Biden inherited a USPS crisis. Here’s how Democrats want to fix it.
The Washington Post
Washington, February 6, 2021
Tags: Good Government
By Jacob Bogage, Kevin Schaul
On one side is Postmaster General Louis DeJoy, who, with the backing of the U.S. Postal Service’s governing board, is expected as soon as next week to outline a new vision for the agency, one that includes more service cuts, higher and region-specific pricing, and lower delivery expectations.
But congressional Democrats are pressing President Biden to install new board members, creating a majority bloc that could oust DeJoy, a Trump loyalist whose aggressive cost-cutting over the summer has been singled out for much of the performance decline. The fight over the agency’s future is expected to be fraught and protracted, leaving Americans with unreliable mail delivery for the foreseeable future.
Meanwhile, customers are fuming on social media and to postal workers about late holiday packages and days-long delivery gaps. Only 38 percent of nonlocal first-class mail arrived on time in late December, compared with 92 percent in the year-ago period, according to data reported in federal voting lawsuits. The agency has not disclosed performance data in 2021.
“One of the biggest problems the Postal Service has is its own fault,” said John McHugh, chairman of the Package Coalition, an advocacy group of businesses that rely on mail delivery, and a former Army secretary and GOP congressman. “It has historically done its job so well that you got to a point that the American people never questioned the Postal Service. … When something in your life is so important and it’s under pressure, you begin to worry about it in ways you never had to before.”
The Postal Service is one of most logistically complex operations in government, ferrying billions of letters and packages a year. For decades, it has done so reliably; in April, three months before DeJoy took over, 91 percent of respondents polled by Pew Research had favorable views of the agency.
Boosters consider it a tentpole of the middle class, offering stable wages and benefits to its 644,000-member workforce and a low-cost shipping option to hundreds of thousands of businesses. Where some of its private-sector competitors have cut costs by hiring cheaper independent contractors, the Postal Service’s career workforce is its strength, they contend.
But the coronavirus pandemic set off a chain reaction of crises: Package volumes swelled as Americans leaned into online shopping to limit outings. DeJoy’s summer overhaul hobbled long-held delivery protocols and jettisoned hundreds of sorting machines just as the pandemic was flattening its staff.
What’s more, hundreds of millions of pieces of election mail flowed through the system during the primaries and through the November election. But DeJoy’s long support of Republican causes and million-dollar donations to President Donald Trump raised suspicions about how his postal changes might compromise ballot delivery, especially as Trump’s baseless attacks on the integrity of vote by mail grew louder.
Through it all, the Postal Service’s financial position worsened: It lost $9.2 billion in 2020, despite collecting $73.2 billion in revenue.
Democrats in Congress want a new postmaster general, which could happen only if the nine-member governing board changes. Though the administration has signaled it will move aggressively to rehabilitate the agency — Biden replaced the Republican chair of the Postal Regulatory Commission with a Democrat on Jan. 25 — there’s not much the president can do to intervene immediately in postal operations.
Representatives from the White House did not respond to requests for comment.
Through agency spokesman Dave Partenheimer, DeJoy has declined numerous interview requests. Partenheimer wrote in an email that the USPS expects service to improve as package volumes decline in the new year.
“Throughout the peak season, the Postal Service, along with the broader shipping sector, faced pressure on service performance across categories as it managed through a record of volume while also overcoming employee shortages due to the ongoing surge in COVID-19 cases, winter storms in the Northeast, as well as ongoing capacity challenges with airlifts and trucking for moving historic volumes of mail,” Partenheimer said.
Separately, lawmakers are considering an unusual accounting maneuver to give the Postal Service a nearly $100 billion credit for years of pension overpayments, according to four people familiar with the proposal, who spoke anonymously to discuss legislative plans. The move, which legislators in both the House and Senate have discussed and has not been previously reported, would shift responsibility for those funds onto the federal government.
But even that bailout wouldn’t solve the agency’s looming financial problems. The credit would eliminate a little more than half of the Postal Service’s massive $188 billion in liabilities.
Pandemic creates financial — and political — uncertainty
DeJoy, a former logistics executive, was in charge of fundraising for the Republican National Convention when he was tapped in May to replace Megan Brennan, the first woman to lead the agency.
Although she was popular with the rank and file, then-Treasury Secretary Steven Mnuchin -- injected into the agency’s operations by Trump -- deemed her not forceful enough at repairing its finances, according to several people familiar with his thinking, who spoke on the condition of anonymity to describe private conversations. The Trump-appointed board of governors acted at his behest to find a replacement.
