Delivering Failure

Poor Louis DeJoy. He got himself into this.

He is a wealthy businessman with experience in investment groups, a fundraiser and donor to President Donald Trump, and in May of this year he took over as Postmaster General of the United States. In a nod to his ego, a new title was created just for him, the Chief Executive Officer of the Post Office.

A mere three months later, there are calls for investigations into potential corruption as the mail delivery service shows increasing signs of failure. There are valid reasons for concern. He sought the position where he has both direct and indirect control over large sums of money, and he is invested in some of the USPS’ rivals and contractors. If he is attempting to undermine the efficiency of mail delivery, he may be able to drive up the value of his UPS stock. If he is attempting to force purchasing of new supplies like mail sorters or shift trucking companies, he may be able to drive up the value of the companies which serve the post office. The possibilities for corruption certainly exist.

It is also a reasonable possibility that he sought a simple job where he could have an impressive new title and a position which would grant him direct access to influential Washington, D.C. power corridors. Postmaster General is one of the dozens of high-level administrative jobs which can provide not only a person but also their family the chance to make important contacts at the highest political levels.

He walked into a mess. The post office has been underfunded for decades. In the 1990s, postal officials warned that they would need to upgrade their services to keep up with new expectations of package tracking which had developed due to competition from Federal Express and UPS. They presented a series of plans for rate increases which would allow them to take in the revenue needed for such an overhaul… and all of their plans were denied by Congress. For various reasons (although concerns about angering their constituents with an immediate jump of a dime or more on first class mail) Congressmen rejected the requested one-time large increase and instead authorized a series of small increases phased in over years.

This resulted in the post office spending far more on the upgrades due to issues like interest, leasing fees, and inflation… just as a person who purchases a house or car directly pays far less than the person who pays on installments over time.

With the advent of e-mail, domestic letter mailing was drastically reduced, with the USPS shifting the majority of its operation to packages and bulk mail. Rates have almost doubled for domestic letters since the 1990s, but they’ve soared even higher for packages. Those packages are expected to have daily tracking from point to point through the system. While automation takes care of much of this, the costs of automation and maintenance are high… and the problems which were first warned about during the time of George H.W. Bush and which were intentionally not addressed during the time of Bill Clinton have continued to grow.

An additional funding problem was created when, in 2006, Congress required the post office to prefund the pension plans of their employees. This is actually a good thing, and hardly unique to the post office, as this Forbes article explains. Private sector businesses (with the exception of churches) are required to pre-fund their pensions, because it safeguards the employees. It is not required for most governmental groups, and as a result many city and state organizations like teacher and police pensions have run into problems, leaving taxpayers on the hook for contracts and public sector workers having part of their pensions negotiated away. But if the post office was to fund their pensions like a normal business, they needed to be allowed to charge appropriate rates… and Congress stopped them from doing so. It was a recipe for bankruptcy.

More problems arose. Under Trump, most of the expected domestic increases were shifted to foreign mail (in keeping with his views on tariffs and trade). When the pandemic struck and foreign package transfer slowed to a trickle, the USPS was hit with a massive monetary loss while simultaneously seeing a rise in costs as people shifted much of their purchasing to online businesses. I have heard it described by a local postal worker as “the worst of the Christmas rush, every day.”

This is the situation that DeJoy walked into. He may have done so with the purest or the blackest of motivations; he may have hoped to make decisions which would cut costs and streamline the organization so as to make himself a hero or he may have intended to enrich himself in a position which normally doesn’t get much attention.

One thing is certain, and that is his status as a fall guy.

President Trump made it clear recently that he opposes funding the post office, although he would sign a bill which includes the funding. This puts the onus on the Senate, which has made clear that they will act in accordance with Trump’s will. This means that Trump is effectively blocking money while trying to provide himself a technicality excuse when catastrophe inevitably strikes.

The Senate is going along with this narrative, turning DeJoy into the target. Senator Susan Collins has made this clear with a strongly worded letter to DeJoy, sent yesterday and released to the public.

DeJoy may be a problem, but complaints about his suggested operational changes are a deflection. The bigger issue, by far, is funding. The patient has been starved for years, and they are cutting off the already paltry food and water supplies at a time when they’re demanding the patient perform heavy lifting. Destruction will follow if they don’t change course, and they are overwhelmingly to blame.