The United States Postal Service.

Chapter One: Ye Olde Post Office

The U.S. Postal Service (USPS) is one of the most derided institutions in the country. It’s been lampooned on television through characters like Cliff Clavin, Cleveland Brown, Newman. Phrases like “going postal” and “snail mail” are in the American lexicon. And, according to the Men In Black movies, most post office employees are aliens.

Also, the USPS is the most beloved government agency in the country. By like a lot.

According to Pew Research, the USPS blows away every other government agency with a 91% favorability rating. Pew. Harris. Gallup. Every polling agency agrees on this ranking. Don’t get me wrong, customer reviews are mostly atrocious. There’s a serious disconnect in the American mind when it comes to the Post Office. We grumble and poke fun. Let our dogs bark and chase mail carriers. Thumb our noses at the government attitude and say things like, “our tax dollars at work.”

At the same time, we’re strangely proud of this institution. It’s like someone picking on your sibling. Or your hometown. It’s okay for you to do, but if someone else does it…watch out.

Somewhere, deep down, I think we all recognize what a miracle it is that you can stuff a piece of paper in an envelope, write a couple of words on it, drop it in a giant blue metal box and voilà! A day or two later a loved one is reading a Mother’s Day card or a company is receiving a check. Even in our cynical and increasingly digital world where technological miracles abound, there’s a deep and abiding respect for the United States Postal Service. Even if everyone that works there is an alien.

Here are some additional fun facts about the Post Office before we get to the heart of the matter.

• In 2023, the Postal Service delivered to 154 million residential addresses.
• The Postal Service has 22,873 leased properties.
• The Postal Service owns 8,500 properties
• In 2023, the Postal Service paid $2.03 billion every two weeks in salaries and benefits.
• Forty-four percent of the world’s mail volume is processed and delivered by the USPS.
• The Postal Service accepted 8.6 million passport applications in 2023.
• There were 525,469 career employees in 2023.
• The number of non-career employees was 115,000.
• The Postal Service has more than 246,503 vehicles, one of the largest civilian fleets in the world.
• In 2023, the Postal Service issued 63.3 million money orders. That’s roughly 209,000 money orders each day.
• The Postal Service had $78.2 billion in operating revenue in 2023.

The Post Office dates back to 1792 as an official department, but none other than Benjamin Franklin served as the first Postmaster General under the Second Continental Congress in 1775. Demonstrating how important it was to the young nation, the Post Office was then enshrined in Article One of the Constitution:

Article I, Section 8, Clause 7 reads: “The Congress shall have Power . . . To establish Post Offices and post Roads.”

First major point: Establishing post offices is an Enumerated Power of Congress in the Constitution. Put that under your hat for a bit. The only debate over these powers over the next hundred years or so was the extent to which the Post Office was able to create and maintain post roads; a power that was eventually superseded and clarified in subsequent decisions.

Nearly a century later, it was established as a Cabinet-level department with the Postmaster General reporting directly to the President of the United States. While Congress has the authority to fund the Post Office (because it can fund pretty much anything it wants) the Post Office is chartered to be self-sufficient. Therefore, among the powers of the Post Office is to establish postal rates and to operate as a business despite being a quasi-governmental agency.

Chapter Two: The Post Office Gets a Makeover

In 1970, the Post Office Department, as it was known, went through a wholesale reorganization as the United States Postal Service, authorized by the Postal Reorganization Act of 1970. Since then it has operated as more of a corporate entity with Congressional oversight but independent of direct government control. It’s overseen by an eleven-member Board of Governors, which operates much like a board of directors.

The USPS is still expected to be financially self-sustaining, though it has received taxpayer funds in recent years since it began losing money. There is also a Postal Regulatory Commission, an independent federal agency, that technically oversees the Postal Service but these agencies have recently been in conflict, especially over the appointment of the current Postmaster General. More on that in a moment.

One of the essential services the Postal Service provides is delivery of mail no matter where the destination. It is mandated to ensure that even the most remote of locations in the United States is served. This mandate might be one of the provisions that prevents more talk of privatization, something that occurred in the UK in 2014 with disastrous results. Private equity firms such as Goldman Sachs feasted on the spinout of the Royal Mail and almost immediately prices were hiked across the board and citizens of the UK paid the price, with one writer referring to it as “selling the family silver.”

