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Thomas: Hello and welcome to Opening Arguments, this is episode 415. I’m Thomas, that’s Andrew. How’re you doing?
Andrew: I am fantastic, Thomas! Nothing broke in between recording the last show and this one, right?
Thomas: Are you sure? [Laughs]
Andrew: I am not sure.
Thomas: I’m not sure either, but we’ll assume it didn’t.
Andrew: Yeah, we’ll assume American democracy is healthy.
Thomas: I also think if anyone wants to go check on my body, I’m probably a nice perfect jerky. I’m probably perfectly ready.
Andrew: Oh man, smoked meats are so good.
Thomas: I’m just guessing based on the smoke, I’m good to go.
Andrew: You’ve been cooking at 109-
Andrew: -for a couple of weeks-
Andrew: -with exposure to smoke.
Andrew: I gotta tell you, if I could cook ribs at 109, I would be all over that.
Thomas: Yeah, so if anyone wants to go collect me, I’m sure that’s where I am right now. But for now, we’ve got stuff to talk about.
Andrew: This has been “Cooking Humans with Andrew and Used-To-Be Thomas.”
Thomas: [Laughs] I love this note you’ve left me here. Fortnite next week.
Thomas: So, does that mean we’re playing-
Andrew: Yeah, you’re gonna play Fortnite, it’s gonna be great. No, look, there are two major stories that, again, until we go to daily OA I apologize.
Thomas: Yeah, we just need like 40,000 more patrons and we’ll be there.
Andrew: Look, if every person who listens to this show tells two friends to listen to the show-
Thomas: Mm-hmm, yeah.
Andrew: -and doesn’t break the chain, we’ll get there. No, so first a decision, and folks have rightly called us out on this. I have, my notes are written on the Supreme Court’s decision in McGirt. That is the one that ruled that 2/3 of Oklahoma is-
Thomas: Oh right.
Andrew: -effectively belongs to the five tribes in Oklahoma. It’s an incredibly fascinating decision, it was written from the conservative contingent. There’s so much that is incredibly interesting about it. I promise you [Laughs] we wanna cover it! Make Donald Trump stop doing horrible stuff and we’ll cover it.
Then the Epic Games v. Apple lawsuit, got a copy of the complaint, motion for injunctive relief. That was supposed to be today’s episode, but instead we have to talk about how Donald Trump is sabotaging the Post Office. Again, probably slightly more important to the future of American democracy than Apple’s attempt to shut down Fortnite. I get that it’s close, but there you go, we’ve got those two stories and plenty more. I’ve done research, I’ve written up notes. Man, we just don’t have the time to cover everything.
Thomas: So we’re not playing Fortnite? Fine, I quit.
Andrew: We can! I’m totally down to play some Fortnite.
Thomas: I’ll turn off the PlayStation.
Andrew: My dance moves are on point; I will tell you.
Thomas: [Laughs] Alright, well I think we have a little Andrew Was Correct. So, what happened with Roger Stone?
Andrew: Roger Stone, on the very last day to file his appeal to the United States Court of Appeals for the D.C. Circuit of his conviction – which again, remember, his sentence was commuted. His conviction was not overturned, he was not pardoned. That commutation, ridiculous in the extreme, we covered that on the show, included the $20,700 dollars in fines. You know, it was as much of a slob job as you can possibly give to Roger Stone. Because he’s a part of the crazy Q-Anon conspiracy ridiculousness, maintained this big public front of “oh well and I’m still gonna appeal those convictions because I’m 100% innocent and it’s all blah blah blah.” We told you on the show, no he won’t. there’s not a chance in hell that Roger Stone is gonna appeal his convictions because the remedy you get for an appellate court throwing out your convictions is a new trial, and you know what Roger Stone does not want? A new trial when Donald Trump is no longer president.
