Now He Is All-In on Postmaster General Louis DeJoy’s Corrosive Plan to Charge More for Slower U.S. Mail
By Lisa Graves and Evan Vorpahl, True North Research and BOLD ReThink
Newly examined materials underscore the concerns of having a partner at a private equity firm help oversee the U.S. Postal Service. True North Research recently detailed the privatization ambitions of Brookfield Asset Management (BAM), the for-profit firm Ron Bloom helps lead while he also acts as the Chair of the Board of Governors for the U.S. Postal Service.
Where We Are. Bloom is a Managing Partner at BAM, one of the largest alternative asset firms in the world. He and three other investment bankers were chosen by Donald Trump to sit on the Board of the Postal Service after Senator Mitch McConnell (R-KY) refused to schedule a vote on President Obama’s nominees to that Board for several years (and Senator Bernie Sanders (I-VT) objected to a Koch-tied privatizer Sen. McConnell had backed for the Board: James C. Miller).
Bloom’s board term expired last December, so he is a holdover governor of the Postal Service and he is also its chair. Unless President Biden appoints a replacement, the Board could vote to extend Bloom’s term. The Board, which includes DeJoy, continues to be stacked with a majority of Trump appointees, including one of Sen. McConnell’s fundraisers. They have the votes to extend the soon-to-expire term of another one of the bankers Trump tapped, John Barger. Unless Biden appoints additional members, DeJoy could remain in charge through the next presidential election.
There is no term limit for Postmaster General in current law. Recent Supreme Court decisions suggest the president could fire him, even though Congress changed the Postmaster General from a cabinet post to one appointed by the Board of an independent federal agency. There is no record of the House impeaching an appointee to head an agency who was not confirmed by the Senate.
A More Perfect Union and the Save the Post Office Coalition have urged that DeJoy and Bloom be removed “to prevent further damage and save the U.S. Postal Service.” Porter McConnell of Take on Wall Street and a co-founder of the Coalition noted:
“Profit shouldn’t be the goal of the United States Postal Service … The USPS’s goal should be to fulfill its public service mandate. We can do this by making sure the mail is delivered on time and giving the USPS the people and the technology to expand its services; to be a true community hub for the twenty-first century… President Biden has the power to remake the postal governing board and remove DeJoy. He must act soon to name two new governors who understand the Postal Service is essential and must be strengthened as a beloved public institution.”
More information about this is described in their new video, which is available here. MoveOn also has petitions about the Postal Service where people can take actions to help protect the Postal Service here. (True North Research and BOLD ReThink have signed on to these petitions and also called for new Postal leadership.)
What Is at Stake. The public has a compelling interest in better leadership for the Postal Service. In our view, ethics and oversight officials have failed to protect this vital public service from the appearance of conflicts of interest resulting from DeJoy’s multi-million-dollar leases with a contractor of the Postal Service, the investments of Bloom’s firm in that contractor, and DeJoy’s investments in Bloom’s firm—as detailed by Jacob Bogage in the Washington Post.
Since DeJoy became Postmaster in June 2020, the Postal Service has been plagued by bad decisions that resulted in massive mail delivery delays before the election and over the winter holidays. This has shaken public confidence in the reliability of the mail even though the Postal Service has historically been the most popular agency in the federal government.
The future of this public institution that millions and millions of people rely on is what is at stake.
Unnecessary Risks. One of the needless hazards the public is facing right now is the seemingly destructive plan that DeJoy and Bloom are implementing that will degrade the reliability and speed of first class mail delivery.
Another needless hazard the public is facing is that there is nothing to prevent Bloom’s firm from later profiting from any future partial or full privatization of the Postal Service resulting from downward demand for mail that is accelerated by charging Americans more for slower, less reliable mail.
Notably, Bloom’s prior employer, Lazard, profited handsomely from investing in the privatization of the Royal Mail less than a decade ago. It is also noteworthy that, after waiting a year following the end of his work in the Obama administration on Fiat’s acquisition of Chrysler, Bloom went to work as a leader of Lazard on the continuation of Fiat’s acquisition of Chrysler. There is no evidence that Bloom violated any ethical laws in doing so. However, this example underscores how easily Bloom could parlay his time on the Postal Board into later helping his firm or other firms benefit from consulting about the Postal Service’s potential privatization of key logistics components or pension funds based on his public role on its Board.