In this way, the federal mandate is what’s lacking in the digital era. The failure of the U.S. government to classify broadband as a utility from the start meant that rural areas would always be underserved and concepts like “throttling” would be permissible. Today the government has to continually carve out money and regulations to ensure broadband access to remote areas of the country such as tribal lands instead of making providers provide comparable service throughout the nation as it was when the telephone companies were laying cable.

That being said, the Postal Service continues to find itself under fire. Privatization is the least of its worries at the moment as even Republicans are afraid to touch this third rail, though a few have attempted to chip certain pieces away.

Trouble really started brewing about a decade ago when Amazon and private carriers like UPS and FedEx made huge advancements both spurring and benefitting from the online retail boom. As more and more consumers shifted to package deliveries, these entities blew up. And so did shipping revenue at the post office, which has deals with companies like Amazon, especially when it comes to last mile fulfillment. But as social media and email continued to proliferate and Google basically ate up the competition for advertising, routine mail and marketing mail began to erode at a startling rate.

To be fair, the Postal Service was running periodic deficits and straining under unfunded mandates, depreciated physical assets and pension obligations long before Jeff Bezos was emperor of the universe. Financial pressure and a massive bureaucracy led to the reorganization in 1970. And it worked for a time, allowing the Postal Service to pursue efficiency measures and increase prices more easily. So long as it maintained its charge to service the entire nation, Congress was willing to give it breathing room to act more autonomously.

The single biggest contributor to the USPS structural deficit that defenders and detractors understand is with respect to USPS pension obligations. Under the reorganization, the USPS was still required to essentially pre-fund projected retirement benefits. Projected benefits are always substantially larger than present-day dollar calculations so the Postal Service was putting away rainy day funds for employees at higher expected rates. That’s manageable in the best of times and when you’re in a predictable and sustained low interest rate environment. But it meant that the Postal Service would have to be massively profitable to cover present and future obligations. Other federal agencies are not held to similar standards.

So in fairness to past and present leadership of the USPS, this is an obligation that very few organizations, even the most well run private companies, would be able to endure over a long period of time and under the best of circumstances.

Now, there are occasions when the Postal Service will be the beneficiary of government funds for specific programs. For example, this year Congress extended funds to provide free service or reduced rates to blind people and overseas voters. The Treasury extended a $10 billion loan under the CARES Act during the pandemic to provide the USPS with liquidity. Congress also increased the direct funding budget to the Inspector General’s office to increase staff and capability for the massive 10-year transformation plan that began under President Trump.

Ah, the turning point in our story.

As usual, our nation’s orange hued hero muddied the waters. When Trump first took office he turned his ire toward the Post Office, calling it “a joke” and saying they were getting hosed by Amazon. The Post Office is not a joke, but in fairness Amazon probably gets a favorable deal. When Matt Stoller was at the Open Markets Institute he did an interview with Vox in which he suggested that there’s “likely quite a bit of revenue from Amazon the USPS is failing to capture.” That said, package fulfillment is one of the growing areas for the post office, in no small part due to its relationship with Amazon.

Trump may or may not have known that but it didn’t matter. The real reason he pinpointed this as a problem was because he hated his coverage in the Washington Post, owned by Jeff Bezos. So 2018 Trump was looking for ways to fuck with Bezos. But it was 2020 Trump that turned his attention to the Postal service specifically because of something that became more important than anyone anticipated.

Mail-in ballots.

More people voted by mail-in ballots in 2020 than any other election because of the Pandemic. And this is where one of the more interesting characters in our story enters the picture.

Chapter Three: Ode to DeJoy

Louis DeJoy, a former CEO of a logistics company that sold for more than $600 million, was a bundler for the GOP. Nearly every major figure in GOP politics has come before DeJoy on bended knee looking for funds and support for many years. He worked hard for Trump in 2016 and 2020 and was purportedly offered ambassadorships but declined. According to DeJoy, he was more interested in getting his hands dirty and making a difference. So when the Postmaster General position opened up, he threw his hat into the ring. DeJoy and those around him claim that Trump had nothing to do with the selection process and was even surprised that DeJoy would even want such a position.

Democrats, on the other hand, were suspicious from the start.

