Today, Explained - Death Cab for The Postal Service?

Episode Date: April 15, 2020

The United States Postal Service is on the brink of collapse. Vox's Matthew Yglesias explains how and why the country should save it. (Transcript here.) Learn more about your ad choices. Visit podcastchoices.com/adchoices

It's Wednesday, April 15th, 2020. The sun is out in the nation's capital, but it's pretty cold for mid-April. I'm Sean Ramos-Firman. This is your coronavirus update from Today Explained. More than 2 million people across the world have or have had this coronavirus in the face of this growing global pandemic, President Trump is suspending funding for the World Health Organization. He accused the WHO of covering up the spread of COVID-19 and failing to investigate claims coming out of Wuhan that directly conflicted with reports from the Chinese government. The president said,

we have not been treated properly before sending the WHO to its room and canceling its allowance for 60 to 90 days while a review is conducted. Speaker Pelosi said in a statement last night, the truth is a weak person, a poor leader takes no responsibility. A weak person blames others. The United States is the largest single donor to the WHO. UN Secretary General Antonio Guterres said this was not the time to reduce the WHO's resources. A whole lot of Americans are about to have slightly more resources. Those stimulus checks are now on their way along with President Trump's Sharpie Scrawl signature. According to the Washington Post, it'll be the first time a president's name appears on an IRS disbursement.

If you're going the direct deposit route, you'll sadly have to close your eyes and imagine that signature when you check your balance online. High school students might have to avert their eyes pretty soon. At home, digital versions of the ACT and SAT are on their way. If we're still social distancing in the fall, please no looking at your phone, your laptop, your iPad, your Switch, your super smart older brother in a mesh. I'm betting test scores go way up either way. Traffic was way up today in Lansing, Michigan. Demonstrators surrounded Michigan's state capital in their cars mostly, but also outside of them to protest what they see as overly restrictive stay-at-home orders passed by Governor Gretchen Whitmer

in response to one of the biggest outbreaks in the country. And the state with the worst outbreak in the country has a new rule. New York Governor Andrew Cuomo announced that if you can't stay six feet away in public, you're going to have to cover your face starting this Friday. Safely remove your face mask at home to call Today Explained. We're at 202-688-5944. Or you can keep it on to email us todayexplained at vox.com

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Earlier this year, when you could still go places, I took a tour of the National Postal Museum right here in Washington, D.C. I really love corresponding postcards, packages, Christmas cards,

so I was more or less in mail heaven. But even if you didn't care for correspondence at all, you'd marvel at the history of this organization. The Pony Express, the stagecoach, the scruffy dog that used to ride the mail trains, the obscure stamps that billionaires bid on, the Elvis stamps that made USPS tens of millions of dollars. I remember my mom tracking a sheet down even from Canada when I was a kid. The only thing at the museum you don't see or read about is that the organization is in big, huge trouble. The United States Postal Service has a massive debt problem.

It's had it for years, but now it's way worse because of this novel coronavirus. Last week, the Postmaster General Megan Brennan told Congress USPS will run out of cash by September without financial aid and that this coronavirus will cause a $13 billion revenue loss this year and something like a $54 billion projected loss over the next decade. I'm a veteran from the United States Navy, and I deliver mail for the United States Post Office. And I'm scared. I'm not only scared about delivering mail and contracting the coronavirus, I'm scared I might not have a job in a couple months. That people who depend on us who need medicine delivered to them because they can't go outdoors, that they need supplies in order to live, waiting for checks or stimulus checks.

They won't be able to get it if the post office closes. Every time I go to work, I see my coworkers and. In the back of my head, I said, this might not last too long now. People who devoted their whole lives to this job, we need help. Thanks for hearing me out. On today's show, we're going to figure out how to save the United States Postal Service. But first, you should hear what's worth saving. And since you can't visit the National Postal Museum, even if you wanted to,

we got Richard John to explain. He's a professor of history at Columbia's Journalism School. The post office is in the Constitution. It's one of the only large organizations in the Constitution, and it has a mandate that was set forth in 1792 to circulate information on public affairs in order to prevent the degeneracy of free government, or so said the Speaker of the House at that time. Now, what did that mean for the founders? Well, in the 18th century, founding of the United States was a recognition that it was extremely hard for the citizenry to communicate and to learn about what was going on in the nation's capital. We'd had a small postal network, really just a link or a chain in the colonial period. All this changed in 1792. First, every newspaper would be