Andrew: Yeah, on the very last day of the deadline he instead filed a notice with the court that he would be dropping that appeal and not appealing his conviction to the D.C. Circuit, which is 100% predictable. Just remember, if you’re needling an Uncle Frank, Roger Stone is a big fat liar with a Nixon tattoo on his back. This is what you should have expected but, you know, maybe you’ll start to get through to them to be like “remember when Roger Stone was gonna bravely fight that?” No, of course not. So there we go, we were right, Uncle Frank was wrong, you knew that.
Yodel Mountain – Postal Service Deep Dive
Thomas: Okay, time for – we’ve left plenty of time, Andrew, for the Postal Service – not the band although I do love that album, it’s one of my favorites. Got into that in college.
Thomas: Anyway, the United States Postal Service deep dive, here we go.
Andrew: I wanted to try and take a deep dive into sort of exactly what’s going on, because so much of the reports coming out about the Post Office are anecdotal.
Andrew: Let me give you an example. The Post Office, for decades, has been removing mail boxes. Just seeing a picture of mail boxes strapped to a truck does not prove that Donald Trump is trying to sabotage the Post Office. Now, what helps prove that is when Donald Trump says “I’d like to sabotage-
Thomas: “I’m trying to sabotage” [Laughs]
Andrew: -the Post Office because they’re gonna otherwise allow mail in voting and I’m going to lose.” That’s a better piece of evidence. So I thought I would take a look at the structure of the Postal Service. I dunno if you say – I imagine you did – the John Oliver special from a couple of months ago when Donald Trump announced that he was going to appoint Louis DeJoy to be the next Postmaster General of the United States, and John Oliver made a claim that the only reason the Postal Service is bankrupt has to do with a 2006 law.
Andrew: So we’re gonna examine that 2006 law.
Thomas: Oh I see that everywhere, more than just on John Oliver.
Thomas: I mean, people do tend to claim that because the law required them to fund retirement for 75 years or something, that’s part of it.
Andrew: Yeah, and spoiler, there are claims in that that are false.
Thomas: Hmm. Okay.
Andrew: So we’re gonna explain exactly what the Postal Accountability and Enhancement Act of 2006 did and then we’re gonna work our way through all of this and is it possible to save our democracy? The answer is a good solid “maybe.”
Andrew: You know, that’s as much optimism as I can bring to bear. The punchline is-we’ve talked about this on the show a lot, more so than usual. The Republican playbook has been to claim that government doesn’t work and then appoint people to sabotage government agencies when they get in power.
Andrew: Then point at it and go “see?” Donald Trump has, to continue with our 70s and 80s guitar rock metaphor, has cranked that up to 11. I cannot recommend highly enough if you’re not scared enough already reading Michael Lewis’ The Fifth Risk, which was written in 2018. Parts of it seem almost quaint right now. But Donald Trump has sabotaged the way in which executive agencies work from the inside and we’ve said over and over again, repairing the way government is supposed to function is gonna be a long-term project. It’s something to remember when you are disappointed two years into a Biden presidency of “well, he hasn’t done X and he hasn’t done Y.”
Thomas: Yeah, why didn’t they fix everything instantly?
Thomas: Should be a pretty simple job, right Andrew?
Andrew: There’s gonna be a ton of work to rebuild what Donald Trump has broken. So let’s get into it. First, I found out interesting trivia about the Postmaster General so I’m going to share them with you, because I didn’t know this. The Postmaster General is the oldest executive office in the United States.
Andrew: It dates back to 1775.
Andrew: Which means it’s older than the constitution, it’s older than the bill of rights, it’s older than the declaration of independence! The first Postmaster General was Benjamin Franklin.
Andrew: Yeah, that was really interesting. For a very, very long time, particularly in the 19th Century, the Postmaster General was a patronage position. So, had a lot of power to send out party franked mail, for reasons that would be super cool if we had the time to get into it, but we don’t, so I’m not gonna do that. But in 1971, as a backlash to that, while people were thinking about good government reforms – this is during Nixon’s first term but before he became Nixon.
