Donald Trump is reportedly enthusiastic about the prospect of privatizing the U.S. Postal Service (USPS), a move fueled by its persistent financial struggles, according to sources who spoke to the Washington Post. Trump has engaged in discussions about this idea with key figures on his transition team, including Howard Lutnick, who is slated to be the next Commerce Secretary. In tandem, the Department of Government Efficiency, which includes notable figures like Elon Musk and Vivek Ramaswamy, is also deliberating on significant reforms for the USPS. Given the historical financial losses incurred by the service, Trump is determined to offload the burden of its inefficiencies onto the private sector, hoping to end the cycle of taxpayer funding that has characterized the USPS for decades.
The financial state of the USPS has deteriorated sharply, with a reported net loss of $9.5 billion for the 2024 fiscal year, which is a steep increase from the previous year’s deficit of $6.5 billion. This downturn occurred despite a slight rise in revenue attributed to increased postage rates following the “Delivering for America” plan initiated in 2021. While this plan was intended to steer the USPS towards financial sustainability, the agency continues to face unpredictability, demonstrating liabilities of nearly $80 billion. Previously reported profit figures were largely illusory, bolstered by an unusual repeal of a prepayment requirement for retiree health benefits, masking the underlying financial instability.
Insights from economic experts like Casey Mulligan indicate a pressing need for change at the USPS, arguing that government operations are sluggish in adopting innovative practices,. He points to the emergence of private carriers that have effectively modernized processes, resulting in improved efficiency. Mulligan suggests that the ongoing challenges faced by USPS should prompt a rethinking of government involvement and potentially lead to a solution that allows the agency to adapt and thrive without the constraints of a subsidized model.
The USPS boasts a political clout that is not to be overlooked, possessing a workforce of approximately 650,000 employees, many of whom would vehemently oppose proposals for privatization. Public sentiment towards the USPS remains generally positive, with a Pew Research poll indicating that 72% of Americans view the organization favorably. Additionally, the postal service holds particular significance in rural areas, often represented by Republicans who may be wary of reductions in service or increased delivery times resulting from cost-cutting measures. Recent reactions to planned changes, such as those proposed by Postmaster General Louis DeJoy, underscore the potential political fallout from privatization discussions.
As Trump prepares to occupy the White House again, he will have the opportunity to influence the USPS’s leadership, filling three vacancies on its board of governors. Currently, there are a majority of Republican-appointed members, with several being Trump’s previous appointees. This situation creates an environment where, even if comprehensive privatization does not materialize, the threat of such a move could serve as leverage to implement organizational reforms for the USPS. The heightened scrutiny on its financial operations indicates that both Congress and the White House might exert increased pressure for necessary changes in the coming term.
Despite Trump’s eagerness to pursue privatization or drastic alterations to the USPS, skepticism persists regarding Congress’s ability to catalyze meaningful reforms. Historical trends suggest a languid governmental response to the USPS’s financial predicaments. Given the current dynamics of leadership and ongoing scrutiny, there remains uncertainty about whether the situation will yield a drastic departure from past inaction, even in light of Trump’s pressing agenda for the postal agency.