admitted into the mail at low cost. Second provision, Congress got control over the designation of new routes, and the new routes came. So the network very soon became by far the largest in the world, much bigger than Britain, France, much denser. So it was not just a chain or link, but a true network that extends well wherever Americans lived, almost never where postal routes eliminated. And they were expanded under congressional mandate without regard for cost. And to this day, one of the securest methods of circulating information is by putting it in a letter. So that was the foundation by the 1830s when Alexis de Tocqueville visits the United States,

the French aristocrat who wants to understand this new, remarkable, astonishing phenomena, democracy. He sees the results that the lawmakers, the founders of this country, had set in motion with the Post Office Act of 1792. Enormous circulation of newspapers, length and breadth of the United States, magazines too, making possible engagement of the citizenry with public affairs that is a cornerstone of American experiment and democracy. And like so many other cornerstones of this American experiment, it just comes down to size. Bigger is better.

Well, size is really important. We Americans have the largest mail service in the world. In fact, we send and receive more mail than all of the rest of the world combined. Another distinctive feature of the U.S. Post Office, let's compare it with the British Post Office, was that its rationale was not fiscal or commercial. In Britain and in France, you wouldn't establish a new office or a new route if it couldn't break even. That was not true in the United States.

We have a civic mandate much more expansive than the commercial mandate in Britain or the fiscal mandate in France. The post office was not about making money for the government. The post office was about providing services for ordinary Americans, because if we're going to have a democracy, ordinary people need to be well-informed. The post office was the primary institution to facilitate the circulation of information necessary to provide the citizenry with information on market trends, public affairs, and after the 1840s, personal matters as well. But it does make money, right? That's one of the things you notice when you go to the Postal Museum in Washington, D.C. They talk about how the Postal Service made

millions upon millions of dollars off of Elvis stamps in the 90s. I mean, this was a profitable enterprise, right? Right. So let's take the long view. From the 1790s until the 1830s, the Post Office made money every year. That is to say, money went from the post office into the general treasury. There was a rough patch in the 1830s. You have new means of transportation, railroad and steamboats. This undercuts post office revenue by some estimates as much as a half, two thirds of the mail volume on the heavily trafficked routes disappeared. Post offices never faced a crisis up to the present as serious as the crisis it confronted in the 1830s and 40s.

But Congress responded. Congress responded by lowering postal rates, the letter rate, to make it competitive with the private carriers who had sprung up in the 1840s. It actually establishes a monopoly over what we would later come to call first-class mail or letter mail, which was where most of the revenue came from until relatively recently. And most importantly, it declared that we are not going to oblige the post office to try to break even. Did it break even from the 1840s until the 1960s? No. Most years it lost money. Some years it lost millions of dollars. That led Congress to interminable debates, which very few people have ever read. In these debates, in the end, they appropriate money for the post office, and the post office continues. And how does USPS get into this current crisis it's in?

With the decline in first-class mail, that is to say, correspondence, and more important, bills. I think the peak year was 2001, and that has eliminated the most reliable source of post office revenue. And with that decline, which is largely due to the Internet, with that decline has come mounting deficits. And an ancillary problem Congress tried to end deficits in 2006 was the pre-funding of pensions of postal workers. Postal salaries are a very high percentage of postal cost. There are several hundred thousand workers. It's one of the largest workforces in the country. It's a workforce that employs many, many minorities, especially

African Americans, veterans, unionized workforce. and that what became an issue in 2006, the pre-funding of pensions, and that has greatly increased the financial liabilities of the post office. Inspector General of the post office estimated a couple years ago that virtually all of the postal deficit was due to the pre-funding of the pensions and not operational budget of the post office, which is remarkable given the transformation that has occurred in the information infrastructure since the commercialization of the internet. So pensions are really killing USPS, but as you've established, the postal service deficit is nothing new. It's just a can that's been kicked since the founding

of the republic? The postal deficit has been the subject of disputation and debate in Congress since the 1840s. And the post office is still with us. And that's because the post office serves function that is vital to the future of our democracy. But if you're living in a rural area and you're dependent on prescription drugs, post office is a lifeline. 2020 census, how are all those forms going to be distributed? Post office is a lifeline. If the 2020 election occurs, conditions even remotely resembling the present circumstance. I'm in quarantine in Manhattan. Mail-in voting, going to be a lifeline. And package delivery. Lots of people are getting

packages via the USPS that are coming from shippers. And that may well be the future of the post office in alliance with internet commerce, large and small. If that's shut off, it's going to be devastating to internet businesses, especially small internet businesses, and especially small internet businesses that are located outside of the major commercial centers. In the parts of the country where the post office remains, believe it or not, a community center, in those parts of the country, disruption to the postal network would be devastating.