Andrew: The Post Office was reorganized as an independent executive agency. What that means is that the Postmaster General cannot be fired by the President the way he can fire subordinate executive branch officials. He can only be fired for cause – or she can only be fired for cause as was the case with the past Postmaster General. So Donald Trump had to wait for the immediately previous Postmaster General to retire before he could nominate Louis DeJoy, and in fact, he could not nominate Louis DeJoy! You will see this everywhere, this is kinda like the first major misconception. The President does not nominate the Postmaster General, here’s what happens. This is 39 U.S.C. § 202, and this was part of the 1971 reforms.
Thomas: Involves a lady in a lake-
Andrew: [Laughs] Yeah, distributing swords, yes! Close. So what happens is the United States Postal Service is staffed by 11 Governors. Nine of them serve these staggard seven-year terms. We’ve talked about this language before, of those nine only five may be adherence to any same political party. The idea is – those were all mechanisms put in place to try and make the Postal Service a nonpartisan political agency. Then those nine get together and they elect a tenth person who will then be the Postmaster General, who is then also technically on the Board. Then those ten people get together and elect a Deputy Postmaster General.
[Sighs] Or at least that’s how it’s supposed to work. It will not surprise you to learn that as of right now there are six members – Governors – of the U.S. Postal Service. All six have been appointed by Donald Trump, so I tried to figure out – I did a lot of researching but then, you know, ran out of time to try and figure out who was the token person who was labeled a Democrat? I think it’s Donald Moak? Only five are supposed to be of the same political party.
Andrew: Trump has appointed all six, the other three spots are vacant, and he does not fill those because he would have to fill them with Democrats. So what’s he doing with those six? Six is a majority and the other power that the Board has is the Board of Governors can remove the Inspector General of the Postal System with the written concurrence of at least seven Governors. If all six of these people get together and Louis DeJoy, and they all agree to remove the Inspector General – the Inspector General, by the way, again staggered terms is Tammy Whitcomb.
She is a lifer in the Postal Service, she’s been there since 2005. She joined as an Audit Director, worked her way up to become Inspector General, she’s not a Trump hack, she has already been referred several requests to open an investigation on DeJoy. First question, Trump just can’t fire her the way he has other Inspectors General, but he can get his lickspittle board to get together with DeJoy to remove her. Keep an eye on that one.
Andrew: They have carefully planned this out. Now I alighted over – that’s what happened. These six people got together and Trump said “I want you to nominate DeJoy,” and they did. Now a couple of them released sternly worded crunch wraps that said “the Postmaster General is supposed to be an apolitical office and we have some concerns,” but they weren’t concerned enough not to nominate and vote for him.
Louis DeJoy has no experience with the Post Office. He’s the first Postmaster General in history – other than Benjamin Franklin who was the first one, right? [Laughs]
Andrew: But he’s the first Postmaster General in history to have no experience with the Post Office. He is, however, a major donor and mega-fundraiser for Donald Trump.
Thomas: What? No way.
Andrew: He was one of three deputy finance chairmen of the Republican National Committee along with Michael Cohen and Elliott Broidy. Yeah, he’s in great company, and he was the finance chairmen of the 2020 RNC until he was appointed Postmaster General. In fact, I cannot – I found no evidence that he has divested himself of that role, so he might be doing both jobs right now.
Thomas: Oh, wow.
Andrew: Raising funds for the RNC and also dismantling the Post Office. That’s great. It gets worse? Louis DeJoy was the CEO of a shipping company called New Breed Logistics that was acquired by a holding company called XPO Logistics in 2014 and, of course, XPO does business as a subcontractor to the Post Office. Not only did DeJoy not divest himself of his XPO stock, why would he do that?
Andrew: But he actually bought … stock options in Amazon after being nominated. After being nominated.
Andrew: He sold his Amazon stock but bought stock options in Amazon which will be way more valuable once he dismantles the Post Office. So… drain the swamp, yay… He’s gonna testify this coming Friday. We’ll be following that.
