Postal Enemy #1: Darrell Issa and His Quest to Privatize the USPS…with Help from Congressional Colleagues

USPostalServiceLogoSubmitted by Elaine Magliaro, Weekend Contributor

Back in May 2012, I wrote a post titled Going Postal in Washington, D. C.: The USPS, the Postal Accountability and Enhancement Act of 2006, Union Busting, and Paving the Road to Privatization. In it, I noted the main reason why the USPS is experiencing financial problems—a mandate included in the Postal Accountability and Enhancement Act of 2006 that required the USPS to pre-fund employee healthcare benefits for seventy-five years…in just tenDarrell_Issa years time. That legislation was passed “on a voice vote by a lame duck Republican Congress.” As Josh Eidelson wrote in a March 2012 Salon article titled Congress’s war on the post office, the Postal Service’s greatest threat isn’t email or economics. He put the blame where it rightly belongs—on Congress. So did Jeanette P. Dwyer, president of the Rural Letter Carriers Association. Dwyer was quoted by the New York Times last November as saying, “Congress created the problems, and it can fix them by taking away the requirement that no other government agency or business has to face.”

This legislative requirement that the USPS must prefund healthcare benefits for three-quarters of a century in one decade means that it has had to cough up $5.5 billion annually since 2007—and will have to continue to do so through 2016. Congress has not required any other government entity or agency to do the same. Why has the Postal Service—an institution that provides valuable services to businesses and to millions and millions of Americans—been singled out? Why indeed…when one considers that the USPS does not receive any tax dollars? It relies on the sale of postage and other products and services to fund its operations.

Both Alison Kilkenny and Matt Taibbi think that the purpose of the legislation “was to break a public sector union and privatize the mail industry.”


…the Postal Service has been under constant, vicious assault for years from the right, who views this as an epic battle with the goal of finally taking down the strongest union in the country, the second largest employer in the United States (second only to Wal-Mart,) and a means to roll the country ever closer toward the abyss of privatization.


The transparent purpose of this law, which was pushed heavily by industry lobbyists, was to break a public sector union and privatize the mail industry. Before the 2006 act, the postal service did one thing, did it well, and, minus the need to generate profits and bonuses for executives, did it cheaply. It paid for itself and was not a burden to taxpayers.

Ah, privatization! We’ve gone down that road before with the privatization of prisons in this country…the privatization of parking meters in the city of Chicago…the privatization of many of our military services. We now have groups that are attempting to privatize public schools. Why not the postal service too?

We continue to hear how privatization will save money and benefit tax payers. But will it? David Cay Johnston says it won’t. He claims that the government is “paying through the nose” for the services of private contractors.

David Cay Johnston (Newsweek, December 2013):

The budget debate now consuming Washington often seems to come down to guns versus butter, or at least its contemporary manifestation, Reaper Drones versus food stamps.

What gets lost in the increasingly caustic rhetoric is just how inefficient the U.S. government is when it spends, especially when it is outsourcing tasks to hugely profitable private companies.

Fortunately, the budget deal just worked out between the White House and Capitol Hill will prevent a government shutdown and all of its attendant global financial inconveniences. But it does nothing to curtail wasteful spending on companies that are among the nation’s richest and most powerful – from Booz Allen Hamilton, the $6 billion-a-year management-consulting firm, to Boeing, the defense contractor boasting $82 billion in worldwide sales.

In theory, these contractors are supposed to save taxpayer money, as efficient, bottom-line-oriented corporate behemoths. In reality, they end up costing twice as much as civil servants, according to research by Professor Paul C. Light of New York University and others has shown. Defense contractors like Boeing and Northrop Grumman cost almost three times as much.

Essentially, the federal government operates two contracting systems, separate and unequal. One hires profit-making corporations, the other handles nonprofits.

Washington lavishes taxpayers’ money on for-profits. Many smaller contracting firms making good money for doing relatively little work ring the nation’s capital and are commonly known as Beltway Bandits. Remarkably, some of these enterprises set themselves up with a Bermuda mailbox to escape paying the federal taxes – perhaps most notably Accenture, which runs the IRS website. (Accenture maintains that its structure was not designed to avoid taxes.)

Johnston added:

But shoddy work doesn’t mean you will get fired from a government contract. Nor can that lackluster effort, like the disaster that is the Obamacare signup website, be blamed on inadequate pay to hire talent to set up a reliable website. Last year, contractors were allowed to charge the government as much as $763,029 per worker.