It could actually destroy the community. I don't think that's too strong. And if you don't believe me, just get outside of the major cities, go to rural America, and start asking folks about the role of the post office in their daily lives. After the break, how to save the postal service. When we kiss, they're perfectly aligned. I have to speculate that God himself did make us into corresponding shapes like puzzle pieces from the tree. Support for Today Explained comes from Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams issue cards to every employee with limits and restrictions and automate expense reporting so you can stop wasting time at the end of every month. And now you can get $250 when you join Ramp. You can go to ramp.com slash explained.

Ramp.com slash explained. R-A-M-P dot com slash explained. R-A-M-P dot com slash explained. Cards issued by Sutton Bank. Member FDIC. Terms and conditions apply. Matthew Iglesias, you wrote about how we can save USPS for Vox.com. Tell the people what you wrote. You know, in the short term, the Postal Service, it needs a lot of money. Like a lot of institutions, its revenue is just plummeting as a result of coronavirus, and it is going to need to make drastic cutbacks in service levels unless the federal government shovels a bunch of money at it. There are various questions about the sort of long-term future of postal policy in the United States of America where reasonable people can sort of disagree, but there's nothing that's really going to work on the time frame that we're looking at other than give them a bunch of money

or have them stop delivering the mail six days a week. Well, okay. That was easy, Button. Give them a ton of money or USPS is going to go bust. Since we still have you, though, let's talk about the long-term ideas. What are the proposals to fix this thing for good? What's the spectrum look like? Sure. Look, for a long time, conservatives have felt we shouldn't really have the postal service, as we understand it. We should open up the mail market to competition. We should privatize the postal service. We should let a new private entity probably do some union busting. And there would still be companies that deliver mail for a fee, but the basic guarantee of postal services that we know and understand would not exist anymore. On the other side,

you have people on the left who are saying, look, we should take this public sector infrastructure of the Postal Service and we should have it do more stuff. In particular, we should offer banking services through the Postal Service or using the Postal Service as a retail front end to the Federal Reserve. And so everybody could have a bank account, and it would be a USPS bank account, you'd have an ATM card, the retail outlets that the post office runs would become the branches of the public bank. And that's something that, you know, existed in Japan for a long time. It exists in Germany to this day, it could provide a new line of business for the post office, but also resolve a bunch of problems related to the unbanked and the banking system. Then in the middle, there's something like, look, keep the post office around and either make it cut its budget or give it more money or some combination of the two.

Do all of the relevant political players fall where you think they would? Like, is President Trump for privatizing and increasing prices? Well, you know, President Trump's focus has been on the idea that if the post office would simply raise the fees that it charges to Amazon, that that would resolve all of its financial problems. They lose money every time they deliver a packet for Amazon or these other internet companies, these other companies that deliver. They lose money every time they deliver a package for Amazon or these other internet companies, these other companies that deliver. They drop everything in the post office. They say, you deliver it. And if they'd raise the prices by actually a lot, then you'd find out that the post office could make money or break even. And as far as I can tell, that's just not true.

Reasonable people can disagree about, is privatization a good idea? Are bailouts a good idea? Should they only deliver mail four days a week? But all of those things would work mathematically. President Trump's idea that if you just jack up the prices you pay to Amazon, these problems would magically go away, nobody knows for sure what would happen if they did that, but it seems to be wrong. It seems like the post office would lose market share. They would be running half empty trucks and they charge what they charge because it's good business for them to do it. And do Democrats support this idea of turning the post service into a bank? Is that where the other end of the argument is? Left wing Democrats have gotten on

board that bandwagon. It's not unusual to think of the post office as a place where basic consumer financial services are handled. I would say the mainstream Democratic position is we should do what the postmaster general wants and just give them some money, give them a loan on generous terms, give them some money to make some upgrades. Basically, think of it as fiscal stimulus. Democrats are out there. They're arguing for more money for hospitals, more money for state and local governments, hazard pay for frontline workers. And they also want to give more money to the Postal Service. The Trump administration has been adamant that they don't want to agree to that. What's the counter argument? Is it just like another bailout for the Postal Service that they don't want to provide?