Thomas: This just sounds like – everything you’ve read off for, I dunno, the last five minutes sounds like the kind of thing that if we discovered it in a secret document would be like groundbreaking Watergate.
Thomas: But because it’s all out there and we know? Oh yeah, so this guy’s this, he’s gonna benefit from this, he hasn’t done this, he hasn’t told us that he bought this stock. It’s all known, and there’s nothing we can do about it.
Andrew: It would be disqualifying for any prior, and I assume any subsequent, President. It’s just more evidence of just the criminal indifference of the Republican party. They’re all in on Donald Trump just gets to put cronies in positions to profit. Yeah, Amazon has a deal with the U.S. Postal Service that’s basically at cost for the USPS to do the last mile shipping on remote Amazon packages.
Andrew: That go to rural areas. That Amazon deal is criticized by conservatives as the Postal Service not charging Amazon enough money to deliver packages to rural areas. We’re gonna talk a little bit about that and how ridiculous that claim is in a minute. Again, I just want to put both of those pieces together. Conservatives have simultaneously said that Amazon has a sweetheart deal with the Postal Service and also that they’re fine with the Postmaster General, in charge of the Postal Service, owning a ton of options of Amazon stock.
I’m out of words! [Laughs] I represent clients in transactions all the time and if one of my clients came to me and said “hey, here’s what I’d like to do,” I would say well, you’ll go to jail for doing that. You would if this were not the Trump administration. So there you go.
Here’s what DeJoy has done since assuming the office in June. This is two months that it took for this to come to light, and these are allegations from one of the many lawsuits that have been filed against the U.S. Postal Service. I’m gonna apprise the likelihood of success. I will tell you; I think we stand a reasonable chance of getting injunctive relief.
Andrew: Again, the reason it’s kind of a mixed bag, I’m gonna tell you about some of this. So every single one of these things that I’m about to tell you that he’s done were undertaken with the justification of “well, the Postal Service is losing a ton of money. These are cost cutting measures designed to make the Postal Service run more like a business.” Obviously, that will dovetail with the next part of this segment where we discuss who’s responsible and why the Postal Service is not profitable. Keep in mind, that’s the justification.
Here’s what he’s done – and look, I should add as a preliminary, there’s a top-level reason you would not expect the Postal Service to be profitable, and it is this: People use email instead of writing letters.
Thomas: And it’s not a corporation! The job isn’t for it to be profitable.
Thomas: You’ve probably seen the memes. People don’t say “wow, the defense department showed a $700 billion dollar loss last year.” No, it’s a service.
Andrew: That’s right. The critical aspect of that is the way in which competitors to the Postal Service are managed to be cost effective is they lop off the costliest parts of mail delivery.
Andrew: That’s why Amazon has its last mile shipping. It’s not always a mile, but it is yeah, we’ll get it out to a certain place but once you wanna go to Uncertain, Texas – that’s a real town, by the way.
Andrew: It’s called that because they’re uncertain which State it should be in. No, Amazon is like “we’re not gonna hire a guy to drive a truck to figure out where the state border is on Eastern Texas with Arkansas. No! We’ll let the Post Office do that nonsense.” In other words, a disproportionate amount of the costs are in these unprofitable routes to areas who, by the way, are overwhelmingly Republican voters! [Laughs]
Andrew: Keep in mind. But either you believe in a civic obligation to get stuff out to Uncertain, Texas, or you don’t. That’s where a ton of the fixed costs come. The other thing is, I made the joke and it’s not a joke. Since 2001 the number of First-Class letters have been on a steady decline. People send email instead of sending letters. But sending letters is still important, and you need the same level of infrastructure to send a lot of letters as you do to send a few letters. The costs remain the same, we think there is a civic obligation to deliver to every American, and some things – me telling you stuff I can replace sending you a postcard with sending you an email. I cannot replace mailing you your medication with sending you an email.
Andrew: So yes, the Postal Service has declining revenues, costs that – put a pin in this – staying about the same, and that’s not a great business model because, as you point out, maybe we shouldn’t think of this as a business when the major constraint is a civic obligation and not a business obligation.