Bloom’s firm is currently invested in XPO (which has expanded and rebranded as GPO), a postal contractor that was recently awarded a $100+ million contract to outsource significant logistics work, as detailed by the Washington Post. DeJoy said he was not the decisionmaker on that controversial outsourcing to a corporation he has a lucrative logistics leasing arrangement with and that he previously led. Bloom has said that he does not benefit financially from DeJoy’s investments in the firm Bloom helps lead. There is no evidence Bloom was involved in his firm’s decision to invest in XPO. There is also no public financial disclosure that details how or how much Bloom is compensated by the work of the private asset investment firm he helps lead.
The complexity and opacity of these overlapping financial ties and the potential for future windfalls pose unacceptable risks to the American people that the public’s interest in having a truly public mail service will not survive DeJoy’s management, which Bloom continues to back.
As True North previously noted, the current lack of required transparency over such matters for any Postal Service governor makes it difficult for Congress to exercise meaningful oversight.
Here is additional information about Bloom’s work for Lazard and related matters.
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BACKGROUNDER ON LAZARD’S PROJECTS DURING RON BLOOM’S TENURE
Ron Bloom’s short bio is well known—a career in banking, advisor to some unions, and an aide to President Obama’s efforts to save Detroit automakers after investment banks crashed the economy in 2008—but that description is incomplete.
Bloom’s current firm, Brookfield Asset Management, is strongly interested in privatizing public assets in the U.S. and abroad. Bloom’s prior firm, Lazard (NYSE: LAZ), helped privatize the Royal Mail and profited handsomely from the initial public offering. Among other things, one of Bloom’s roles was helping LAZ aid Fiat’s acquisition of Chrysler after helping with that acquisition when he previously worked for the government. More details are provided below.
Bloom Helped Lead Lazard in the US as Its UK Arm Helped Take the Royal Mail Private
In February 2012, Bloom joined LAZ, the private equity firm formerly known as Lazard Freres & Co., where he previously had worked for five years after getting an MBA from Harvard in 1985.
From 2012 to mid-2016, Bloom’s title was Vice Chairman of U.S. Investment Banking. During this period, LAZ also worked on the privatization of the Royal Mail in the U.K. and has advocated for other privatization, but whether Bloom played any role in those is not known.
A) Background on Bloom’s Work for LAZ and LAZ’s Compensation
At LAZ, Bloom parlayed his high-profile government experience with Detroit to work on three significant automotive industry-related negotiations.
Chrysler-Fiat. Bloom worked for LAZ on the 2014 completion of Fiat’s acquisition of Chrysler, a project Bloom worked on in 2009 when he was in the Obama administration where he helped Steve Rattner push Chrysler in a deal with Fiat and the United Auto Workers for joint ownership. The 2009 portion of the deal included $3.3 billion from the U.S. Treasury Department, in addition to other financial support for Chrysler. The initial agreement and final purchase were praised in the press, but the circumstances surrounding the deal later became embroiled in controversy.
In 2017, the Department of Justice pursued a criminal case against Fiat for paying gifts in violation of the Labor Management Relations Act (LMRA). In January 2021, Fiat pleaded guilty to one count of violating the LMRA and agreed to pay a $30 million fine. Fiat’s agent also pleaded guilty in exchange for a reduced prison sentence of four years. The illegal payments were made through a training center, as described in an additional case that settled. There is no indication Bloom was aware of any of the corruption behind the deal.
(Bloom did not respond to a request for comment about how his taxpayer-funded work on Fiat’s acquisition of Chrysler was distinct from his corporate-funded work on Fiat’s acquisition of Chrysler after he left government service.)
Other Deals. Bloom also worked for LAZ on the dissolution of a global tire partnership between Goodyear and Sumitomo Rubber Industries, Ltd. (SRI). A former advisor to the Steelworkers, Bloom advised for LAZ on the acquisition of an American-based steel affiliate of a German firm (ThyssenKrupp Steel USA) by two other conglomerates: ArcelorMittal of Luxembourg and Nippon Steel & Sumitomo Metal Corporation, a Japanese firm. That deal was described as helping ArcelorMittal to expand its role in supplying steel to the U.S. automotive industry and also to increase its role in producing metal pipelines for oil and methane gas distribution (contributors to the climate crisis that is underway).