In the Public Interest addressed some of the “myths” about privatization:

Proponents of privatization promise to fix budget woes by saving the government money.  But numerous examples in a variety of sectors show that projected savings don’t always materialize.   Cost overruns combined with hidden and indirect costs, such as contract monitoring and administration, can make privatization more expensive than in-house services for governments.   In fact, the Government Finance Officers Association estimates that hidden and indirect costs can add up to 25% to the contract price.

In the Public Interest also weighed in on risks involved with privatization:

Privatization and contracting out involve giving up control of public structures we all rely on to private companies.  Once a public service or asset is privatized, we, the public, lose the ability to have a voice in decisions affecting that service or asset.  We also lose the ability to request and view important information related to the privatized function.  Without proper information and a forum in which to voice opinions, the public is effectively shut out of the decision-making process.  These services and structures are no longer controlled by a government accountable to the public, but instead beholden to companies who may have entirely different goals and priorities.

Josh Eidelson (Salon) reported on Friday that the Postal Service’s largest union was “raising alarm over a pilot partnership with Staples, which it warns is a stalking horse for privatization – a goal the union alleges draws support or indifference from key Democrats.”

American Postal Workers Union (APWU) president Mark Dimondstein spoke to Salon last week “prior to Tuesday demonstrations outside Staples stores in San Francisco and San Jose, the first of what he said would be an escalating wave of protests.” He said he thought that Congress and the White House were “pretty much working hand in hand.” He added, “There hasn’t been a fight to defend the public good, and there hasn’t been a real fight around good jobs.”


California is one of four regions in which the new Staples pilot program is underway, and the first target for postal union pushback. While Congress and President Obama have not played a public role in instigating the pilot program, APWU is seeking support from both in stemming the perceived privatization threat. Both of the state’s U.S. senators, Barbara Boxer and Dianne Feinstein, are Democrats who voted for a 2012 tripartisan postal bill from Sens. Carper, D-Del., Lieberman, I-Conn., and Brown, R-Mass.; neither is listed among the 30 co-sponsors of a union-favored alternative introduced last year by Sen. Bernie Sanders, I-Vt. Dimondstein charged that the California senators “have not been fighters to defend, or advocates to defend, the people’s post office as I think our elected officials should be.” A spokesperson for Boxer did not respond to a request for comment.

Dimondstein was particularly critical of Feinstein, noting that her husband, Richard Blum, chairs the board of the real estate giant CBRE, which holds an exclusive contract to negotiate the sale of Postal Service buildings to private companies. Blum is the co-founder and CEO of Blum Capital Partners, which led a $750 million buyout of CBRE in 2001.

“I can’t get into her mind,” the union president told Salon, “but I would think that the fact that her husband is making so much money off the sale of post offices has to have an influence in the way that she approaches these issues.”

The postal union had “harsh words” for Rep. Darrell Issa (R-California) who is the chairman of the House’s Oversight and Government Reform Committee. Issa is the member of Congress who has been most aggressive in leading the charge to reform the USPS. He has called for the discontinuation of Saturday postal deliveries—among other things. John Nichols (The Nation) said last July that Issa had a plan to put the Postal Service in a “death spiral.” He added that Issa has had a “long history of attacking the postal service.”


The changes Issa proposes would, according to the National Association of Letter Carriers, lead to “the elimination of more than 100,000 postal jobs and would dramatically cut service.” And in addition to its assault on the character and quality of postal service, the legislation includes classic austerity schemes, such as a prohibition against postal unions and management from negotiating protections against the closure of post offices, stations and branches, the consolidating of plants, the privatization of operations and layoffs.

The cuts, if implemented, would issue as an open invitation for private-delivery services to cash in by offering to fill the void created by those cuts. There are profits to be made by delivering mail to the front doors of Americans who can pay—and who want regular delivery on Saturdays. So it should come as no surprise that one of the first endorsements for Issa’s proposal came from the “Coalition for a 21st Century Postal Service,” a group that counts FedEx as one of its most enthusiastic boosters.

The corporations that want to carve the USPS up and grab their pieces of America’s communications infrastructure are ready to pounce.

Would we be better served by privatized mail delivery service? I think not. Remember the failure of FedEx and UPS to deliver an untold number of Christmas packages on time?

Last December, Charles Pierce (Esquire) alluded to that failure of private companies when he wrote: “My goodness, it’s been a terrible holiday season for those people who trumpet the flexibility and abiding genius of the Free Market over the clammy deadweight of Government.” He continued, “Then, just as we’re all waiting on our porches for the last of our Christmas packages to arrive, we recall that the people who have worked for two decades to chloroform the U. S. Postal Service always have assured us that the Private Sector, as personified by FedEx and UPS, would more than make up the slack when the clearly obsolete USPS goes out of business.