In furtherance of that, here’s what DeJoy has done in two months: First, moved to decommission 10% of the Postal Service mail sorting machines, including one out of seven of delivery barcode sorters, DBCS machines. DBCE machines make up the bulk of the Postal Service’s mail sorting operation and are used, and we’re quoting from the complaint here, to sort envelope mail such as letters, postcards, and ballots – vote by mail ballots. They are capable of sorting 335,000 pieces of mail per hour and DeJoy came in in June and said, as part of our cost cutting measures, we’re gonna decommission 671 mail sorting machines including 502 of the DBCS by September 30th.
You may have noticed that in his interview with Nancy Pelosi, in his testimony before the House, DeJoy promised that they wouldn’t decommission any more machines.
Andrew: What he didn’t mention was that 95% of the machines that were scheduled to be decommissioned have already been removed according to the USPS’s own documents. Yeah, that damage has already been done, you need to get injunctive relief to require them to reinstate those machines. Some of the relief here is gonna be easy to get, that’s gonna be hard to get. So item number one, taking machines out of service that help us process mail.
Item number two, unspecified, but removing mail boxes. Again, the Postal Service has been steadily removing mail boxes because as people mail fewer letters you need fewer mail boxes. Previously this has not been a concerted effort, now it certainly looks like it is.
Item number three, this one has been publicly reported in a number of places. Since taking over, DeJoy eliminated overtime for Post Office workers.
Andrew: Again, you can kind of understand. You’ve gotta cost cut, overtime is time and a half, it’s expensive. Except that 20% of all of the work being done by Postal Service mail handlers were done as overtime. Postal Service employees (quote) “utilize overtime to handle surges in mail, including mail-in ballots during election season” (end of quote). That’s been eliminated and there has been no concrete promise to rescind that directive, instead what DeJoy has said is “we didn’t have a blanket prohibition on overtime and we won’t eliminate overtime just to eliminate overtime,” but they’ve reserved the right to say “we’re eliminating overtime because it’s not cost effective.”
Related to that, this is part of what they call streamlining operations, DeJoy directed that late trips and extra trips to ensure timely delivery of mail (quote) “are no longer authorized or accepted,” (end of quote). You may have seen this in your house. We have – it’s actually gonna come in a couple of minutes during our record – a pretty regular time at about 4 pm.
Andrew: When the mail carrier comes and my dog goes nuts.
Thomas: Also known as edit point! [Laughs]
Andrew: Yeah, it’s an edit point because Lily goes crazy. Most people have the same thing, the mail carriers keep to a regular schedule, but have you ever checked the mail, gotten your mail, and then checked it a couple of hours later and there’s been a second delivery or a third delivery?
Thomas: Yeah, yeah.
Andrew: Yeah, happens all the time. The reason it happens is those are late trips and extra trips. The reason that happens is because the sorters will spit stuff out later, people will come back from their rounds, they’ll check the boxes, and letter carriers will say “oh man, this was mailed three days ago, let me take another trip out and stick this in the mail boxes sot that people get their letters on time.” Because again, this is a civic-minded service. Those have now been cancelled.
The Postal Service has directed postal workers to leave mail behind at distribution centers for delivering the following day if (quote) “collecting it would delay letter carriers from their routes,” (end of quote). That is a longstanding reversal of the policy to not do that thing, to take extra routes in order to make sure mail didn’t sit for an extra day. You mad yet?
Andrew: Because yeah, you should be. On July 16th of 2020 the Postal Service informed the letter carriers union about a new initiative called Expedited Street/Afternoon Sortation, under which (quote) “city carriers will not sort any mail during the morning operation, but will instead sort delivery in the afternoon upon return from street delivery. That is designed to reduce morning office time to allow carriers to leave for the street earlier.” That’s the justification, but again think about what that means. That means we’re now taking away a morning sorting of mail and if you sort it in the afternoon you combine that with the late trips restriction, that means it’s gotta take an extra day. It is adding one day onto every bit of incoming mail.