Detroit. Like BAM, LAZ consists of a number of limited liability companies or groups that have financial relationships and compensation structures that are complex and relatively opaque. Bloom’s compensation from LAZ in base salary, annual cash incentives, and performance-based restricted stock units (long-term equity) were not required to be publicly disclosed as part of Bloom’s nomination to the Postal Board. However, LAZ’s compensation from a fourth deal, where Bloom was one of its representatives, is known: Detroit had agreed to pay LAZ “$175,000 a month plus a $6 million ‘success fee’ payable if Detroit successfully exited bankruptcy court.”
In response to outrage over the fees charged by several advisory firms during the largest municipal bankruptcy in U.S. history, LAZ stated it had reduced its compensation request to “$5.56 million, down from $8.44 million.” The portion or amount of those fees and bonuses, if any, paid to Bloom is not known. (Some of the other firms, like the city’s law firm, Jones Day, made much more, with the lawyers receiving nearly $60 million. In context, the lawyers advising the city’s two pension funds also received fees of around $6 million each.)
At LAZ, Bloom’s experience in government helped pave the way for seemingly significant revenue for his firm with the industry he had some oversight over while on the federal payroll, including one company he worked closely with. Accordingly, it is fair to question if and how Bloom could profit from subsequent dealings with firms that do business with the Postal Service or from parting out of the Postal Service if it were privatized in part or in whole.
It is also unclear whether any of his compensation as a leader of LAZ was subsidized in part by other work conducted by the firm during his tenure, including two notable privatization projects detailed below. (Bloom did not provide a comment in response to a question from True North Research about his compensation from LAZ.)
B) LAZ Helped Privatize the Royal Mail in 2013 and Was Engulfed in Controversy
While Bloom served as the Vice Chair of U.S. Investment Banking for LAZ, at its largest global office in New York, the firm also profited from the privatization overseas of the Royal Mail—from both fees and controversial stock trades.
The Royal Mail was a government asset for almost 500 years, since a “Master of the Posts” was established in 1516 by King Henry VIII. By 1710 that role had been renamed Postmaster General. In 1969, the Royal Mail was changed from a government agency to a government corporation. (In 1971, the U.S. Postal Service made a similar transition from an agency governed by a cabinet position to an independent government entity governed by a Board.)
After Margaret Thatcher became Prime Minister in 1979, British Telecom was split off from the Royal Mail and privatized in 1980. In her last year as Prime Minister, the Royal Mail’s banking operation, the National Giro Bank, was sold to a for-profit bank. Its Parcel Post services, which relied heavily on rail logistics, were rebranded Parcelforce in 1990. The UK’s Conservative leaders pushed to privatize it, arguing that most of its shipping customers were businesses and so it should have to compete with those businesses as a private firm, but it was not privatized then.
Koch Agenda. Notably, Charles Koch-funded groups, like Reason and the Cato Institute, have taken some credit for aiding Thatcher’s privatization push. As detailed in a report by True North Research, In the Public Interest, and the BOLD ReThink last summer, Koch staked the Reason Foundation and the focus of its leader, Robert Poole, on privatizing public assets:
According to a biographer of United Kingdom Prime Minister Margaret Thatcher, Poole’s book was seminal to her efforts to privatize or contract out key public functions—except that she refused to privatize the Royal Mail:
“The intellectual case for ’contracting out’ came from an American MIT-trained policy wonk, Bob Poole, head of the Reason Foundation in Santa Barbara and author of a little book called ’Cutting Back on City Hall’… Everything—literally everything—could be outsourced and he littered his book with examples and figures…”
Koch groups continue to push for the privatization of the U.S. Postal Service and other assets.
However, Thatcher “who privatised British Gas, British Airways, British Telecom and dozens of other state-owned institutions in the 1980s, famously refused to countenance a sale of Royal Mail, saying she was ‘not prepared to have the Queen’s head privatised.’” (Her image has been part of the Royal Mail’s brand and stamps for decades.)
In 2013, the UK did decide to privatize the Royal Mail after all, and it did so in a way that echoed one of the tactics Bloom deployed at his prior investment banking firm, Keilin and Bloom, and in his prior work for the Steelworkers: employee stock ownership plans (ESOPs). ESOPs have been used as incentives to give workers some stock as part of deals with the private sector. That tactic to sweeten the blow of privatization was used when Thatcher privatized British Gas in 1986, for example.