Change came rapid-fire with DeJoy: One month in, he slashed overtime hours, prohibited late and extra mail delivery trips, and set stricter delivery schedules. More than 7.5 percent of the first-class mail was late in the five weeks that followed, data shows, after the agency weathered pandemic-related disruptions in the months earlier without service suffering.
Rep. Gerald E. Connolly (D-Va.), chairman of the House subcommittee in charge of postal issues, likened DeJoy’s changes to “deliberate sabotage” and suggested DeJoy was a patronage appointment.
Trump, meanwhile, continued to undercut the Postal Service, telling Fox News on Aug. 12 that he wanted to deny it emergency pandemic funding specifically in order to prevent mail-in voting. Throughout the election season, he routinely and baselessly accused postal workers and election officials of trashing ballots and skewing election results.
Later in August, more than 90 House Democrats called on the agency’s governing board to fire DeJoy. “He has already done considerable damage to the institution,” the group wrote, “and we believe his conflicts of interest are insurmountable.” Senate Democrats made clear they would pursue more oversight of the USPS Board of Governors — specifically Chairman Robert M. Duncan, also who leads a PAC aligned with Senate GOP Leader Mitch McConnell (Ky.) — and the postmaster general if they won control of the chamber in the November election.
DeJoy implored Trump’s campaign to ask the president to stop badmouthing the Postal Service, he told a congressional panel in late August. Privately, DeJoy bristled at scrutiny from Democrats in the House.
“Thanks, again for your support,” DeJoy wrote soon after the Aug. 24 hearing in an email to Sen. Ron Johnson (R-Wis.), who defended him over questions from Democrats in an earlier Senate hearing. The Washington Post obtained the email in an open-records request. “Made a big difference in my preparation for Monday’s BBQ in the House.”
The hearings catapulted DeJoy into the public eye and raised the hackles of some postal experts and voting rights activists. Connolly called DeJoy a “Trojan Horse” sent to disrupt the agency. “Saturday Night Live” later made him a punchline of a comedy sketch.
“Given who Trump is and given the tenor of the times and given people believe what they want to believe, it was just terrible timing for him,” said Tom Davis, the former rector of George Mason University who serves on its board of visitors, and a former GOP congressman from Virginia who helped write the 2006 postal reform bill. “Had he come in on day one and put together something, it might have worked differently. But this guy had no political finesse at all.”
Part of that inability included DeJoy’s struggle to mark the agency’s successes. The Postal Service processed a staggering 135 million mail-in ballots, a tide that political analysts say helped Biden carry Georgia and other swing states. It also moved more than 1.1 billion packages during the holiday season, a number, Partenheimer said, was that driven up by UPS and FedEx turning down business. In the last full week of December, package volume jumped 61.5 percent year over year, the agency told Congress.
Lawmakers already have embarked on postal reform discussions, including a wider proposal allowing the agency to offer non-mail services that many legislators hope will be enacted by a new postmaster general.
One Senate aide involved in postal policy discussions, who asked not to be named given the sensitivity of the conversations, described postal reform as one of Democrats’ best ways to advance their voting rights agenda, and said DeJoy inspires anger among lawmakers. “You’re going to see a push by House Democrats and Senate Democrats to demand the removal of people,” said another Senate aide.
In a Jan. 25 letter, Rep. Bill Pascrell Jr. (D-N.J.) urged Biden to fire every member of the board of governors. Rep. Tim Ryan (D-Ohio) made the same request on Jan. 29. Biden can remove governors “for cause,” which is not clearly defined by law. There is no indication the president is interested in such a move.
“The board members’ refusal to oppose the worst destruction ever inflicted on the Postal Service was a betrayal of their duties and unquestionably constitutes good cause for their removal,” Pascrell wrote.
DeJoy has told mail industry officials he intends to remain in office to roll out an agency reorganization as soon as next week. The plan, parts of which were outlined to a Senate panel in August, includes geographic pricing and longer delivery windows. He’s entertained leasing out Postal Service properties and offering non-mailing services, such as private financial services.
Partenheimer, the spokesman, said DeJoy’s plan would sustain six- and seven-day delivery, and “strengthen the Postal Service as a self-sustaining federal entity.”
“Absent substantial changes, our financial losses will continue to widen,” he said, “and our ability to invest in the future of the organization and deliver for the American people will be severely curtailed.”
The president’s most linear path to mail changes is by appointing governors to the agency’s nine-member board. Agency operations are specifically insulated from elected leaders to prevent politicians from tinkering with the mail service, postal historians say. Governors are confirmed by the Senate and serve staggered seven-year terms. No more than five members may belong to the same party.
