Trump vs Amazon feud has USPS losing money being stuck in the middle. But who’s really to blame?
Donald Trump always does things for the wrong reasons. But every once in a while he hits upon something at least worth doing.
It’s pretty well-established that Trump doesn’t like Amazon CEO Jeff Bezos and has gone out of his way to try and tank the company’s stock. Maybe it’s because Bezos is demonstrably wealthier (without pretending to be anyone else or help from daddy) but it is also definitely because Bezos also owns The Washington Post, the newspaper which has held the Trump administration to the fire more than any other.
That led him earlier this month to demand a federal task force investigating the U.S. Postal Service’s finances — because Trump claims, without any evidence, that Amazon is the reason USPS is losing money.
Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field!
— Donald J. Trump (@realDonaldTrump) April 2, 2018
I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. 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?)!
— Donald J. Trump (@realDonaldTrump) April 3, 2018
The reality is much more complicated and ultimately Congress’ fault. But Trump throwing a fit about it just might finally make something happen to improve the situation.
Is USPS losing money? And does it matter?
Definitely and yes.
But it’s nothing to do with Amazon.
The contract between USPS and Amazon is confidential — just like the contract between USPS and every other shipper. It’s not possible to say much of anything based on unknown details, but we do know the federal law requires that the deal at least cover the costs to the USPS and that regulators approved the contract. So it makes no sense to suggest Amazon managed to secure an illegal deal or that USPS had any reason to agree to one.
The Postal Service does lose money, lots of it. And that’s because the laws haven’t been updated in a while and it has not been allowed to cut costs or optimize like a regular business would.
It has had to pay upfront for all employees’ pension and health care expenses — about $38 billion — even as fewer and fewer people rely on physical letter mail. (And the people who do are the most spread out and costly to deliver to.) Almost all of the “losses” it suffers can be attributed to that prepayment.
And there aren’t many ways to make it up. It’s not allowed to raise prices on stamps faster than the rate of inflation. It’s not allowed to diversify into other types of business without Congressional approval.
But on the other hand, the USPS is not funded by taxpayer money. We only pay for shipping services when we buy them. So it’s not like we are losing money — but if the Postal Service founders, you can bet we would. Right now USPS delivers as many Amazon packages as FedEx and UPS combined. Without that competition and access to the infrastructure of USPS, shipping and handling fees will go up.
What an audit could accomplish
It’s doubtful Trump’s audit will convince Trump himself of reality — the basic facts are already known, and have been for a long time. He’s chosen to ignore them. But it might create political pressure on Congress to fix the problem.
There was an attempt at reform last year that fell flat, even though it would have saved $29 billion over five years. First-class rates could have gone up and some retirement health costs could have been shouldered by Medicare. The Senate is ready to try it again, and maybe when Trump’s report comes out in four months, that’ll provide some ammo.
Here’s another idea which would help out consumers in Trump country: Let USPS provide more financial services, something many countries do and we used to, too. “Some 59 percent of its post offices are in places with either a single bank or none at all. In rural hamlets they are often one of the very few commercial establishments; even in the postal service’s diminished state, there are still more than seven post offices for every Walmart in America,” The Economist notes.
By providing basic banking services and an alternative to pawn shops and the payday lenders the Trump administration refuses to rein in, everybody would win. Trump could crow about making USPS more like a business, pretend he removed some undue influence from Amazon, everybody gets to keep their faster and cheap shipping options, and people without many banking options can get a fair shake.
Will it happen? Probably not. But maybe one of Trump’s vendettas will finally turn into something.
Article last modified on July 16, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: A Trump Feud That Might Save Us Money In the Long Run - AMP.
Article last modified on July 16, 2018. Published by Debt.com, LLC .