DeJoy is a hardscrabble Brooklyn kid who built a fortune in logistics. He still has a thick Brooklyn accent, which is music to my ears but can be off putting to some. He’s a self proclaimed operations guy who doesn’t bother with details but focuses on the big picture; a trait that has gotten him into some trouble like when he testified in front of Congress in 2020 and appeared not to know the rates of anything in the post office outside of a first class mail stamp.

But it was another snap decision that really put DeJoy under a microscope in that same year.

In May of 2020 DeJoy issued a mandate after learning that trucks were running habitually late. From that moment forward, he proclaimed, the trucks were to run on time. And for a while they did, which DeJoy and his management team celebrated by their own admission. The only problem was that trucks were leaving without mail.

It was a fairly big blunder that became seismic in the eyes of Congress and the American people during the height of the pandemic. Not only were postal workers on the front lines of the virus and suffering more significantly as a result, it was becoming increasingly evident that mail-in ballots would be crucial in the upcoming election. So DeJoy was immediately accused of sabotaging the election months before it was even held; a claim that would stick to him for a couple of years.

On top of that, his wry New York attitude and insistence upon modernizing the USPS to compete head-to-head with UPS and FedEx made it look like DeJoy was nothing more than a corporate downsizing monster doing the bidding of Trump. To many, it looked like his sole mission in life was to destroy the very thing he was put in charge of saving.

Undaunted, DeJoy doubled down. He dismissed his critics and implemented a ten-year turnaround plan to modernize the aging fleet, consolidate USPS facilities, cut back on full-time jobs and close several sorting centers. The master plan calls for more technology in centralized centers that run in a hub-and-spoke style similar to UPS and FedEx. By the middle of 2023, Republicans and Democrats and members of the public—pretty much anyone with an opinion on the Postal Service—were calling for DeJoy to step down amid complaints of missing mail and slow delivery times across the country.

Around the same time, two members of the 11-person board of governors stepped down leaving a vacancy that President Biden has been bizarrely slow to fill. In fact, the administration only recently put forward their first candidate—former mayor of Boston and former Labor Department Secretary Marty Walsh—to fill one of the vacancies. He’s currently awaiting confirmation by the Senate.

It’s almost as though the administration is dragging its heels on purpose. And it might be paying off for the embattled Postmaster General. Attitudes toward DeJoy on Capitol Hill have begun to thaw. Slightly. DeJoy still comes under fire for delays and price hikes but his willingness to own up to them in hearings has taken the wind out of the sails of his harshest critics. After it appeared that he was going to ignore calls to electrify the aging fleet and gave an early contract to a notoriously anti-union manufacturer, DeJoy has begun to spread the wealth and work more closely with union shops and has made strides in electrifying the fleet.

But the biggest stay of execution for DeJoy was delivered in the bi-partisan Postal Service Reform Act of 2022. There were two critical provisions, among small funding measures and modernization grants, that offered tremendous relief to the USPS and might have bought DeJoy some badly needed time to see his plan through. The first is a federal mandate that requires retired postal employees to enroll in Medicare when they become eligible. The second and more important provision is the repeal of the pre-funded benefit mandate. It’s estimated that the combined savings from these two measures will save the Postal Service up to $50 billion over ten years.

Bring it home, Max.

In fiscal year 2023, the U.S. Postal Service lost $6.5 billion. The prior year it recorded positive net income of $56 billion due primarily to the impact of the Postal Service Reform Act. We’re three years into the ten-year “Delivering for America” plan under DeJoy and the vaunted USPS is still losing money every month.

Now, if you’re really into this story I would direct you to listen to the most recent meeting of the Board of Governors during which you’ll hear a strident and defensive Roman Martinez IV defend the ten-year plan and put down those who would criticize the post office. Martinez is DeJoy’s right hand and Chairman of the Board of Governors. There is a serious can-do attitude among the USPS leadership and they have made some massive gains despite the financial losses. But here’s the thing.

It’s all bullshit.

The price hikes are going to continue. Sorting centers are going to consolidate and modernize. The fleet will be replaced and electrified. Facilities will close in the name of operational efficiency. Every standard will be measured against market competitors that have zero incentive to satisfy the needs and requirements of those who are the hardest to service. The most remote. The infirmed and disabled. The elderly. The isolated. Those who receive medication through the mail. Tribal members forced to reside in forgotten parts of the country. Those who stay connected to loved ones in arcane ways because the digital revolution hasn’t yet and may never meet them where they are.

