The NY Daily News, a newspaper recently purchased for $1, published an article railing against the President’s latest tweet about the USPS titled, Fuming Trump finds fresh target in U.S. Postal Service, rips Dems on Twitter — after ‘Fox & Friends’ segment.
The article attempts to make Trump look like an irrational guy who relies on the much-reviled Fox News and just wants to hurt Jeff Bozos and Amazon. However, they reported a blatant lie or half-truth, however you want to look at it.
Trump’s quote is not irrational and it’s not condemning the people in the post office, it reeks of common sense.
Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!
— Donald J. Trump (@realDonaldTrump) December 29, 2017
The left is tweeting wildly as they condemn the President’s tweet.
He’s not wrong, however. The USPS loses billions each year and a few years ago, they lost $15.6 billion. In an alleged free market country, we have a monopoly that does indeed cost taxpayers a lot of money – $18 billion a year.
The NY Daily News wrote, and it’s being repeated by AOL and many other news sources, that:
The independent agency, known as the United States Postal Service since 1971, does not use taxpayer money for its operations.
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Under federal law, it can’t raise prices more than the rate of inflation without approval from the Postal Regulatory Commission.
That’s true as far as it takes it but leaves out the $18 billion annual gift from taxpayers thanks to laws allowing them to operate as a monopoly.
But as Robert Shapiro—former Treasury undersecretary and chairman of the economic consultancy Sonecon—points out in a new analysis, American taxpayers subsidize the USPS at a rate that surpasses the costs associated with any Congressional mandate. He estimates that, all told, the subsidies and legal monopolies that Congress bestows upon the post office is worth $18 billion annually. These include:
Laws that bar any other shipping service from delivering mail and packages directly to residential and business mailboxes. Shapiro estimates that this gives the Post Office a $14 billion annual boost, more than three times what the Postal Regulatory Commission estimates it to be. Shapiro argues that the PRC’s analysis doesn’t take into account the productivity gains that the Post Office would be forced to make if it really had to compete for mailbox delivery. He points out that productivity at USPS has only grown by 0.7% per year versus 2.5% for its competition.
Tax breaks. The Post Office is exempt from state and local property and real estate taxes, along with other burdens like tolls, vehicle registration fees, and parking tickets. These exemptions save the USPS $2.18 billion per year.
Cheap borrowing. The Postal Service, writes Shapiro, “can borrow from the U.S. Treasury through the Federal Financing Bank, at highly-subsidized interest rates.” It currently borrows the legal limit of $15.2 billion at a rate of 1.2%. Without this access, it would be paying somewhere between $415 million and $490 million per year more in interest.
Finally, Shapiro points out that the USPS pays its workers salaries and benefits far above the rates paid to similar workers in the private sector. Labor accounted for 78% of the organization’s costs in 2014, “with about 89% of those costs involving employees represented by collective bargaining.” These higher labor costs, plus the absence of a need to innovate due to government-granted monopolies, has freed the USPS from $20 billion in labor and productivity costs per year, Shapiro estimates. “While we do not technically count this as a subsidy,” he writes, it represents an economic burden on others arising directly from USPS’s monopoly position.”
If it were privatized, there would be no taxpayer cost and the poor could be subsidized.
In summation, the politicians love to present “tax breaks” and “near-zero loans” as free money for all, a non-tax, just a nice gift like so much manna from heaven, however, the difference has to be made up by taxpayers. The monopoly also overpays its workers and that costs us too.
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