I mean, it's it's three things. One is Republicans are skeptical of spending more money. They are focused on trying to expand this small business lending program, but they don't want to do that much besides that. The other thing is conservatives have for a long time tried to push for privatization. So they see this as possibly an opportunity. And then the third factor is President Trump's personal sort of war on Amazon. And the Postal Service has gotten kind of caught in the crossfire to an extent between President Trump and Jeff Bezos. You wouldn't think it was relevant, but it seems very relevant to what's happening here. What about this idea that we should turn the Postal Service into a bank? Why is that divisive?

Why can't everyone get on board with an idea like that, where we have this capacity, why not use it? Obviously, banks really do not like the idea of needing to compete with some kind of a public option for banking. I mean, this would solve a bunch of problems around the edges of the banking system. We have millions of people who don't have bank accounts.

It becomes hard for the government to do things because they can't interface with unbanked people. But it would be a huge blow to both conventional banks and especially check cashing operations to have these postal banks out there. I mean, also, there are a lot of questions. It's easy to sort of say on paper, oh, this will be fine. Everyone will have a bank account. They'll use the post office. But like, how is it actually going to work in detail is a

sort of a complicated managerial question. But it's a concept that has been percolating on the left ever since the last financial crisis, because, you know, there's a lot of anti-bank sentiment out there and has gained some kind of steam. So the Postal Service keeps being sort of caught between these two grand reform visions, right? Like, make it bigger or get rid of it. And every year, they lose a bit more mail. And now because of coronavirus, it's just fallen off the cliff and they're going to

need some money fast. What about this privatization option? Has that been pulled off anywhere else? Is any other country taking a massive, high-functioning postal service and privatized it with success? I mean, you know, this will sound funny to Americans who are used to thinking of Europe as a land of socialism. But postal services are pretty much privatized in most of Europe. And a lot of the sort of former state-run postal agencies, they still have these like government kind of names, right? So there's like the Royal Mail in the UK, but that's privatized. It seems to work okay. I mean, I think it's hard to say there's some catastrophic consequence of this. It's just that it's then run more like a business. Right now,

you pay a flat rate to mail letter from anywhere in America to anywhere else in America. That's like fairness, right? That's government. That's democracy. It's not business. It is much more inconvenient to deliver things to people in the most isolated rural communities than to people in big cities. The reason the Postal Service has that flat rate guarantee to everyone is that it's a government agency that would go away if you privatized the post office. And just like anything ambitious sounding seems unlikely in this moment where the country's got so much else to worry about, right? So what's the most likely outcome here? Is it just the terms of the funding that they'll eventually get? I mean, the most sensible outcome, I think, would be to give them some money and just kick this down the road.

There is no reason that Congress needs to resolve this long simmering question about the future of postal services in the United States right now in the middle of a national emergency. There are hundreds of thousands of people who work for the postal service. I think having mass layoffs at USPS this fall would be very disruptive, would be very economically damaging. And that's much more obvious to me than the answer to any question about, like, how should we handle the mail in the long term future? It's just that we don't need hundreds of thousands of people losing their jobs in September. Matthew Iglesias hosts The Weeds from Vox. The Weeds recently redesigned its logo and the new one is Fuego.

Check it out wherever you listen to logos. It's the black and yellow one with the Capitol building on it. One last thing about the United States Postal Service, it inspired the name of maybe the greatest electronic emo duo ever. They're called the Postal Service. Back in the early days of this century, two musicians, Jimmy Tamburello in Los Angeles and Ben Gibbert in Seattle, started mailing each other music because the United States Postal Service is cheap and reliable and, you know, Dropbox didn't exist yet. Once they had enough jams to make an album, they decided to call themselves the Postal

Service because of that whole mailing music origin story. They called the album Give Up, and it did really well. So well that the United States Postal Service was like, guys, you can't just steal our name. But no one got sued. Instead, the Postal Service band agreed to play a show for USPS and to let USPS use their songs in commercials, and USPS agreed to sell the band's CDs on its website. Remember CDs? And websites? Well, I was the one worth leaving