The Postal Service was designed to meet the needs of the least among us. When it was established it was impossible to conceive of a time when private logistics companies would compete with this most basic service. And, look. I get it. The world has changed. We’ve changed. We live in a culture of immediacy. It might sound like nostalgia to suggest that we leave the post office alone. I was in the newspaper business and for a long time held out hope that people would still want to hold newsprint in their hands, turn pages over a morning cup of coffee and save issues that were important to them. Those days are over.

But mail delivery is a right much in the way that broadband should have been. There’s a reason that while we poke fun at postal workers and complain about the price of a stamp, we also have a 90% favorability rating of the post office itself. It’s there when you need it. It’s a utility and a right.

Listen to the language of the Deliver for America plan. Listen to DeJoy. Read the Postal Service Reform Act. They all convey the soothing sounds of corporatism:

• Restructured
• Modernized
• Competitive
• Efficient
• Consolidated
• Streamlined

All of the buzzwords, all of the efficiency initiatives—they’re all possible within a government agency setting. I know that’s anathema to those who view the world through a corporate lens but there are meaningful distinctions when it comes to incentives.

DeJoy is pursuing the incentive that makes the most sense to his world view and experience: Profit.

And I get it. From its founding, the Postal Service was to be self-sustaining. And it worked for more than 200 years. That’s quite a run. But sometimes we hold onto decisions from the past as sacrosanct without considering the circumstances under which these decisions were made. Think back to our education series. Or our healthcare series.

It was a given when our nation was formed that education would be seen as a fundamental, though not Constitutionally enumerated right. But the founders had to make hard decisions when the nation was formed. Raise money for the common defense of the nation or educate the masses? They simply didn’t have the funds to do both and the former was a more present threat to the stability of the fledgling nation. So they devised a scheme whereby this right would be protected through local taxation, a system that worked broadly but left it open to uneven distribution of resources. One that we grapple with to this day.

When it was decided that Americans should be given the right to access healthcare coverage after the Second World War, the federal government faced a similar funding problem. Pay for the war or provide healthcare. From Eisenhower forward, the federal government operated under the false premise of balanced budgets and decided that paying for the common defense took priority over the common welfare. And so it provided for the least among us with Medicaid and retirees with Medicare and created a complex system of coverage that relied on the masses being fully employed and coverage through employer sponsored health insurance. And once again, this led to the uneven distribution of resources as the population exploded and employment became more and more precarious without union protections.

And on…And on…And on…And on.

Clear the corporate cobwebs from our eyes and it reveals a much clearer picture. We’re not a small and thickly settled population that can be serviced by centralized hub-and-spoke centers for healthcare, education or even the mail. We are a widely distributed and aging population with disparate access to each of these fundamental services that contribute to the general health and welfare of the nation.

We’re not the nation we were in 1797 or 1945. We no longer have to cling to the decisions of the past that were made under wartime duress. We can run general health and welfare programs efficiently if we simply decide to and we can even tap the private sector to leverage certain concepts, ideas and technology. That’s how the internet was born. How all those satellites were launched. How all those pharmaceutical breakthroughs were made. We focus so much on what the private side of public/private partnerships can get out of the taxpayer rather than how we can ameliorate government services through collaboration, learning and partnership.

For those who cry about government bloat, understand that when postal rates go up it’s the lower and middle classes that eat the brunt of the increases. The big guys will just write legislation that allows them paperless delivery and the well-heeled can pay to have medication expedited, their packages delivered and ACH payments processed online.

Understand this isn’t a cry to just return to the way things were. It’s a cry to see things for how they are. If the USPS loses money, the government has no other choice but to step in and fill the gap because it’s a constitutionally designed benefit. That means the taxpayer is on the hook for it one way or another. So not only are they bearing the brunt of the losses, they’re bearing the brunt of the increases that attempt to minimize the losses.

A wholly government run agency, still accountable to the Congress, would have to adhere to the highest standards of both delivery and efficiency. At present, we have neither.

Fully federalize the Postal Service and we’ll deliver more than the mail; we’ll deliver on a most basic promise.

Here endeth the lesson.

Image Sources

• Bureau of Engraving and Printing. Designed by Edward Vebell., Public domain, via Wikimedia Commons. Changes were made.
• Bureau of Engraving and Printing. Designed by Edward Vebell., Public domain, via Wikimedia Commons. Changes were made.