Separating Fact From Fiction On Trump And The Post Office – And Why It Matters

Let’s review some of the assertions being made about Trump and the Post Office recently, shall we?

Trump admits blocking Postal Service funding to undercut vote by mail.Atlanta Journal-Constitution, as reprinted from the Los Angeles Times, August 13, 2020.

“President Donald Trump said Thursday that he would block a funding boost for the U.S. Postal Service to handle an expected flood of mail-in ballots in coming weeks, admitting it’s part of a White House effort to limit Americans voting by mail and raising the chances of chaos surrounding the election in November.”

This is based on an interview at Fox Business with Maria Bartiromo, as cited in more detail at CNN.

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“They want $3.5 billion for something that will turn out to be fraudulent, that’s election money basically. They want $3.5 trillion — billion dollars for the mail-in votes, OK, universal mail-in ballots, $3.5 trillion. They want $25 billion, billion, for the Post Office. Now they need that money in order to have the Post Office work so it can take all of these millions and millions of ballots. . . . Now, if we don’t make a deal, that means they don’t get the money. That means they can’t have universal mail-in voting, they just can’t have it. So, you know, sort of a crazy thing. Very interesting.”

But what does Trump mean? Chris Cillizza says that “Trump refuses to give them that money — or include it in any sort of deal — because, without it, there won’t be the ability for the people to cast more mail-in ballots, or — and this is really important — for election officials to effectively count them all.”

Here are some excerpts from another version of his thoughts on the issue, at his August 13 press briefing:

“So, they want $25 billion, and they want — think of this: They want $3.5 billion. Would you say that’s enough to cover it? I think we could do it for less, right? I think we could do it for less. But they want $25 billion for the Post Office because of this. . . .

“But they turned down this bill because they want radical-left agenda items that nobody in their right mind would approve. . . . And the bill is not going to happen because they don’t even want to talk about it because we can’t give them the kind of ridiculous things that they want that have nothing to do with [Covid-19]. So, therefore, they don’t have the money to do the universal mail-in voting. So, therefore, they can’t do it, I guess. Right?”

What is Trump saying? Yes, for the most part, it’s incoherent — but it sounds far more like an attempted negotiating stance than an admission of seeking to “raise the chances of chaos.”

A Politico article today explained,

“House Democrats included $25 billion for the USPS in their coronavirus bill in May, along with an additional $3.6 billion in election security funding. The White House and Democratic leaders tentatively agreed to as much as $10 billion for the Postal Service in their negotiations, but that was contingent on the rest of the agreement being nailed down, which wasn’t anywhere near happening.”

Postal Service warns 46 states their voters could be disenfranchised by delayed mail-in ballots,” Washington Post, August 14, 2020.

“Anticipating an avalanche of absentee ballots, the U.S. Postal Service recently sent detailed letters to 46 states and D.C. warning that it cannot guarantee all ballots cast by mail for the November election will arrive in time to be counted — adding another layer of uncertainty ahead of the high-stakes presidential contest.

“The letters sketch a grim possibility for the tens of millions of Americans eligible for a mail-in ballot this fall: Even if people follow all of their state’s election rules, the pace of Postal Service delivery may disqualify their votes.”

Reporting on these letters stoke fears that the Post Office has become so chronically late that it cannot handle the obligation to deliver ballots to voters and subsequently back to election officials, thus “disenfranchising” voters (that is, with the connotation that this is a deliberate act to deprive Americans of their vote), yet the letters themselves matter-of-factly lay out the expected delivery times plus allowance for contingencies, and whether a given states’ deadlines for requesting and mailing-in ballots are reasonable in light of those times. For instance, in Maine, voters are permitted to request absentee ballots as late as the third business day before the election, in Montana the day before, and so on.

“. . . the U.S. Postal Service is required to pre-fund retirement for employees in a way other businesses are not,” from “Wait, so what’s happening with the Post Office?”, as published at the Chicago Tribune, August 15, 2020, as a reprint from the Associated Press.

