In a three-and-a-half page letter sent March 13 to the leadership of the House and Senate and the respective committees with USPS oversight, Postmaster General Louis DeJoy recited – again – the many faults he found with the agency when he arrived, and listed seven areas in which his 10-year Plan has led to “impactful” accomplishments.
The task list
In the middle of the third page, he informed the readers that he has engaged the president’s Department of Government Efficiency to help him tackle challenges outside his direct control. That portion of the letter stated:
“Last night I signed an agreement with the General Services Administration and DOGE representatives to assist us in identifying and achieving further efficiencies. This is an effort aligned with our efforts, as while we have accomplished a great deal, there is much more to be done. We are happy to have others to assist us in our worthwhile cause. The DOGE team was gracious enough to ask for the big problems they can help us with. Among other initiatives, I provided the following list of items that are in your hands and that have been intractable even though they have needed to be addressed for over a decade. Please review the following:
- The mismanagement of our self-funded retirement assets and the actuarial miscalculations of our retirement obligations. These work functions reside with the Office of Personal Management and the Treasury Department based on legislation enacted by the Congress. They result in several billion dollars a year in burdensome additional charges not common in private industry.
- The mismanagement of our Workers’ Compensation Program resulting in approximately$ 400 million dollars a year in excessive charges when compared to private industry practices. These work functions reside with the Department of Labor and are legislated by the Congress.
- The unfunded mandates imposed on us by legislation. These well-intended laws that have been passed since we were created as a self-funding agency for the most part require the Postal Service to perform costly activities without providing any supporting funding. In the private industry context, this would be like UPS or FedEx providing services to the Federal Government without charging for them. This amount is estimated to cost between $6 billion and $11 billion annually. As you know, Congress is responsible for passing legislation without appropriate funding.
- Our burdensome regulatory requirements restricting normal business practice. The Postal Regulatory Commission is an unnecessary agency that has inflicted over $50 billion in damage to the Postal Service by administering defective pricing models and decades old bureaucratic processes that encumber the Postal Service. They have an anachronistic view of the Postal Service’s current business environment, they have failed to change as the times and the postal economy has changed, and they therefore stand in the way of the timely and necessary changes required to succeed as a self-funded enterprise in a competitive environment-which is what the Postal Service needs to do to survive.”
Observations
The four items on to-do list DeJoy gave to DOGE – and that were publicly disclosed – are of variable merit.
- Resolving the years-long debate over the Postal Service’s retirement funds – whether they’re overfunded by billions or underfunded by billions – has been ducked by the other federal agencies involved, all claiming their positions were unalterable without legislation. Therefore, leveraging DOGE to get action from Congress may seem desirable, but there’s no guarantee that the result would be a recalculation in favor of the USPS; the current political thinking might not want the Treasury to refund billions to the USPS. Similarly, although the Postal Service’s accounts in the US Treasury are invested very conservatively, with almost no risk, and though those funds might grow more if invested in other publicly-traded markets, the related risk might cause second-thoughts for politicians disinterested in adversity occurring on their watch, or because of their decisions.
- The complaint about workers’ comp reflects DeJoy’s dislike for it not being within his control. Of course, he can control safety training and safer employee practices that would reduce the injuries leading to worker’ comp claims, but DeJoy prefers to find fault with how the system works instead. It’s true that the monthly fluctuations in the workers’ comp liability can be large, and – as he quickly points out – can adversely impact USPS finances, but it can also swing to his favor – and he’s silent when it helps his bottom line.
- Since he’s been at the Postal Service, Louis DeJoy has never openly criticized the universal service obligation or highlighted the problematic mandate to both provide expected public services while being financially self-supporting. The issue here may well be how he would resolve the matter – by his likely solution – removing the mandates – or the more service-focused solution – Congressional funding for mandated public services. DeJoy also complains about six-day delivery without acknowledging his support for its codification in the 2022 Postal Reform Act. Regardless, it’s questionable whether even DOGE can get legislators to enact any measure that would reduce universal access to postal services, enable the closure of unprofitable post offices, or impact unionized postal carriers by permitting fewer delivery days.
- Louis DeJoy also has never accepted that the USPS is a statutory monopoly, and that its monopoly power is appropriately limited by a regulator. His allegations about the PRC inflicting “over $50 billion in damage” – money he presumably could have raised through postage rates had he been able to price postal products and services as he wishes – simply reflects his rejection of any regulation over monopoly power in the marketplace. Accordingly, DeJoy continues to complain about the “defective pricing model” established in 2006 that sought to force the USPS to control its costs and survive financially on CPI-capped postage rates. The agency’s current financial mess reflects its failure to control costs – primarily for labor – but also is another testament to the increasingly expensive – and unfunded – universal service mandate. In that regard, complaining about the PRC or the ratesetting system is barking up the wrong tree.
Meanwhile, DeJoy remains convinced that investing billions in infrastructure changes and hiring thousands of permanent fixed-schedule employees is prudent – and can be supported by postage revenue – even as mail volume declines and package volume falters. Moreover, his solution – that the agency can become a major player in the package business –glibly overlooks that the private sector is much more nimble than the USPS and unlikely to simply step aside so DeJoy can muscle his government agency into their business arena. DeJoy and DOGE can turn to Congress but shouldn’t expect quick compliance. Legislators on both sides of the aisle, keen to curry favor with voters, readily issue mandates to agencies, but are loathe to spend the money to pay for them.
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