Nevertheless:
“[t]he Communication Workers Union (CWU) said postal workers oppose[d] privatisation, which ‘not even Thatcher dared do… Privatisation is an old-fashioned idea. We don’t believe it’s in the interests of customers, the workforce or the wider industry. We want a modern Royal Mail in full public ownership and able to deliver the universal service six days a week to all parts of the UK.”
But privatization forces prevailed due to claims that the mail would not get access to equity markets to finance operations or modernization without privatizing.
When stock in a portion of the Royal Mail was offered for sale and ownership by the private sector, 10% of the initial public offering (IPO) was reserved for Royal Mail staff. It gave 913 shares to each of its full-time employees as part of the privatization of the mail. That was worth about £1,500 each.
LAZ made much more than that from the Royal Mail IPO, as The Guardian reported in 2014:
Lazard, which was paid £1.5m by the government for flotation advice, followed its own recommendation and bought 6m shares at 330p each on the day of the float but sold them within 48 hours at 470p to reap a profit of £8.4m…. Lazard “made a killing at the expense of the ordinary taxpayer that lost £750m on day one” of Royal Mail’s London Stock Exchange debut.
[T]he government decided against increasing the flotation price of Royal Mail beyond 330p-a-share because of warnings from Lazard’s corporate advisory arm, Lazard & Co, that City funds would be put off.
On the day of the flotation, on 11 October, the shares rocketed 38% due to phenomenal demand from the City and public. They gained £750m in value in the biggest one-day rise in a privatisation since British Airways in 1987….
William Rucker, chief executive of Lazard & Co, admitted … part of the company knew that Lazard Asset Management was given “golden ticket” priority investor status, allowing its investment arm preferential access to the shares… Denying any wrongdoing [due to an internal wall between components of LAZ], Rucker pointed out that the £8.4m profit was made on behalf of clients rather than for Lazard Asset Management itself.
Lazard Asset Management was one of 16 investors given “priority investor” status that allowed them to buy [millions of shares while hundreds of thousands of ordinary people were limited to just £749 worth] of Royal Mail in the hope that they would stay with the company through thick and thin.
As a result of the controversy over the IPO, LAZ did not work with the UK government on the second public offering of the Royal Mail in 2015, when it was fully privatized. [The Royal Mail had been divided into two components, UKPIL (UK Parcels, International & Letters) and GLS (General Logistics Systems), both of which were subject to the privatizing public offerings.]
There is no indication Bloom was involved in the advice LAZ gave on pricing the IPO or the decision of LAZ’s investor arm to buy the golden ticket shares and sell them for a quick profit. (Bloom did not provide a comment in response to a request by True North Research about whether he argued against privatization of the Royal Mail when he was helping to lead LAZ.)
This episode points to some of the hazards of privatization and the complex interests of investment banks and private equity firms when it comes to public assets and the pursuit of profits or returns on investment for their super wealthy or institutional investors. After the IPO, investigators learned that three of the senior advisors to the head of the Royal Mail had previously worked for LAZ, although no wrongdoing was alleged. An audit suggested that the deal at the offering price recommended by LAZ and with the allocations for special investors cost the government, and thus taxpayers, nearly £750 million in lost revenue from the outset.
Also, despite rosy claims about privatization made by the Koch-founded Cato Institute and others, it is not popular. Most people in the UK opposed the privatization of the Royal Mail back then and now. According to a YouGov poll in 2019, almost 70% of those surveyed supported public ownership of the Royal Mail over privatization.
That level of opposition to privatization is unsurprising given the results, as noted by Labour MP Gill Furniss, the Shadow Minister for Postal Services: “Five years on the serious consequences of privatisation of this great institution are being felt more than ever by consumers, workers and the public at large whilst shareholders bag unprecedented bonuses.”
He also noted these impacts of privatizing the mail in the UK:
● Huge Executive Pay. Under privatization, Moya Greene, the head of the Royal Mail (who was the executive pre- and post-IPO) received huge compensation compared to when it was a public asset, with total compensation nearing £2 million.
● Massive Dividends Paid Out. Nearly £1 billion paid out in dividends to shareholders.