Biden has three seats to fill, and could also replace Ron Bloom, a Democrat serving a one-year holdover term. Those four seats, plus sitting Democrat Donald Lee Moak, could give Democrats the votes to unseat DeJoy, if desired. Securing that majority may be months away, as the administration prioritizes Cabinet and sub-Cabinet nominations.
The president also could push Congress to pass reform legislation for the first time since the 2006 bill that created the Postal Service’s prefunded retiree health-care obligation. Members of both parties in the House and Senate introduced legislation Monday to repeal that requirement and allow the Postal Service to pay off health-care costs annually, as most private corporations and government agencies do. That legislation passed the House in the last Congress but failed in the Senate.
The Postal Service, Partenheimer said, favors integrating retiree health-care costs into Medicare, which would shift tens of billions of dollars worth of obligations off the mail service and onto taxpayers.
That repeal, combined with elevated package volumes and a new postage rate hike, could be enough, some experts say, to put the Postal Service on more stable financial footing and stave off more congressional intervention.
“Even if you had postal reform that only dealt with [pre-funding], it would take a really divisive issue off the table,” said Kevin Kosar, a resident scholar at the American Enterprise Institute, a right-leaning think tank. “It’s an elegant solution that appeals to the left and the right because no stakeholder has to suffer.”
The Postal Service has $16.7 billion on hand. That’s enough to sustain payroll — about $2 billion biweekly — according to experts on the agency’s finances. Funding future investments, though, they say, would require another appropriation from Congress, one in line with the board of governors’ $79 billion request from the early days of the pandemic.
Partenheimer said the agency asked Congress for $10 billion in borrowing authority and is considering requesting another modernization grant.
The agency also needs a new fleet. Its trucks, the oldest of which are close to 30 years old and known to catch fire, need the ability to transport more parcels than paper mail, and reduce fuel expenses and carbon emissions. It also wants new sorting machinery to handle boxes of varying weights and sizes.
Congressional Democrats say the basic framework of a $25 billion grant and another $25 billion in new borrowing authority are likely starting points, according to aides in both chambers who spoke on the condition of anonymity to discuss details of potential legislation.
Lawmakers also are considering giving the agency credit for years of overpayments to the Civil Service Retirement System, the federal pension program that covered workers until 1983, according to four people involved in the deliberations, who spoke on the condition of anonymity to discuss legislative plans.
Postal officials argue that when Congress spun the Postal Service into a self-sustaining agency in 1971, the federal government did not contribute its fair share to the pension fund, and the mail agency is entitled to between $80 billion and $110 billion in repayment, according to inspector general and Postal Regulatory Commission reports.
But some postal experts worry that a credit to the Postal Service would not remedy substantial problems with its business, namely that it must deliver to every corner of the country six days a week without enough mail to cover the cost of those trips.
Performance problems and virus could endure
Without swift action, the crisis at the Postal Service threatens to become dire. On shop room floors in Cleveland and Detroit, employees have voiced concerns that stacks of mail block emergency exits, according to workers who spoke on the condition of anonymity to avoid retribution. Staffers have to shove crates of mail out of the way to clear narrow walkways.
In Toledo, facilities are three weeks behind, said Jennifer Lemke, the clerk craft director at American Postal Workers Union Local 170 in northern Ohio.
The agency aims to process first-class mail with a 96 percent on-time score, and marketing mail — such as coupons and advertisements — at 92 percent. But neither class has hit those marks since July. Patients and pharmacists have complained about late medications, and residents say they are getting dinged for late mortgage and utility payments.
“I mailed my bills the beginning of this month and today I heard from four entities that they did not receive my payments. This is causing me [to incur] late fees and damage to my credit score. A friend of mine has had the same problem,” a Maryland resident wrote to Sen. Chris Van Hollen (D-Md.), according to a letter to DeJoy.
Coronavirus infections among postal staff have spiked. For every employee infected, roughly three are forced to isolate, according to data from the American Postal Workers Union. More than 16,000 employees are under quarantine this week after testing positive for the coronavirus or coming in contact with someone who had.
The ratio jumps in local post offices, said national union officials who spoke on the condition of anonymity to describe the data, because heating and air conditioning units in smaller facilities tend to recycle air rather than heat or cool air pumped from outside the building.
Labor leaders say they’re encouraged by DeJoy’s plans to convert 10,000 non-career employees to full-time status in mail processing, and extend thousands more seasonal workers beyond the holidays to spell an exhausted workforce. Those hires, though, are too far off to immediately alleviate mail delays.
“Hopefully there’s been some awakening,” said Mark Dimondstein, the APWU’s national president, “that those things that he said he was going to do and some of the things that he did do, it’s not going to work for the people of the country.”https://www.washingtonpost.com/graphics/2021/business/usps-performance-whats-next-biden/