We’re currently getting a vivid, painful reminder of why we need a public sector. The collapse of public services, in particular the provision of public health, has torpedoed the entire economy as a deadly pandemic ravages the country. The end of the road in our current devolution may be the assault on one of our oldest public institutions — the venerable and very popular U.S. Postal Service.
The internet has come to take on much of how we communicate in the 21st Century, but the fact remains that Americans still rely heavily on the delivery of physical correspondence. And it’s not just assistance checks and life-saving medication, all kinds of commerce in private goods is facilitated to a significant extent by the Postal Service’s package delivery. Transport of periodicals, the business of non-profit organizations, and now the very feasibility of our national elections, also all depend on a well-functioning Postal Service.
There has been a cascade of well-founded furor over President Trump’s blatant sabotage of the mail in order to benefit him politically. But focusing only on Trump’s current attacks obscures the bipartisan, neoliberal roots of the current crisis.
Following the U.S. postal strike of 1970, Congress—including Republicans and Democrats — passed the Postal Reorganization Act, which separated the agency from the federal government as an independent, quasi-public corporation. One upside of the change was that postal workers won collective bargaining rights, and the service was largely able to function and escape controversy for decades afterwards. Yet it also ensured that the Postal Service would be run “like a business.”
The 1990s were a period of retrenchment in the public sector. Democratic President Bill Clinton declared, “The era of Big Government is over.” Vice President Al Gore crusaded to “reinvent government.” The administration boasted of its efforts to reduce the number of federal employees, and privatization and shrinking of certain public services became the cause-celebre. The Democratic Leadership Council, also known as ‘New Democrats,’ put much of their faith in markets rather than government.
It could not have been surprising that the neoliberal gunsights later became trained on the U.S. Postal Service. Clinton administration alumna Elaine Kamarck, a leader in Al Gore’s reinventing government project, subsequently called for privatization of the Postal Service.
In 2012, President Barack Obama’s former head of the Office of Management and Budget, Peter Orszag, also advocated privatization of the Postal Service. Among the Obama administration’s lapses was the failure to appoint its own majority to the Postal Service Board of Governors (BoG). Unfortunately, Obama’s failure to exercise his appointment power was a pattern that affected multiple government institutions. Postal Service employment itself was reduced by almost 20 percent during Obama’s time in office.
Obama ended up nominating Bush administration holdovers to the BoG that were rejected by a coalition of progressive organizations, including La Raza, the Leadership Conference on Civil Rights, the NAACP, the National Urban League, the AFL-CIO, and postal workers’ unions.
Recently, the objection at the time of Sen. Bernie Sanders to these Obama nominations, on the grounds that they threatened the future of the agency, was said by both MSNBC commentator Jason Johnson
and Daily Kos blogger Markos Moulitsas to have helped cause the current dysfunction at the Postal Service. It should not be surprising that, despite such specious rewriting of history, Sanders actually had the strong support of postal workers themselves.
From its defensive crouch, the Postal Service now attempts to shore up its political support by pledging that it does not require “tax dollars” to function. Its leadership is now saying that once the current hit to its finances due to the coronavirus is remediated, the agency will be able operate as a stand-alone enterprise.
From an economic standpoint, there is no reason a postal service must run a profit. As many commentators have pointed out, this constraint is applied selectively, out of ideological prejudices. Nobody requires the Department of Defense to turn a profit. (For this we should probably be grateful.)
The traditional rationale for subsidizing a postal service goes by the principle of “universal service.” The bonds of a nation are strengthened by the ability to communicate on paper, at nominal cost, with any residential address in the country. In economics, the technical buzzword for this is “network externalities.” All members of a network benefit from direct links to other members, even if they are seldom or even never taken advantage of.
The universal service commitment makes possible the provision of regular mail delivery to relatively isolated rural locations. If the Postal Service were an unregulated, profit-making concern, mail delivery would cost a premium for customers in such areas. That is why, when push comes to shove, you can find conservative members of Congress from rural districts sticking up for their relatively costly local post offices and mail routes.
The problem with a pledge to reject “tax dollars” became evident with the Postal Accountability and Enhancement Act of 2006, passed in a lame-duck Congress by unanimous consent, by Republicans and Democrats alike. One of the original sponsors was Rep. Henry Waxman (D-Calif.), a long-time liberal stalwart in the House of Representatives.
Among other changes, the act required the Postal Service to put aside money for the health benefits of future retirees, leading inexorably to budget pressure on current operating expenditures and justifications for service cuts: fewer postal workers, less overtime, decommissioning mail-sorting machines, and shorter window hours at the nation’s post offices add up to less timely and reliable service.
Now, in the heat of a national election with a greatly expanded use of mail-in voting, problems should be expected. The spurious notion of a stand-alone agency also means that any infusion of funds from general tax revenue, otherwise justifiable in economic terms, can be stigmatized as a “bail-out.”
The point here is that the spurious notion that the U.S. Postal Service should be financially self-sufficient — which goes back decades — helped give rise to the ability of Trump’s crony in charge of the Post Office, the conflict-of-interest-ridden Louis DeJoy, to cut services in the name of accounting solvency. For his part, Trump has acknowledged openly that his refusal to provide necessary supplementary funds to ensure effective delivery of the mail is founded on his determination to frustrate the vote-by-mail system.
In the wake of the uproar over mail sabotage, public pressure has apparently forced DeJoy to defer some service cuts until after the election. To make sure this pledge is honored, we will have to keep a clear eye on the actual progress, on the ground, in preparing for the election. Fortunately, unionized postal workers will be essential allies in monitoring the integrity of Postal Service management. Pending the successful removal of the current administration, a forthright rejuvenation of the U.S. Postal Service can commence, in which we finally cast off the unfounded accounting imperatives that cripple its operations.
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Max B. Sawicky is a retired economist and writer in Virginia. He is a Senior Research Fellow at the Center for Economic and Policy Research.