- Soon after saying he would not permit a $US10 billion loan to the US Postal Service unless it hikes its rates on Amazon, President Donald Trump tweeted on Friday that he will “never let our Post Office fail.”
- The USPS is estimated to shutter in the summer unless there is significant monetary intervention, according to a March report from Democratic lawmakers.
- The March report suggested $US25 billion in emergency funding for the USPS. The CARES Act, which came later, provided for the $US10 billion loan.
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President Donald Trump said in an April 24 press briefing that he would not sign additional bailout funds to the US Postal Service unless it increased rates on Amazon, a major customer of the USPS.
Hours after those statements, Trump tweeted that he would “never” let the USPS fail.
“I will never let our Post Office fail,” Trump wrote on Twitter. “It has been mismanaged for years, especially since the advent of the internet and modern-day technology. The people that work there are great, and we’re going to keep them happy, healthy, and well!”
Per the CARES Act, the USPS is eligible for a $US10 billion loan from the Treasury Department. Secretary of Treasury Steven Mnuchin told reporters on Friday that he is outlining criteria that the USPS must meet to receive the loan, including a postal reform program and recruiting a new postmaster general.
Trump added one more requirement to the USPS during the briefing: Hike its Amazon rates, or receive no cash.
He said on Friday, emphasis ours:
If they don’t raise the price of the service they give, which is a tremendous service, and they do a great job and the postal workers are fantastic – but this thing’s losing billions of dollars.
It has been for years, because they don’t want to insult for whatever reason, you can imagine, they don’t want to insult Amazon and these other groups.
If they don’t raise the price I’m not signing anything, so they will raise the price so that they become maybe even profitable, but so they lose much less money, OK? And if they don’t do it, I’m not signing anything and I’m not authorizing you to do anything, Steve.
Before Trump made that statement, he advised the USPS to quadruple its rates.
“If they raise the price of the package by approximately four times, it’d be a whole new ballgame,” Trump told reporters. “But they don’t want to raise because they don’t want to insult Amazon, and they don’t want to insult other companies perhaps that they like.”
USPS is estimated to shutter in the summer unless there is significant monetary intervention, according to a March report from Democratic lawmakers. Reps. Carolyn Maloney and Gerry Connolly said that the coronavirus outbreak was leading to plummeting mail volumes and that the USPS “is in need of urgent help” from Congress and the White House.
A closed-down USPS would endanger deliveries to rural Americans, voting by mail, and prescription delivery. To protect that, lawmakers proposed $US25 billion in emergency funding. Ultimately, Trump signed into law a $US10 billion loan through the CARES Act.
But Trump’s comments about the USPS’ finances leave out an important fact: that much of it financial woes don’t stem from delivery losses, but instead from a 2006 law. The law required the USPS to determine how much it would spend on pensions over the next 75 years and build up a fund to cover that cost, and it’s had a huge toll: According to the USPS’ inspector general, the pre-funding requirement accounted for $US54.8 billion of the agency’s $US62.4 billion in losses from 2007 to 2016.
An ongoing feud
Trump has long targeted Amazon and its founder and CEO, Jeff Bezos, whom he’s referred to as “Jeff Bozo.”
For much of 2018, Trump took to Twitter and the press to wage a war on Amazon – as well as its relationship with the USPS. He said the rates USPS charges Amazon are far below market value, cutting key transportation costs for the $US1 trillion online retailer.
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump tweeted on December 29, 2017. “Should be charging MUCH MORE!”
More recently, the feud has leaked outside of the delivery realm and into Amazon Web Services, the Seattle-based company’s cloud computing arm. Amazon said Trump’s vendetta against the company cost it a $US10 billion contract with the Pentagon, and is pushing for Trump to testify on his dislike of Bezos.
Trump may not be completely off base with Amazon, even if his comments on the USPS’ finances leave out important context. Logistics analysts have concluded that Amazon is able to build a transportation network, in which Amazon can save money delivering its own packages, with significant help from the USPS.