MEGAN BASHAM, HOST: It’s Thursday the 27th of August, 2020.Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Megan Basham.
MYRNA BROWN, HOST: And I’m Myrna Brown. First up: the fight over America’s mailboxes.
Last weekend, House Majority Leader Nancy Pelosi brought Congress back from vacation early. She wanted lawmakers to approve a bill blocking changes at the U.S. Postal Service. Democrats think President Donald Trump is trying to prevent mail-in voting by sabotaging the system.
BASHAM: But new Postmaster General Louis DeJoy says recent changes to the agency’s services have nothing to do with the election. He’s trying to keep the service solvent. Earlier this month, the agency reported a quarterly deficit of over $2 billion. What’s behind those financial challenges? WORLD Reporter Kyle Ziemnick explains.
TRUMP: This isn’t a Trump thing. This has been one of the disasters of the world – the way it’s been run. It’s been run horribly. We’re gonna make it good.
KYLE ZIEMNICK, REPORTER: That’s how President Trump described the U.S. Postal Service earlier this month. He’s repeatedly called the agency out for being a fiscal failure. Criticizing a government agency for mismanagement is nothing new.
But the situation facing the Postal Service is unique.
The USPS is part of the executive branch. It performs a public service. But it doesn’t get any tax dollars. It accepted its last public subsidy in 1982. Since then, postage has funded all of its operating budget.
David Woods is a former postmaster from the Baltimore area.
WOODS: And often people, customers, would have this perception that the post office is operated with tax dollars. And it is with a sense of pride that I was able to say, “Oh no, no, this is something that we, we have to raise the money that we use in order to deliver the mail.”
And guaranteeing that delivery isn’t easy. Woods says it was always a battle to make sure the mail was delivered on time to every location.
That’s partly because the U.S. Postal Service has what’s called a universal service obligation. That means all Americans get a basic level of service—regardless of the cost.
Companies like Amazon, UPS, and FedEx don’t have a delivery mandate. They can refuse to serve unprofitable customers. The Postal Service can’t. On top of that, it can’t freely adjust its own prices.
WOODS: The post office has some restrictions on what we can charge, which is something the president has been encouraging them to change, but we’ve got a board of governors that determines that. So we can’t necessarily change prices in every single area.
These financial handcuffs put the USPS at a big disadvantage. But at first, that didn’t seem to be a problem. Between 1980 and 2000, the Postal Service enjoyed decent profits or made very small losses. The no-taxpayer-money model appeared to work.
That changed in the mid-2000s. Two separate, but very important developments began to push the postal service over the fiscal cliff. In 2006, Congress passed an act reforming the agency.
One reform in particular hit the postal budget hard. The agency had to pre-pay its retirees decades in advance. That means part of their current budget goes to a fund for future workers’ retirement benefits. And it costs billions of extra dollars per year in expenses.
WOODS: I didn’t think it was fair, no other agency or company or business had ever been asked to do that type of thing.
Sandra Wells is a retired postmaster who lives in Florida.
WELLS: That’s when they made us start funding those, um, future retiree benefits. But if you think about it funding somebody 75 years in advance, those people aren’t even born yet. In 75 years, do you honestly think there’s going to be companies that are paying retirement to people? I doubt it.
To stay afloat, the Postal Service stopped setting up these benefits in advance. But they still count as negatives on the monthly budget. The agency has had a cumulative $120 billion deficit since 2008. But it’s kept a positive cash flow despite the deficit.
The second issue affecting the agency is more fundamental. The way Americans communicate has changed dramatically. Since the early 2000s, the amount of first-class mail has fallen dramatically. People just don’t send letters or cards as much as they used to. At the same time, package volume has skyrocketed.
WELLS: It’s a lot easier to shop from home. We all do it now.
But the Postal Service makes the most money off first class mail, for one simple reason.
WELLS: First-class – that is not, that’s not competitive. Cause there’s, there’s no competitors out there. We have the right to the mailbox and we universally deliver.
On the other hand, the world of packages has many competitors. UPS, Amazon, and FedEx trucks cover American streets. That makes profits and margins lower for the postal service.
These changes have brought the agency to its knees. And now it faces another challenge this fall.
TRUMP: What they want to do is send millions of ballots out—just indiscriminately, all over. They want to send millions and millions of ballots out, and you can’t do that—you can’t do that.
The coronavirus pandemic has prompted many states to rely more heavily on mail-in ballots. Some states sent primary ballots to their voters several weeks in advance. But that didn’t prevent problems.
State election officials have rejected more than half a million ballots so far this year. Late submissions and missing signatures are the main culprits. And that has many Americans—including the president—worried about what will happen on Election Day.
MALONEY: OK. Welcome everybody, to today’s hybrid hearing…
On Monday, Postmaster General Louis DeJoy testified before the House Oversight Committee. He reminded lawmakers that the Postal Service handles more than a billion pieces of mail every month. Ballots would only amount to a fraction of that.
So DeJoy is confident in his department’s ability to get the job done, as he assured Congressman Chip Roy on Monday.
ROY: In other words, is the USPS perfectly capable of handling any amount of mail that would be attached to our election in November?
DeJOY: We are very ready to handle the election mail, sir.
Despite DeJoy’s assurances, former postmaster Sandra Wells worries if something goes wrong on November 3rd, the Postal Service will end up as the scapegoat.
WELLS: I’m afraid they are going to be blamed for whatever goes down.
Reporting for WORLD, I’m Kyle Ziemnick.