● Jobs Lost and Post Offices Closed. “[M]ore than 12,000 Royal Mail jobs lost and many of its mail centres and delivery offices closed- with more set to be announced.”
● Attempts to Cut Postal Worker Pensions. And “the company had planned to slash workers’ pensions by up to 50%, but a tough battle with the Communication Workers Union forced them to accept a new deal on pensions which would protect workers.”
● Watered Down Services for Customers. He also noted that it was “[p]utting profit before customers and pushing through cuts has watered down this world class service.”
Notably, LAZ has also been a sovereign advisor on the privatization of the Poste Italiane—despite the Royal Mail controversy—and others, like selling off of the public stake in Spanish airports.
According to the Transnational Institute, LAZ :
“is the number one firm when it comes to sovereign advice. Its operational global headquarters are in New York City, however the firm is officially incorporated in Hamilton, the capital of Bermuda. The firm has a long history as an adviser to governments with financial troubles and has been referred to by Bloomberg as the ‘advisor of the broke,’ due to its services to countries struggling with unsustainable debts, such as Argentina and Ukraine… William Cohan, a former Lazard banker said the following about Lazard’s public sector advisory services: ‘This is a very high-margin business… All their expenses are paid, and they have no capital at risk. This is as sweet as it gets.’”
C) Other Noteworthy Details about LAZ from when Bloom Was Vice Chair of LAZ
Tennessee Valley Authority. To be fair, despite the controversy over the Royal Mail IPO, LAZ has not always recommended privatization of public assets. It deserves credit for its assessment of a query from the Obama administration about whether to privatize the Tennessee Valley Authority (TVA). The TVA is a federally owned electric utility company, created in 1933 in the midst of the Great Depression to bring affordable electricity to rural Americans living in seven states. Over the years, groups funded by libertarian billionaire and carbon baron Charles Koch have repeatedly pushed for the privatization of the TVA.
The Economic Policy Institute wrote about this in its report “If It Ain’t Broke, Don’t Fix It: Potential Impacts of Privatizing the Tennessee Valley Authority.” It said LAZ “concluded that, although it had ‘recommended for privatization in other situations in the U.S. Power & Utility Industry,’ several factors led it to ‘recommend against pursuing a divestiture of TVA.’”
It is not clear whether Bloom played any role in that recommendation or whether that evaluation was conducted by another arm or internal component of LAZ.
The Postal Service. In 2011, LAZ was hired by the National Association of Letter Carriers (NALC) to assess the Postal Service’s operations and a then new five-year strategic plan. That plan was produced in the midst of mounting pressures on the Service due to growing debt from unique obligations added by Congress in 2006 in the Postal Accountability and Enhancement Act (PAEA), when Koch ally James C. Miller III was the Chair of the Postal Service’s Board of Governors.
LAZ called the 2011 strategic plan of the Postal Service a “shrink to survive” plan. As NALC summarized it:
“That strategy, Ron Bloom of Lazard told us, was doomed to fail. No enterprise can prosper by slashing the quality of service and dismantling its core strategic assets in our case, the invaluable six-days-a-week last mile delivery network.”
Yet, now that Bloom is no longer on contract with a labor union, he has jointly issued a ten-year plan for the Postal Service with DeJoy that is strikingly similar to that old shrink-to-survive plan, in the view of True North Research.
Why Is the DeJoy-Bloom Plan So Troubling?
One of the striking things about the LAZ evaluation from almost a decade ago is how applicable its critique of the 2011 “Plan to Profitability” appears to be to the DeJoy-Bloom ten-year plan that is dubbed “Delivery for America.”
Despite the different slogans and a few shared positive components, both are deeply flawed shrink-to-survive plans. If anything, the 2021 plan is worse, in the opinion of True North Research.
The DeJoy-Bloom Plan Charges More for Slower Mail and Will Shrink the First-Class Mail Base; It also Appears to Prioritize Packages and Commercial Interests
The DeJoy-Bloom expressly proposes charging Americans more for slower First Class mail, along with reduced hours at fewer U.S. Post Offices.
Here are the main components of that deeply flawed plan:
● They propose increasing prices by about 9%, according to the Washington Post, with more to come.