UPS said, “The volume of air packages in our system exceeded the capacity of our network”—and apologized to its customers. FedEx also apologized to its customers—and called the volume an “extraordinary event.” Both companies blamed the problem on “weeks of bad weather and higher demand from soaring online sales.”

Making light of their excuses, Charles Pierce wrote:

This was due to inexplicable “bad weather” in a season we like to call “winter” and due to an “extraordinary event.”

Called “Christmas.”

UPS, FedEx scrambling to deliver late Christmas packages

John Nichols wrote that the USPS “continues to perform with more agility than private firms, as holiday delivery patterns illustrated—in ways that are all but certain to make the postal service vulnerable to privatization.” Nichols said that ending Saturday mail service would negatively affect “the ability of the postal service to meet the demands of modern shipping and communications.” He added that “the likely result would be a rapid shift of traffic to private firms, which contribute heavily to politicians but which do not provide the universal, low-cost service that is the hallmark of the postal service.”

Nichols added that privatizing the postal service could “harm the employment prospects of veterans” as the USPS is second only to the US Department of Defense in the number of veterans it employs. He said that more than 20 percent of the USPS workforce—approximately 120,000 employees—have records of military service. He noted that close to “a third of those employees are rated as 30 percent or more disabled, a reflection of the fact that the postal service goes out of its way to provide an array of employment services and options for veterans.”

GOP Political Target: Republican Congressman Darrell Issa’s Anti-Post Office Crusade

Submitted by Elaine Magliaro

The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.


“Cynical and diabolical”: Issa attracts allies in quest to demolish Postal service: Union president tells Salon the lawmaker is “a pure enemy of the Postal Service” — and he has bipartisan partners (Salon)

Issa bill would end Saturday mail to repeal military pension cut (Washington Post)

Darrell Issa’s Cruelest Cut: A Seriously Cynical Attack on the Postal Service (The Nation)

Darrell Issa’s Got a Plan to Put the Postal Service in a Death Spiral (The Nation)

Oversight Committee Approves Issa’s New Postal Reform Bill (National Journal)

Don’t Let Business Lobbyists Kill the Post Office (Rolling Stone)

The Invisible Hand Is All Thumbs (Esquire)

Darrell Issa’s Mischievous Postal Reform Bill (Business Week)

Congress’s war on the post office: The Postal Service faces a threat greater than email or economics: Politics (Salon)

Amid Capitol Turmoil, Postal Crisis Drags On (New York Times)

Privatization Myths Debunked (In the Public Interest)

Privatization 101 (In the Public Interest)

US Postal Union Peeved at Staples for Threatening Jobs (ABC News)

The U.S. Government Is Paying Through the Nose For Private Contractors (Newsweek)

UPS, FedEx scramble to deliver delayed Christmas packages (NBC News)

Postal Workers: The Last Union (Truth-Out)

26 thoughts on “Postal Enemy #1: Darrell Issa and His Quest to Privatize the USPS…with Help from Congressional Colleagues”

  1. Read the Preamble – Justice, Tranquility, Defense, General Welfare (i.e. mail delivery) excluding individual welfare. The Preamble is not only binding, it is meta-law, it is the context of America. Delivery of mail, which may not include parcels and overnight articles, to every address every day is a mandated governmental function. Period. This is not optional as the military, police and justice are not. Effective management of operations, with special attention paid to non-mandated advertising mail, is imperative. The Ten Commandments are clear, understandable and don’t conclude with an 11th opt-out choice. No, Mr. Bernanke, the Constitution has not “evolved.” Read the Preamble. The Founders are speaking to you; to all of us everyday. Read it.

  2. Elizabeth Warren Proposes Replacing Payday Lenders With The Post Office
    FEBRUARY 3, 2014

    The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

    “USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

    Those companies are among the most predatory actors in the money business. Payday loans with annual interest rates well north of 100 percent suck billions of dollars out of poor communities every year, with the average customer paying $520 to borrow $375. After decades of operating in a regulatory blind spot and ducking state-level reforms, the payday lending business now faces a crackdown from the Consumer Financial Protection Bureau. The threat of new rules for short-term cash loans in general has caused traditional banks to stop offering deposit-advance loans with similar features.

  3. Thanks for taking up this topic, Elaine. I am waiting for someone to propose the same funding mandate for all state and federal public employee pensions.

  4. Next thing, they are going to want to privatize the fire department and then burn down all the poor neighborhoods where people cannot afford to pay. Only mansions will be left standing and the rest of the US will be ashes.

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