While the U.S. Senate prepares to consider controversial legislation that would reform how the U.S. Postal Service (USPS) handles health care, government watchdogs have released documents that show an "increasingly cozy relationship" between the independent regulator of USPS and lobbyists working to shape the legislation favorably for their clients.
According to a statement from the Functional Government Initiative (FGI), the documents show the connection between the the Postal Regulatory Commission (PRC), a regulator responsible for transparency and oversight of USPS operations, and lobbyists for a coalition of package companies that include Amazon and eBay (known as the “Package Coalition”) that have relied on USPS to reduce one of their largest operating costs.
"Unsurprisingly, records show extensive communications between lobbyists for the Package Coalition, PRC regulators and staff on the congressional committees with oversight over postal issues," the FGI said. "Throughout the released records, the PRC’s regulatory staff appear to be deeply tied to the messaging and legislative interests of the so-called 'Package Coalition.' Some of the communications reveal an unusual display of agency deliberations and frankness with a lobbyist representing an interested party. Taken together, the frequent behind-the-scenes communications raise concern about the objectivity and potential for arbitrary decision-making being undertaken at the PRC."
In a May 2021 exchange discussing specific cost attribution studies relating to developing postal reform legislation, Jennifer Alvarez Warburton, the director of public affairs and government relations for the PRC, messaged Michael Scanlon, the primary lobbyist for the Package Coalition, saying, “OK, so are you good?” Scanlon replied that it was acceptable as long as the study was conducted by Warburton’s agency (PRC) and “not GAO,” which undertakes investigations for Congress.
The Package Coalition is lobbying for legislation that would codify an "integrated network" for mail and packages. In an official corporate message, Amazon publicly supports the Postal Service Reform Act, specifically measures taken in the bill to eliminate USPS’ existing mandate to pre-fund health benefits for retirees and shift those costs onto the Medicare system.
Industry experts have said that Amazon systematically takes advantage of USPS in a number of ways. Not only has Amazon leveraged its volume of packages to be shipped against USPS’ solvency concerns to fix below-market shipping costs for its deliveries, but experts say that it is effectively using USPS to subsidize Amazon’s own logistics and delivery operation, according to Business Insider.
A recent report by economic research firm Econ One alleges that postal reform policies included in the Postal Reform Act and pursued by Amazon directly benefit the company's profit margin while shifting costs to USPS.
"First, Amazon has lobbied to combine mail and parcel delivery under one cost center, thus obscuring the latter’s contribution to institutional costs and allowing Amazon to conceal the uneconomic pricing it receives from USPS," the report claims. Also, by building its own distribution networks in primarily urban areas, while leaving USPS to handle rural areas, Amazon is employing a "cream-skimming" strategy that exploits the Postal Service’s universal service mandate.
In another January 2022 email, PRC Commissioner Ann Fisher told Vice President of Global Government and Regulatory Affairs for Pitney Bowes Leigh Walton that she was “really pulling for that House bill.” Pitney Bowes is a major player in the commercial postage and shipping industry and member of the Package Coalition lobbying in favor of the Postal Reform Act.
The Wall Street Journal editorial board has called the legislation "an accounting shuffle that’s comic in how much it misses the point."
"The USPS has lost money for 15 straight years, a total of $92 billion since 2007," WSJ's editors write. "This is often blamed on a 2006 law that requires it to set aside money for retiree health benefits. Yet the mandate has turned into an accounting fiction because the USPS hasn’t made the payments since 2010. Killing the pre-funding rule would have no effect on the USPS’s actual cash flow. Shifting retiree funding off the annual books would make its finances look better year to year, but the unfunded liability would still loom. This is 'reform' in the sense of defusing a time bomb by silencing the ticking sound."
Last May, U.S. Congressman James Comer (R-KY-1) partnered with his Democratic counterpart, Chairwoman Carolyn Maloney (D-NY), on the House Oversight Committee to introduce the Postal Service Reform Act now under consideration by the U.S. Senate, including Sens. Mitch McConnell (R-KY) and Rand Paul (R-KY).