Andrew: Yup. [Laughs] I’m not done. They fired a whole bunch of people, and I’m not gonna go through it, but they fired a whole bunch of people and announced a management hiring freeze and voluntary early retirement program for employees not represented by the collective bargaining agreement.
Next. [Sighs] And this is something I think we will be able to get an injunction to reverse. A lot of those things I just mentioned, they’ve already happened and it’s gonna be really, really hard to say “oh you’ve gotta hire people back, you’ve gotta put mail boxes back out on the street, you’ve gotta put sorting machines back in service.” That’s tough to-
Andrew: To, you know, undo. This, I’m optimistic we’re gonna get an order on this and I’ll tell you why. Postmaster General DeJoy ended the practice of treating all election mail as priority mail.
Andrew: Yeah! Has always been the historical position of the Post Office that ballots are to be treated as priority mail. In 2018 95.6% of all vote-by-mail ballots were delivered within 1-3 days, which is functionally equivalent to the faster first-class mail standard. The Postal Service announced that it was ending the practice of prioritizing all election mail and to prepare for – and again, these are their words, testifying before Congress (quote) “slower delivery times and an increased risk that voters will not receive their ballots in time to return them by mail” (end of quote).
If that’s not enough I’m gonna include, this is a separate link, this is not in any of the complaints, but the evidence broke a couple of days ago that as part of those omnibus instructions, postal clerks were now instructed that they could not provide a witness signature on ballot envelopes. So sometimes ballots require you to have a third-party signature as a witness, it tells you, you can go to the Post Office and they will say “oh yeah, I saw you sign this ballot.” Kind of like a notary function. The instruction was (quote) “performing this function is not within the scope of a postal employee’s duties and is not required by the Postal Service’s regulations.” (End of quote).
Thomas: Can they stop them, though, from doing that?
Andrew: So, yeah, because when your boss says “don’t sign this anymore,” then you as a Postal Service employee will say oh yeah, sorry, I was told not to do that.
Andrew: And if you’re asking has that already happened? I’m going to include; this is from the Anchorage Daily News. Again, you might think, Alaska, probably pretty important for people to want to vote by mail, right?
Andrew: Alaska’s ballot instructions say “have your signature witnessed by an authorized official, or if no official is reasonably available by someone 18 years of age or older.” Then it says “an example of an authorized official is a Postal official.” Then there are – testimony here, this is from a person named Shelly Delaney who said “so I went to the Post Office to mail my absentee ballot, and even though it says very clearly on the instructions that Postal officials can sign your witness affidavit, the folks working the counter downtown said they were not allowed.”
Andrew: So yeah. Again, you might say this seems kinda like tinfoil hat territory and Andrew, you don’t delve into conspiracy theories, what gives? Um, this would be all tinfoil hat territory if Donald Trump hadn’t explicitly said “I’m instructing the Post Office to slow things down.”
Thomas: I don’t think any part of this is tinfoil hat.
Thomas: I mean, it’d be tinfoil hat if you had no evidence of it.
Andrew: Yeah. We have explicit evidence for all of this. So let’s ask, is the Post Office bankrupt? The answer to that is yes.
Thomas: Hmm. What does it mean to be bankrupt if you’re the –
Andrew: That’s a great question. What I mean by that is heading into 2020 the U.S. Postal Service had $161 billion dollars in outstanding debt. The net worth of the United States Postal Service, negative $161 billion dollars. That’s a lot of money.
Andrew: And we’re gonna talk about how they got to negative $161 billion dollars. Look, in the abstract saying “this entity is worth negative $161 billion dollars, maybe we should cut some costs,” it’s not a crazy thing to say.
Andrew: The claim you have seen, it’s a Facebook meme, is the reason that the Postal Service, that the U.S. Postal Service is worth negative $161 billion dollars is the Postal Accountability and Enhancement Act of 2006.