● They propose increasing the time for mail to go across the country from three to five days, by expanding trucking and cutting contracts for mail transported by plane. “Air Mail” was one of the biggest innovations of the last century when it was implemented 100 years ago. Meanwhile, Amazon and UPS have actually increased their investment in air in order to maximize the speed of their delivery of parcels to homes and businesses. In all, the plan has been described as slowing the delivery of more than a third of the mail (and purportedly speeding it for 5%).
● They propose increasing consolidation of sorting facilities, which slows local mail. The sorting facility consolidation that had already occurred before this plan slowed local mail for many communities that are not in large urban areas. For example, letters mailed in Middleton, Wisconsin, to neighboring towns are shipped miles away to Milwaukee for sorting and then shipped back to Madison for delivery, according to the local post office. This affects the time it takes local payments and ballots to arrive. These kinds of delays will only increase with the DeJoy-Bloom proposal that furthers that consolidation.
● They propose reducing “retail” locations and hours of operations, meaning consumer access to post offices, while they pitch updating the remaining locations and specifically expanding ways that corporations can access postal processing facilities. That is, their plan will result in fewer post offices with fewer hours for ordinary people but easier access for corporations to ship packages and use the Postal Service’s last-mile delivery.
These changes appear very likely to reduce people’s use of first-class mail, diminishing projected “savings” created by these proposals, similar to LAZ’s critique of the 2011 plan.
Also, in our opinion, if the DeJoy-Bloom plan were implemented, people living in rural communities would see closures of local post offices and slower mail due to reliance on trucking over air mail and due to regional consolidation of operations like sorting and trucking lines—all at a higher cost to consumers.
The emphasis on trucking also harkens back to the roots of DeJoy’s wealth: his father’s trucking business and his own profiting on logistics support for trucking businesses. In our view, those roots from the 1980s and 90s are the wrong path for modernizing mail in a period where people want faster services, not slower ones.
The DeJoy-Bloom plan is particularly problematic because it degrades the quality of service for the Postal Service’s “market dominant” products (First Class Mail and Second Class Mail, for example), which constitute the majority of its revenue and its most profitable, or revenue-positive, services.
This would likely accelerate the decline in reliance on First Class mail, a product that the private sector cannot readily compete with. The Postal Service already faces ongoing competition from email and online bill pay. Notably, offering online bill paying was an innovation suggested by the Postal Service almost two decades ago, but that idea was stunted in response to pressure from corporations.
It is that fear of “unfair” competition by the Postal Service that has also hamstrung the deployment of this public asset in other publicly beneficial ways, but the DeJoy-Bloom plan does nothing to ameliorate that.
As the Congressional Research Service (CRS) observed in its 2016 report:
Prior to the passage of the PAEA, there was concern that the USPS was using its revenue from market dominant products to subsidize the costs of competitive products. Cross subsidization could, potentially, provide an advantage for the USPS in the competitive market by creating artificially low prices that did not include all the costs attributable to those products. The PAEA addressed this issue by forbidding the subsidization of competitive products with market dominant revenue and establishing the Competitive Products Fund (CPF), which receives deposits from the Postal Service Fund for revenues derived from the sale of competitive products.
That CRS report provides illuminating detail about the differences between the volume and revenue from “market dominant” products and competitive ones, as show by the chart below:
Meanwhile, as the chart below shows, even as the pandemic took hold in the spring of 2020, the Postal Service’s speed of delivery was on time nearly 90% of the time. Postal workers were and remain frontline workers who have risked their lives to help their neighbors get the checks, medicines, and other deliveries they have needed during this pandemic.
But since DeJoy took charge in June 2020 and started making changes, delivery speed has been erratic and often substantially slower. (Also, the Postal Service has continued to remove high-speed sorting machines for mailed envelopes, part of long-term cost-cutting, due in part to the pressures of its statutorily-imposed debt obligations.)
It is also counter-intuitive that with DeJoy as a leader of the Postal Service, a lower volume of First Class mail has resulted in slower delivery rather than faster, as the chart below illustrates:
Focus on Corporate Customers. The DeJoy-Bloom plan appears to be more focused on the needs of corporations through how it handles “competitive products,” like parcel delivery on Sundays and access to postal sorting and transit logistics. In this arena, the Postal Service is competing with a private sector that is investing in speed, as with the major investments in air cargo by Amazon and UPS. Those firms rely on the Postal Service for the most costly “last mile” delivery of packages through contracts that make postal workers almost into contractors for what the private sector considers to be too unprofitable to do itself. Yet the DeJoy-Bloom plan drives in this direction.
