Biden stiff arms progressives on the Postal Service

President Biden has sent a clear message to progressives regarding the U.S. Postal Service (USPS): major change is out, and Trump fundraiser Louis DeJoy can stay as postmaster general for the next few years. He will lead 21 percent of the federal civilian workforce.

The president did this by nominating two highly impressive, accomplished public servants — Dan Tangherlini and Derek Kan — to serve on USPS’s Board of Governors, i.e., its board of directors.

The Board of Governors, not President Biden, has the authority to fire and hire the postmaster general. So, while Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wis.), and dozens of members of Congress have demanded DeJoy be fired, he is staying in place.

With the likely confirmation of Tangherlini and Kan, Biden will have five nominees on the full board versus four from President Trump. But Kan is a Republican who worked in the Trump administration and for Sen. Mitch McConnell (R-Ky.), making him unlikely to remove DeJoy. And at least two of Biden’s other confirmed nominees have shown no inclination to remove DeJoy.

By law, no more than five of the nine governors with voting power to remove a postmaster general can be from the same political party. The Board’s vast duties, which include directing and controlling expenditures and setting policies on all postal matters, make the job poorly suited for one-agenda, political hacks.

For these and other reasons, Biden’s choices are practical and appropriate. And for progressives, the DeJoy nightmare could soon get much worse.

There has been visible consternation among House Democrats as DeJoy has refused to purchase a large amount of electric vehicles to replace USPS’s fleet, even though USPS has more than $20 billion in cash. DeJoy has played Democrats like a fiddle, promising more electric vehicles but only if the funds are provided by Congress, which many Democrats are determined to do.

Congress is considering the Postal Service Reform Act (PSRA), the heart of which will provide $46 billion in financial relief to USPS. Passage of the legislation is a critical component of DeJoy’s 10-year plan, which also includes slowing 40 percent of first-class mail and expanding commercial package delivery.

The legislation will give DeJoy vast resources with which to work. It would come on top of a $10 billion COVID grant that USPS received as part of the December 2020 COVID package even though its revenues have risen significantly in the pandemic. And USPS’s work to distribute COVID testing kits will also provide additional cash.

While DeJoy, a successful private sector logistics executive, was a major fundraiser and donor for Donald Trump and the Republican Party, his policies as Postmaster General have seldom been conservative.

Republicans took strong issue with DeJoy when he implemented an experimental postal banking program in October 2021.

DeJoy’s push for the PSRA follows Democrats holding a special Saturday session of Congress on Aug. 22, 2020, demanding $25 billion in assistance to USPS while warning the election might not proceed smoothly because of mail-in ballot voting disruptions. The measure passed the House but was not enacted into law and the USPS still delivered election mail in model fashion. 

Under DeJoy’s leadership, USPS recently reached a three-year labor agreement with the American Postal Workers Union that includes wage increases above inflation for the next three years. No wonder APWU President Mark Dimondstein said, “This is great news.” And with inflation raging, those increases, and the costs to USPS and its customers, will likely be high.

As it did before DeJoy came into office in June 2020, USPS continues to under charge its large package customers. In its Annual Compliance Report, issued on Dec. 29, USPS reports that packages were again far less profitable than first-class or marketing mail.

In addition, USPS determined packages accounted for 39 percent of institutional costs even though they were 44 percent of revenues. Yet, packages are bulkier and more expensive to deliver than mail. Last year, USPS also made almost all its sizable capital investments in package services. 

A key step to fix USPS for the long-term is to have it better identify and track costs and price products accordingly, through modern, cutting-edge data analytics and related systems. This does far more than slowing 40 percent of first-class mail, particularly to rural America.

On its current course, USPS is likely to be again asking Congress for more money in coming years, even with passage of the Postal Service Reform Act. And there is a good chance Louis DeJoy will still be postmaster general.

Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Va.