Legislation

Four Reasons the Government Isn’t Going to Sell Off the Post Office


Saturday delivery rounds on the U.S.’s first rural postal route, in Charles Town, W.Va.

Photograph by Jared Soares/Redux

Saturday delivery rounds on the U.S.’s first rural postal route, in Charles Town, W.Va.

If you believe Democratic politicians and their allies in the labor movement, Postmaster General Patrick Donahoe has a barely concealed agenda to privatize the U.S. Postal Service. Donahoe “can say whatever he wants,” Montana Senator Jon Tester told the Washington Post, “but I think he wants to privatize.” Why else would Donahoe be so eager to cut costs at the USPS? He’s trying to push the post office to the brink of collapse so there will be no choice but to sell the 238-year-old government mail service. Or so goes the theory.

But this line of thinking doesn’t make sense. There’s no chance the USPS will be privatized anytime soon, and here’s why:

1. The postmaster general thinks it’s a bad idea. Really. “The privatization discussion is a ruse,” he told CBS News. “We have no interest in privatizing the Postal Service.” Donahoe has also called privatization “a crazy idea.” Cynics dismiss these statements. But they should take him at his word.

This is a guy who’s been working at the USPS since 1975. He’s a loyalist who believes the Postal Service is a noble and critical public institution. Donahoe could have departed years ago and made more money in the private sector, but instead he’s stuck around trying—naively, you might say—to revive it. “You have a sense of service to the American public,” he told me last year. “They’re our customers. You get on an airplane; everybody on that airplane is my customer. I have a lot of responsibility to the employees.”

2. Its biggest users aren’t pushing for it. Chet Dalzell of the trade magazine Target Marketing asked catalog companies and other businesses that depend on the mail to consider what it would take to privatize the Postal Service, and they were dismissive of the idea as a solution to the USPS’s financial woes. Hamilton Davison, president of the American Catalog Mailers Association, told the publication: “I doubt America will ever decide on full privatization. There are too many complications.” Davison said he could envision the USPS eventually farming out some of its duties if Congress continues to obstruct Donahoe’s efforts to get the agency’s finances in order: “Greater outsourcing, or even licensing, of its functions to third parties is a realistic alternative.”

“I believe it will be very difficult to privatize USPS at the moment,” Peggy Hudson, executive vice president in charge of government affairs for the Direct Marketing Association, said in the Target Marketing article. “It is a 60-plus-billion-dollar annual operation, but it is facing declining demand. That declining demand forecast makes it difficult to see USPS privatized.” In other words, who would want to buy a government agency that reported a $5 billion loss in 2013?

3. Not FedEx or UPS. Some who believe Donahoe has a secret agenda have suggested either FedEx (FDX) or United Parcel Service (UPS) would eagerly step up to buy the USPS if only the postmaster could concoct a means of putting it up for sale. That’s laughable. The two companies are joined at the hip to the agency. FedEx has a contract to fly the Postal Service’s express mail; UPS relies on the USPS to deliver some of its packages. And neither of these profitable, publicly traded companies has expressed on the record any inkling of interest in taking on the daunting, money-losing burden of visiting every doorstep in the country six days a week.

“I know I’ve met a lot of people over the years who say, ‘We wanted you guys to do this thing. We wanted you to do the mail,’” UPS Chief Executive Officer Scott Davis told me in August. “And the answer is universal service. You have to match price with cost to serve. You cannot charge 46¢ to deliver a letter by snowmobile in Alaska and make it work.”

4. Postal worker unions are dead set against it. Don’t discount the political power of the four postal worker unions. They’re among the largest donors to the Democratic Party, they’ve been able to keep Donahoe from ending Saturday mail delivery, and they’ve done a masterful job of building opposition (PDF) to his plan of opening post offices inside Staples (SPLS) stores. Part of that campaign has been to label Donahoe a “privatizer.”

Ghost_image
Leonard is a staff writer for Bloomberg Businessweek in New York.

Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • FDX
    (FedEx Corp)
    • $149.53 USD
    • -1.33
    • -0.89%
  • UPS
    (United Parcel Service Inc)
    • $102.66 USD
    • -0.91
    • -0.89%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus