Privatize the Postal Service? It’s Not as Easy as You Might Think

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Donald Trump has expressed an interest in privatizing the U.S. Postal Service. Most conservatives look at the bloated, mismanaged, debt-ridden Postal Service as a white elephant, ripe for privatization and a cut-off in government subsidies.

If only it were that simple.

Connecting 330 million people is a stupendous undertaking. There is absolutely no doubt that the Postal Service needs major reform.More than that, it needs to reinvent itself, something it should have done 20 years ago.

Casey Mulligan, who served in the first Trump administration, told the Washington Post, “The government is slow, slow, slow — decades slow on adopting new ways of doing things, and there’s a lot of [other] carrier services that became legal in the ’70s that are doing things so much better with increased volumes and reduced costs.”

How to revolutionize such a hidebound relic has to be figured out for the simple fact that there is no alternative to Rural Free Delivery (RFD). Millions of people rely on RFD, and the only alternative is to return to the 19th century and require most rural residents living in areas where it’s unprofitable to deliver mail to pick up the mail themselves.  

Forty-one million Americans rely on Rural Free Delivery. As of 2022, the USPS had about 133,000 rural letter carriers serving 80,000 rural routes. 

The Postal Service lost $9.5 billion in the fiscal year ending Sept. 30, stung by continued declines in mail volume and a slower-than-anticipated parcel shipping business, even as it made major new investments in modernized facilities and equipment. The agency faces nearly $80 billion in liabilities, according to its annual financial report.

Cuts to the Postal Service could upend the trillion-dollar e-commerce industry, hitting small businesses and rural consumers whose businesses and budgets make the agency the shipper of choice. Amazon, the Postal Service’s largest customer, uses the agency for “last-mile” delivery between its hulking product fulfillment centers and consumers’ homes and businesses. (Amazon founder Jeff Bezos owns The Washington Post.) And the agency’s “universal service obligation” — which requires it to deliver mail or parcels regardless of distance or profitability concerns — means it is often the only carrier that will deliver to far-flung reaches of the country.

Certainly, some labor reform is in order. USPS work rules not only stifle innovation that would ease a transition to modernity but make other reforms impossible. It’s time for the postal workers’ union to end its opposition to entering the 21st century or they will find themselves on the street.

The Postal Service is in the midst of a 10-year modernization program. Most of it is smoke and mirrors. There’s a reason that FedEx, UPS, and other private carriers can operate at a profit: they aren’t chained by regulations to operate on specific timetables for processing and delivery. In fact, the 19th-century way that the Postal Service is governed makes changing anything a literal federal case. The USPS is governed by a nine-member Board of Governors and a Postal Regulatory Commission

Postmaster General Luis DeJoy issued a statement last week that was more aspirational than realistic.

“The United States Postal Service is already engaged in an initiative to ensure that we can provide our customers with a high level of service to every delivery address in the nation at least 6-days-a-week in an efficient and financially sustainable fashion as required by law,” the statement said.

Trump does not possess the authority as president to unilaterally privatize the USPS. Since the Postal Service was created by Congress, there would have to be some kind of enabling legislation to take it private. This is especially true if the “universal service obligation” (USO) — the requirement that reliable, affordable, and efficient postal services are available to all Americans  — is to be changed or eliminated.

There are so many impediments to having a fast, efficient, cost-effective Postal Service that whatever reforms are attempted will likely result in howls of outrage from Democrats and some Republicans. Change will be hard. And the American people are demanding it.