The U.S. Postal Service should not be a business

·6 min read

The United States Postal Service has been on the ropes for years, but the coronavirus crisis may finally lay it out. The society-wide shutdowns have decimated the mail volumes by which the agency makes its money, and it's projected to run out of cash by the end of September.

In response, the classic partisan divide over what to do about the service has re-emerged. Democrats tried to pass a $13 billion cash grant, as part of the recent $2.2 trillion CARES Act, to help out the Postal Service. But President Trump reportedly threatened to scuttle the whole bill over it. Eventually, a $10 billion loan was agreed to. Meanwhile, both Trump and other Republicans insist the Postal Service needs to be run "more like a business," or should even just be privatized entirely.

Democrats have the right idea, but the point needs to be taken further: The U.S. Postal Service needs to be reabsorbed into the federal government proper, and treated as just another public function.

For the majority of its existence, the United States' Post Office was run as exactly that. It was simply another government department, funded out of general government revenue. If the Post Office charged fees for its services, it did so simply to add to that general government revenue, rather than to "pay its own way." No one asked if the Post Office was "making a profit" for the same reason no one asks that of the U.S. military: The question doesn't apply.

Things changed in 1971, when Congress restructured the U.S. Post Office into the U.S. Postal Service, and required it to fund its operations entirely with its own revenue. There was no hard economic reason for hiving the Postal Service off from general government funding. Nevertheless, this division became the conceptual basis for treating the U.S. Postal Service as a market participant, same as a private business, that needs to keep its finances in the black.

Except the Postal Service wasn't really transformed into the equivalent of a market firm: It's still required to provide mail service to every corner of the country, for one thing. Its private rivals — FedEx, UPS, Amazon, etc. — are under no such obligation. If you live out in the rural hinterlands, and providing you service isn't profitable, those companies simply don't run delivery routes out to you. Only the U.S. Postal Service does. The agency also retains a legal monopoly over certain basic mail services like letter delivery. The idea being that, if the Postal Service's legal mission requires it to do things private firms wouldn't do, it should also have some built-in market advantages to make up for that handicap.

The problem is that, in the last few decades, the basic mail services the Postal Service has a monopoly on, and that long provided its financial foundation, have been hit hard. There's been competition from those private rivals in the areas they do serve, and the rise of the internet has cut way down on physical letters.

In 2006, Congress also passed a law requiring the U.S. Postal Service to make sure all its likely pension costs are funded for the next 75 years. That's an enormous financial burden that virtually no one else — be they a government agency or a private company — imposes on themselves, because it makes no economic sense. (That hasn't stopped bad-faith arguments that the agency's inability to meet those funding requirements somehow proves its inefficiency.) In fact, that 2006 law created the overwhelming bulk of the U.S. Postal Service's current money woes; the challenges posed by private competitors and the internet are trivial by comparison.

The combined impact of all this meant the Postal Service was already going to go broke in a few years. The arrival of the coronavirus pandemic simply took the agency's slow bleed from falling mail volumes and kicked it into overdrive.

Now, back in 2018, Trump's Treasury Department recommended fixing these long-term problems by, among other things, abandoning the Postal Service's commitment to universality and charging variable rates. (Right now, every American pays the same fee for weight no matter where they are geographically. Under this solution, if you're out in a remote rural location, you could be priced out of using the Postal Service entirely.) More recently, when he rejected the Democrats' proposal, Trump said the Postal Service should charge firms like FedEx and Amazon higher fees to deliver their packages: Because they don't serve some areas themselves, those companies pay the Postal Service to deliver their packages and close the gap. The trouble with this idea is that if the Postal Service increased what it charges, it would likely lose that business entirely. And it needs those fees to stay afloat.

The basic point here is that treating the Postal Service as a "market participant" that's separate from the rest of the government is the root of all these evils. Economically, this division makes no sense; it causes all sorts of confusion in how policymakers think about the Postal Service's needs and challenges; and it's in tension with the agency's fundamental patriotic commitment to knit the country together with universal mail service, deterred by "neither snow nor rain nor heat nor gloom of night."

Nor pandemics, either: Nineteen Postal workers had died of COVID-19 as of Saturday, 500 had been infected (with another 462 presumed infected), and 6,000 had self-quarantined. For millions of Americans, the agency's services remain essential for staying in contact with loved ones and getting needs like food and medicine — for many lower-income and rural Americans, it's the only option. The Postal Service will be critical to getting out the $1,200-per-person cash aid Congress recently passed. And if the pandemic continues through November, necessitating a national vote-by-mail effort, the Postal Service will literally be the lifeline for millions of Americans to participate in their basic right to vote.

So the Democrats aren't wrong that the Postal Service should get government help. But that doesn't go far enough: the very request for aid buys into the notion that the Postal Service should be thought of as something separate from the government. It shouldn't be, and the damage wreaked on our society by the coronavirus ought make it clear why. We should undo the restructuring of 1971, and make the Post Office a U.S. government department again — a universal public service that helps tie America's social fabric, its democracy, and its citizens together.

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