Treasury proposes postal changes after Trump attacks on Amazon
President Donald Trump’s task force scrutinizing U.S. Postal Service operations is proposing an overhaul of the financially distressed agency, including changes to how it prices packages shipped by retailers like Amazon, a frequent target of the president’s attacks.
In a report released on Tuesday, the Treasury-led task force says the Postal Service should price packages “with profitability in mind” and impose higher rates on general e-commerce goods and other non-essential items sent through the mail.
Trump commissioned the report earlier this year after months of attacking Amazon for, in his view, ripping off USPS and treating the agency like its “Delivery Boy.” Amazon CEO Jeff Bezos privately owns The Washington Post, and Trump, who slams the Post’s coverage as unfair, often conflates the newspaper with the e-commerce giant, even calling it the “Amazon Washington Post.”
The report’s recommendations are broad and sweeping. They call for stronger oversight by the Postal Service Board of Governors — which sat empty for much of Trump’s presidency. They also encourage the agency to consider other revenue streams, such as renting out unused real estate to businesses, charging outside shippers for access to people’s mail boxes and issuing hunting and fishing licenses.
But the ideas for package rates are likely to draw the most scrutiny, given the president’s attacks on Amazon. The task force says the Postal Service should distinguish between essential items, such as medication or tax notices, and non-essential items, such as consumer products — and mark up the latter to generate more income.
The administration on Tuesday denied that it’s targeting Amazon, saying the report’s recommendations would hit the coffers of all retailers with a large volume of online sales.
“None of our findings or recommendations are linked to any one customer or competitor of the Postal Service,” said a senior administration official. “We based our analysis on the needs of the entire economy and all its businesses.”
But Trump’s frequent rants about Amazon hover over the findings.
“I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy,” Trump tweeted in April shortly before the White House announced the task force. “Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!”
The president told The Daily Caller last month that Amazon is “getting the bargain of the century,” adding, “I think that’s why I’ve asked for a review.”
The task force, led by Treasury Secretary Steven Mnuchin, spent weeks meeting with companies and trade associations in affected industries like retail and package delivery. Officials from the Office of Management and Budget and other federal agencies have also been involved. A report was initially delivered to the White House in August, though its public release was delayed until later in the year.
The senior administration official said the Postal Service and Postal Regulatory Commission can enact some of the changes, including increasing package prices, without intervention from Congress, but said other proposed changes would require lawmakers to act.
For more than a decade, the Postal Service has logged billion-dollar loses, resulting in a total cumulative deficit of nearly $63 billion as of September. But those losses are not driven by Amazon or other big shippers of packages. Instead, much of it can be attributed to the decline of letter mail in the internet era and the mandatory payments that Congress has ordered the Postal Service to make into a retiree benefits fund. The task force recommends restructuring that obligation, but not doing away with it altogether.
The report does not call for privatizing the Postal Service, despite the Trump administration saying in June that it wanted to do so as part of a government reorganization.
Amazon did not immediately comment, but an industry coalition that represents the e-commerce giant warned the report could cause widespread economic damage.
“If it were to be adopted in its entirety I think we would be approaching a worst-case scenario from a consumer and business perspective,” said John McHugh, a congressman-turned-lobbyist who leads the so-called Package Coalition, saying Congress should be involved in changing longstanding Postal Service regulations.
Amazon, like other bulk users of the Postal Service, negotiates a special shipping rate that is not publicly disclosed. Though Amazon would pay below the standard rate, by law, those negotiated arrangements must cover the cost of shipping the packages — meaning the post office cannot lose money on them as Trump claims. Each agreement is evaluated and endorsed by the Postal Regulatory Commission and approved by the Postal Service Board of Governors.
Package delivery has been a rare bright spot on the Postal Service’s earnings statement. Mail carriers are delivering more packages than ever before — as the number of standard letters steadily declines — bringing in $21.5 billion in revenue in the most recent fiscal year.
Amazon has been developing other delivery options in anticipation that the Postal Service cannot accommodate its rapid growth. It runs a service in which contract drivers drop orders at customers’ doors and recently announced it would lease trucks to entrepreneurs to start delivery services. The company has also experimented with aerial drones and, according to media reports, self-driving vehicles, though those are still years away from adoption because of technological and regulatory hurdles.
The investments could help Amazon lessen the sting of a rate hike over the long term or gradually move away from the Postal Service altogether if shipping expenses become too prohibitive. Industry advocates have warned that fewer packages would only mean more pain for the agency’s bottom line.
Trump’s most direct impact on the Postal Service could be appointees to the Board of Governors. The body plays a key role approving so-called negotiated service agreements, giving it a hand in how much Amazon and others must pay for postal services. The board could, in theory, send Postal Service negotiators back to the table if such deals are not judged to be in the agency’s best interest.
The board sat entirely vacant for the first 18 months of Trump’s presidency. He’s so far nominated people for three of the nine board seats, two of whom were approved by Senate-wide vote in late August.
[Politico]
