Nam Y. Huh/AP Photo
A U.S. Postal Service employee works outside a post office in Wheeling, Illinois, January 29, 2024.
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
With America having been Made Great Again Again, President-elect Donald Trump is back at his old playbook of looting the nation while casually tossing out earthshaking proposals to distract us all from said looting. At least one of these proposals has a real chance of success with a Congress and media both scrambling hard to the right: privatizing the United States Postal Service.
The Washington Post first reported Trump’s enthusiasm for postal privatization on December 14. The paper’s editorial board—which infamously kowtowed to its billionaire owner, Jeff Bezos of Amazon, earlier this year—rushed to praise the idea. I am ethically obligated to report that the board technically wrote, “we are agnostic on privatization,” in the second paragraph of its piece. I am even more ethically obligated to point out that they spent the remaining nine paragraphs castigating USPS and raging against the very concept of public options. “With or without privatization, the risk for the U.S. Postal Service is not radical reform; it’s reform that’s not radical enough,” the board concluded. Doesn’t sound too agnostic to me!
Postal privatization has been a glittering conservative prize—the Heritage Foundation has called for it consistently for 20 years. Centrist neoliberals have hemmed and hawed—Matthew Yglesias wanted to privatize in 2012, then wanted to punt on the issue in 2020, and is now “all for postal privatization” again. But the actual public adores USPS. It had a +51 net favorability rating and the second-highest affirmative favorables in this year’s annual Pew poll of well-known federal agencies, just behind the National Park Service.
USPS is America’s most visible example of a government-owned commercial enterprise, so its continuing existence shows that there is, in fact, an alternative to the private market. And it turns out the public likes it when the government does nice things for them. What a concept.
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The charge against the post office is always the same: It doesn’t turn a profit, while private shipping companies do. WaPo’s editorial board grumbled that “the Postal Service spent $89.5 billion last year, more than three-quarters of which went to personnel costs.” Asked about this expense at a press conference, Trump invoked “Amazon and UPS and FedEx and all the things that you didn’t have [before the 1970s].”
Slight problem: Amazon, UPS, and FedEx are all USPS customers. They contract with the post office for last-mile delivery to rural and far-flung areas where it’s unprofitable to maintain a robust delivery network. Amazon has a deal with USPS, in place since 2006, to use the public post to deliver 1.5 billion packages a year.
This is the key flaw in the postal privatization argument: No one, public or private, can be sure they’ll make money operating a truly nationwide delivery network in the long run. The reason we have a publicly owned postal service with a universal service mandate to every mailbox in the country is because that’s the only way to offset the cost of maintaining what is, even in the digital age, an indispensable public good. If everyone deserves to be able to ship and receive letters and parcels in America (and yes, everyone does), then we need the power of government to do that.
Privatization advocates like to point to European countries with private posts, but those nations are all geographically smaller, and more densely populated in urban centers. The United States is the length of a continent plus several island territories. We know that maintaining that carriage network is costly from U.S. history: Congress criminalized long-distance private letter carriage in 1845, then intracity carriage in 1872, because private “cream-skimming” was eating up the profitable shipping routes, leaving the public post office with massive liabilities.
The post office is required by law to maintain both prompt delivery and low prices nationwide, a dual mandate that used to be known as the “post office principle.”
Even a statutory monopoly didn’t make the post office profitable, because doing so would mean throwing out what makes the post valuable in the first place. The post office is required by law to maintain both prompt delivery and low prices nationwide, a dual mandate that used to be known as the “post office principle.”
Enshrining high overhead and low prices in law guarantees deficits in the long run, especially once there were viable alternatives like telephones and later email for peer-to-peer communication. Congress was fine with that. The Postal Policy Act of 1958 reads: “The postal establishment was created to unite more closely the American people, to promote the general welfare, and to advance the national economy … It clearly is not a business enterprise conducted for profit or for raising general funds.”
Privatizing the post office would probably mean eliminating the post office principle, which in turn would mean far higher prices, lower-quality service, or both. Amazon, UPS, and FedEx may follow suit without a public competitor setting a floor for their rates or picking up the gaps in their coverage. Rural consumers would suffer the most, especially those reliant on the mail for prescription drug delivery or baby chicks (really).