Granted, during the pandemic reliance on packages increased dramatically beyond the trend line and ordinary people do rely on the Postal Service to get packages on time, from small businesses and big ones. But this emphasis on the less profitable portion of the post office in the DeJoy-Bloom plan is coming at the expense of reliable and speedy mail delivery for all.
It may be understandable that the contract DeJoy touted for new mail trucks is focused on package delivery with the increase in parcel business, although it is still much less of the Postal Service’s revenue than envelopes, mass mailings, and magazines. Even there, however, DeJoy shortchanges the future because he failed to require a higher percentage of EV or alternative fuel vehicles, unlike Amazon and other package delivery companies.
Notably, the contract he approved for a company near Senator Ron Johnson’s home is now subject to litigation by another bidder that sought to provide greener delivery vehicles. Additionally, the emphasis on regional trucking and logistics that cater to business could also be paving the way for parting out the USPS down the road.
Postal Banking. It is also noteworthy that the DeJoy-Bloom plan does not propose innovative services for consumers, like consumer banking—even though the LAZ critique of the 2011 plan agreed that providing such services could help drive more consumer use of post offices.
Several Members of Congress and the Senate have urged the Postal Service to conduct a pilot project on community banking at post offices. On the House side, this effort has been led by Reps. Marcy Kaptur (D-OH), Bill Pascrell, Jr. (D-NJ), and Alexandria Ocasio-Cortez (D-NY), and on the Senate side by Sen. Kristen Gillibrand (D-NY). As the Financial Regulation News (FRN) reported:
“Millions of Americans live in an area without immediate access to a brick-and-mortar bank. In a 2017 study, the Federal Deposit Insurance Corporation found that some 63 million adults are considered underbanked. It found that 90 percent of zip codes lacking a bank or credit union are in rural areas. Bank branches are also sparse in low-income urban communities. The lawmakers said that roughly 46 percent of Latino and 49 percent of African American households are underbanked. Further, reports by the USPS Office of Inspector General found that the Postal Service is well-suited to bring basic nonbank financial services to underbanked communities. This pilot program would establish expanded banking and financial services in post offices.”
That initiative is supported by a wide array of organizations that represent millions of Americans, including “the American Postal Workers Union, Save the Post Office Coalition, American Civil Liberties Union (ACLU), AFL-CIO, Public Citizen, Consumer Action, Communications Workers of America, SEIU, Leadership Conference on Civil and Human Rights, Center for Popular Democracy, Patriotic Millionaires, Take on Wall Street, Sierra Club, Common Cause, Americans for Financial Reform, Social Security Works, Alliance for Retired Americans, and the National Active and Retired Federal Employees Association….”
Porter McConnell of the Save the Post Office Coalition told FRN:
Postal banking “would save working families in these communities thousands of dollars and would ultimately bring in over a billion dollars in revenue for the postal service every year.”
Repeal of the Onerous Pre-Pay Rules from 2006. The only real bright spots in the DeJoy-Bloom plan are the endorsement of the repeal of the pre-pay obligation for future retiree health benefits and an update to the old retirement system that Koch’s ally James Miller promoted as part of the initial privatization scheme.
Those are common sense changes that were sought in the five-year plan and other proposals. They are not new, but are important to the future sustainability of the Post Office. Congress is finally considering repealing the pre-funding requirement, which has weighted down its balance sheet and limited its access to capital for modernizing the Postal Service’s operations and expanding its consumer services.
However, in our view, overall the DeJoy-Bloom plan “slashes the quality of service and dismantles its core strategic assets.” It also corrosively builds on the misguided self-“sabotage” from 2011 in ways that harm this public service.
Accordingly, True North Research supports the removal of both DeJoy and Bloom from the leadership of the U.S. Postal Service.
This article has been updated to reflect recent judicial decisions that suggest that the Postmaster General could be fired by the president as part of his inherent power as the head of the Executive Branch of government and to note that there is no legal bar on impeaching DeJoy, although there are no examples of non-confirmed appointees being impeached. The president has express power to fire members of the Board of Governors of the Postal Service.
True North Research Fellow Alyssa Bowen contributed to this report. For additional information, please contact Evan Vorpahl at evan@truenorthresearch.org