Yes, we’ve been through this before — see my April 14 “Post Office Pensions: Some Key Myths And Facts” for a detailed explanation. The short version is that the Post Office, like all private companies, is required to advance-fund its pensions. All private companies are likewise required to account for their obligations to provide retiree medical, to the extent that they have made this commitment — which means that these liabilities show up as debt on their balance sheet, and the annual interest accrual on that debt shows up as expense, so that the Post Office is in the same boat as its competitors with respect to its profit or loss in the year. The key difference is that because the Post Office is essentially locked into providing retiree medical benefits in a way that isn’t true for its private competitors, it has been required to advance-fund them, but, even so, since 2009, it has not actually been paying into the fund so that the on-paper “funding requirement” doesn’t actually affect its cash flow. Now, there are some particular elements of the requirements that one can point to — a lower discount rate that boosts their expense, for example — but the claims that they are obliged to fund pensions for as-yet-unborn workers are particularly egregiously wrong.

The Post Office has lost money for years, though advocates emphasize it’s a subsidized government service rather than a profit-maximizing business like FedEx or other competitors — which are not under an obligation to provide services everywhere at fixed costs.” — the same Tribune/AP article.

Yikes.

Many of the issues at the USPS I don’t purport to have any expertise on. How much does it need in the way of support for covid-related costs, such as for sanitizing or workers on sick leave? What sort of bargains should it strike with companies such as Amazon? Is the new postmaster general Louis DeJoy competently reforming a troubled organization, or indifferent to the obligation of the Post Office to deliver the mail in a timely manner? Are the mail-in ballot woes a sign that the Post Office is now newly-mismanaged, or are we only now noticing or caring? (As an incidental data point, a top hit in a quick online search was an article bemoaning mail delays — from 2015.) I note that even measuring the decade from 2010 to 2019, stamped “single piece” first-class mail volume had dropped nearly in half — from 28.9 billion in stamped mail in 2010 to 16.5 billion in 2019, while the shipping/package volume doubled, from 3.1 billion in 2010 to 6.2 billion in 2019. It’s also the case that our stamp prices appear to be on the cheaper end compared to other countries — and, as they say, you get what you pay for. (In Germany, you’d pay a dollar for a stamp, in France a little more, compared to our $0.55.)

But that single sentence startled me more than the usual claims that “it’s all due to an unfair pension requirement” or the new refrain that “Trump is out to destroy the Post Office.”

Again:

Advocates emphasize it’s a subsidized government service” —

Just this past Thursday I lamented that too many Americans and pundits and politicians more specifically want to “have their cake and eat it too” with respect to Social Security, wanting to simultaneously believe that they paid for their Social Security, fair and square, while at the same time calling for the wealthy to subsidize everyone else and for tax boosts to be immediately paid out in benefit hikes rather than funding future benefits. And the same issue troubles me here.

If this new perception of the Post Office is now mainstream, that it is a “subsidized government service” rather than a quasi-private entity expected to cover its costs, that’s a substantial shift and something we need to talk about. Yes, there has always been an element of subsidy, as the Post Office’s rates are designed to require city-dwellers to subsidize country folk by paying the same postage rates even though their mail is cheaper to deliver. (Heck, living as I do in an older suburb where the mail carriers still walk from house to house, I’ve occasionally wondered how much cross-subsidy my mail carrier’s route entails, relative to the folks a mile or two down the road with at-the-street mailboxes serviced by mail trucks.) But we have not, as Americans, generally thought of the Post Office as subsidized. Now, American (Democratic) politicians are using the same rhetoric about the Post Office as for any other government agency, for instance, in a letter from Speaker Pelosi and the House Democrats to Postmaster General Louis DeJoy, on August 12:

“The Postal Service provides critical services for the American people: delivering medicine to seniors, paychecks to workers, tax refunds to millions and absentee ballots to voters.”

And, again, nowhere in any discussion of the USPS’s financial health is the question of whether those stamp prices are simply too low for the task at hand.

If we have a new consensus that mail delivery should be subsidized, and the stamps we purchase should not in aggregate cover the entire cost, if we are now beginning to think of mail delivery as some sort of “social insurance” program, then we need to be open about this expectation, and think about what it means. Should, for instance, delivery to rural areas should be subsidized not by city-dwellers but directly by taxpayers? Should crucial, costly medications delivered by government programs, be delivered by trackable mail options (with the government footing the bill)? (Paychecks are not actually a relevant concern, as they are almost entirely direct deposited or delivered in-person, and Social Security checks are likewise direct-deposited in over 99% of cases.)

And that’s a much bigger and longer-term question than that of mail-in voting deadlines. The fact that we appear frustratingly incapable of honest discussions on Social Security, and that we likewise appear to be unable to have a discussion about how much mail delivery actually costs and who and how we should pay for it, are two sides of the same coin.

As always, you’re invited to comment at JaneTheActuary.com!

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