In nations that have tried it, postal privatization has also generally led to massive workforce cuts. USPS is heavily unionized, and heavily Black—it offers the highest median annual and hourly wages of the ten occupations with the highest share of the Black workforce.
Maybe you think a public-private hybrid might offer the best of both worlds, keeping the universal mandates but executing them with an efficient, corporate-like organizational structure. Well, congratulations, you’ve just reinvented USPS.
The Postal Reorganization Act of 1970 reformulated the post office not as a cabinet department but “an independent establishment of the executive branch.” Functionally speaking, USPS is a government-owned corporation. The Postal Board of Governors is basically a board of directors, the postmaster general whom they select is basically a CEO, and the Postal Regulatory Commission is, as the name implies, a regulator. The 1970 law also prohibited USPS from taking general funding appropriations from Congress, so like a business, it has to fund itself through the revenue it generates.
After a rocky first few years, USPS did just that. It turned a modest profit for about half a decade thanks to a sudden surge in letters in the ’80s and ’90s, along with postage rate hikes, new sorting machines, and ancillary products.
But in 2006, Congress set USPS up to fail. Most infamously, it required the post to fully prefund retirement benefits for its employees, essentially mandating heavy financial losses. Congress thankfully repealed that mandate in 2022. But the 2006 law also prohibited USPS from entering any new markets besides physical delivery. With letter volume steadily dropping with the dawn of email, USPS’s financials have tumbled downhill ever since.
It’s important to emphasize that the post office’s financial problems have artificial causes. Generations of politicians, Democratic and Republican, have statutorily forced the agency into impossible binds, then sighed that government just can’t seem to do what the private sector is never asked to do in the first place.
Why, in the age of fiat money, are we demanding that a noninflationary function like the post fully fund itself at all? This fiscal year’s postal deficit is $9.5 billion. We’re paying a third of that every year to one arms contractor that had already defrauded the Pentagon multiple times when it won the contract. If Congress and the president are looking for inefficiencies, they ought to start with the war machine.
Moreover, why are we still forcing the Postal Service to do nothing besides physical package delivery? It’s not like there’s some shortage of useful things for a national public-information network to do.
Silicon Valley lobbied hard to restrict the Postal Service to physical mail at the dawn of the internet age, correctly recognizing that USPS’s demonstrated interest in email posed an existential threat to the nascent business model of surveillance capitalism. The result is an internet that’s an endless spying machine optimized to track us, serve us ads, and formulate pricing from our demonstrated behaviors. What if the post office offered free or low-cost surveillance-free, highly encrypted email services? To be clear, the U.S. post’s own record on privacy is seriously flawed. But with proper legislation and oversight, a real public need could easily be addressed.
Of course, the clearest expansion USPS could make would be postal financial services, as the agency itself and a litany of onlookers have been begging for years. The Prospect reported that USPS tried a “pilot program” in 2021 … which operated in just four locations, none of which were actually in underbanked neighborhoods, according to Take On Wall Street’s Porter McConnell. Moreover, the program only cashed checks and sold reloadable, low-limit debit cards, not exactly a robust suite of financial services. That’s because USPS had to cram the pilot program into its heavily limited existing financial products, most of which relate to money orders. True postal banking requires congressional authorization.
It’s especially eerie that Trump floated privatizing the Postal Service one day and then liquidating the Federal Deposit Insurance Corporation the next. The original Postal Savings System was created in part to stave off calls for nationwide deposit insurance after the financial panic of 1907, and closed up shop because politicians and finance industry lobbyists thought it was redundant after the FDIC. If Trump successfully eliminated both agencies (unlikely, but not impossible), U.S. consumers of mail and money would be worse off than in 1911.
I doubt that Trump thinks or cares enough about the Postal Service or the FDIC to commit much personal energy to either project. But unelected co-president Elon Musk certainly sees the value in being the private monopolist of crucial networks, and is unsurprisingly eager to slash the post as much as possible. He and his allies will make the same foolish argument about profits, and the media will lap it up as an opportunity to perform nonpartisanship and fete the thought processes of wealthy businessmen. It’s up to the rest of us to see through the act; they wouldn’t want to kill the Postal Service so badly if it didn’t represent something they fear.
