Trump eyes privatizing U.S. Postal Service, citing financial losses

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President-elect Donald Trump has expressed a keen interest in privatizing the U.S. Postal Service in recent weeks, three people with knowledge of the matter said, a move that could shake up consumer shipping and business supply chains and push hundreds of thousands of federal workers out of the government.

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Trump has discussed his desire to overhaul the Postal Service at his Mar-a-Lago estate with Howard Lutnick, his pick for commerce secretary and the co-chair of his presidential transition, the people said. Earlier this month, Trump also convened a group of transition officials to ask for their views on privatizing the agency, one of the people said.

Told of the mail agency’s annual financial losses, Trump said the government should not subsidize the organization, the people said. The people spoke on the condition of anonymity to reflect private conversations.

Trump’s specific plans for overhauling the Postal Service were not immediately clear. But he feuded with the nation’s mail carrier as president in 2019, trying to force it to hand over key functions – including rate-setting, personnel decisions, labour relations and managing relationships with its largest clients – to the Treasury Department.

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“The government is slow, slow, slow – decades slow on adopting new ways of doing things, and there’s a lot of [other] carrier services that became legal in the ’70s that are doing things so much better with increased volumes and reduced costs,” said Casey Mulligan, who served as a top economist in the first Trump administration. “We didn’t finish the job in the first term, but we should finish it now.”

The postal system is older than the nation itself, founded in 1775 with Benjamin Franklin as its chief, revitalized with free rural delivery at the start of the 20th century, then transformed into a financially self-sustaining agency in 1970 designed to “bind the nation together” through the mail. Even through financial challenges wrought by the rise of the internet, the Postal Service has remained one of Americans’ most beloved federal agencies, second only the National Park Service in a 2024 Pew Research Center study.

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But as congressional Republicans and others in Trump’s orbit have clamored in recent weeks for federal cost-cutting, the Postal Service has emerged as a prominent target. People who will work on the “Department of Government Efficiency,” a nongovernmental panel led by tech entrepreneurs Elon Musk and Vivek Ramaswamy, have also held preliminary conversations about major changes to the Postal Service, said two other people familiar with the matter, who also spoke on the condition of anonymity to reflect private talks.

The Postal Service lost $9.5 billion in the fiscal year ending Sept. 30, stung by continued declines in mail volume and a slower-than-anticipated parcel shipping business, even as it made major new investments in modernized facilities and equipment. The agency faces nearly $80 billion in liabilities, according to its annual financial report.

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Cuts to the Postal Service could upend the trillion-dollar e-commerce industry, hitting small businesses and rural consumers whose businesses and budgets make the agency the shipper of choice. Amazon, the Postal Service’s largest customer, uses the agency for “last-mile” delivery between its hulking product fulfilment centres and consumers’ homes and businesses. (Amazon founder Jeff Bezos owns The Washington Post.) And the agency’s “universal service obligation” – which requires it to deliver mail or parcels regardless of distance or profitability concerns – means it is often the only carrier that will deliver to far-flung reaches of the country.

Attempts to privatize one of the most prominent parts of the federal government could spark a political backlash, especially for Republicans representing rural districts that the agency disproportionately serves. Federal officials from Alaska, for example, often invite postal executives to the Last Frontier to see how crucial the Postal Service is to the state’s economy.

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Responding to inquiries about privatizing the agency, a Postal Service spokesperson said the agency’s 10-year modernization plan has led it to cut 45 million work hours in the past three years and reduce spending on transportation by $2 billion. The agency is also seeking regulatory approval to alter its mail processing and delivery timetables to better align with private-sector practices, the spokesperson said in a statement.

“The United States Postal Service is already engaged in an initiative to ensure that we can provide our customers with a high level of service to every delivery address in the nation at least 6-days-a-week in an efficient and financially sustainable fashion as required by law,” the agency’s statement said.

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Trump has long had a tense relationship with the mail agency. He once derided it from the Oval Office as “a joke” and in a social media post as Amazon’s “Delivery Boy.” In the early days of the coronavirus pandemic, Trump threatened to withhold emergency assistance from the Postal Service unless it quadrupled package prices, and his treasury secretary, Steven Mnuchin, authorized a loan for the mail agency only in exchange for access to its confidential contracts with top customers.

Ahead of the 2020 election, Trump said the Postal Service was incapable of facilitating mail-in voting because the agency could not access the emergency funding he was blocking. The Postal Service ultimately delivered 97.9 percent of ballots from voters to election officials within three days.

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When he returns to office, Trump could have several options to exert control over the mail agency – though he may not have the authority to unilaterally privatize it.

The Postal Service has three vacancies on its nine-member governing board. Among sitting members, three are Republicans, and two of those are Trump appointees. Biden has three pending nominees, but the Senate does not appear poised to confirm them before Trump’s inauguration.

Significantly narrowing the universal service obligation – which had been recommended by officials during Trump’s first term – would probably require an act of Congress. If approved, the Postal Service would almost immediately be required to scale back delivery service to unprofitable areas and downsize its staff of roughly 650,000 employees.

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Cutting off the agency’s access to loans from the Treasury Department – as the first Trump administration attempted – could quickly stifle the Postal Service, preventing it from making its biweekly payroll and financing its facility and equipment maintenance.

“At the end of the day, the Postal Service is going to need money, it’s going to need assistance, or it’s going to have to come up with some radical, draconian measures to break even in the near term,” said Paul Steidler, who studies the Postal Service and supply chains at the right-of-centre Lexington Institute. “That gives both the White House and Congress an awful lot of power and an awful lot of leeway here.”

Democrats are already warning of potential cuts to the nation’s mail carrier.

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“With much more runway ahead of them, they may very well focus on privatization, and I think that’s our big fear. That could have disastrous consequences, because when you go private, the profit motive is everything,” Rep. Gerry Connolly (D-Virginia), a leading postal backer, told The Post.

Rep. Marjorie Taylor Greene (R-Georgia), the incoming chair of the House’s “DOGE” Oversight subcommittee, excoriated the Postal Service in a social media post Tuesday, writing, “This is what happens when government-run entities are bloated, mismanaged, and unaccountable.”

The agency was also under fire earlier this week, when Postmaster General Louis DeJoy faced sharp questioning from Republicans in a hearing Tuesday. House Oversight Committee Chair James Comer (R-Kentucky) warned DeJoy that next year’s Congress could seek to overhaul the mail service.

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Republicans asked repeatedly about clawing back funding for the agency’s new fleet of electric delivery trucks, mounting financial losses, and about what executive actions Trump could take to bring the service to heel.

“The days of bailouts and handouts are over. The American people spoke loud and clear. I worry about that EV money sitting around, that it may be clawed back. I think there are lots of areas where there’s going to be significant reform over the next four years,” Comer said. “… There are lots of ideas – I don’t know if they’ll be advantageous or not to the Postal Service – that are out there about significant changes.”

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