Andrew: That claim was made by John Oliver on his show. It’s not quite true. That Act is a disaster, and I’m about to tell you why it’s a disaster. It was passed by a voice vote in both the House and the Senate in the lame duck Republican Congress in December of 2006. You might remember 2006, blue wave election year, the Democrats retook both the House and the Senate. In December of 2006, so they’d be sworn in January 3rd, 2007, so in some late minute housekeeping the Republicans passed this Postal Accountability and Enhancement Act. We have no idea who voted for it and who voted against it, there was no call for a division.
It is 39 U.S.C. § 201 and there forth. The best analysis of this comes from the Independent Congressional Research Service, they did an analysis of this bill in 2009. The bill did a couple of different things. The first thing that it did that is 100% true that was noted by John Oliver and that is mostly indefensible is that it imposed an obligation on the Postal Service to pre-fund healthcare costs for future retirees. What that means is usually your costs are on a pay as you go basis. When somebody retires the Postal Service then pays out their retirement healthcare benefit, that shows up as a line item. If somebody retires in 2013 that shows up as a line item on their 2013 budget.
Andrew: That is the way every government agency does it. This law required the USPS to prefund those obligations. That was a ten-year amortization of those obligations at $5.4 to $5.8 billion dollars per year. Under the calculations provided by the Inspector General of the US Postal Service, that imposed net present costs of $54.8 billion dollars on the U.S. Postal Service.
Thomas: Well that certainly sounds like it would contribute to this big number.
Andrew: It absolutely did, and let me give you another piece of evidence for that. The total number that the U.S. Postal Service lost over that time period was $62.4 billion.
Andrew: So you would say, right, okay, admittedly $7.6 billion dollars is still a lot of money, but you can see where somebody would look at this and be like, yeah, they lost $62 and a half billion, they had to pay $55 billion that no other government agency has had to pay, so… yeah. Why am I saying this is not entirely true? Here’s why. It actually has to do with an earlier bill, again, passed Republican Congress, Republican President George W. Bush, called the Postal Civil Service Retirement System Funding Reform Act of 2003. It goes by the snappy acronym of PCSRSFRA.
The allegation, bipartisan, was that they were over funding retirees’ pensions – that is putting more money aside and saying hey, we need even more funding than this because we need this money for our retiree’s pensions, and it turned out that they didn’t. That PCSRSFRA reduced as a matter of law the amount of money that the U.S. Postal Service could set aside for pension out-pays, and it also said – because one of the reasons that the U.S. Postal Service gave was they said yeah, we’re funding these military pensions. People in the military who have worked for the Postal Service, they’re entitled to certain pensions and we’ve been funding those, that’s why we’ve overfunded. That was part of their explanation.
So, Congress said okay, why don’t you take that on then? You say you’ve been funding military service-related pension costs, but as it turns out that’s also been separately funded by the U.S. Treasury, so we’re gonna make you – the U.S. Postal Service – responsible for those obligations. That was $27 billion dollars in costs that was imposed on the Postal Service in 2003 as a result of its pensions. And, in something that you might not expect, and I think this was part of why the bill was able to sail through Congress with bipartisan support.
The 2006 Act, the one that everyone is so critical of, imposed those healthcare costs, the prefunding of the healthcare costs, but also relieved the U.S. Postal Service of that $27 billion dollar obligation in the military pension costs.
Andrew: So in other words, there was an offsetting number to that $54.6, and that offset was about half of it, about $27 billion.
Andrew: The way I look at it, if that 2006 Act had not been passed, the delta would not be $7 billion but would be about $30 billion dollars, about half of the Postal Services decline from 2006 to 2017 is due to that prefunding requirement. That’s still a super bad thing, it’s certainly something that we should criticize, but I think it’s not correct and I think it’s important to be right to say that it’s not just an accounting trick. Here’s why, it’s not just because we wanna be right about the law, but because blaming it on overfunding is a little reductionist about the other evil thing that the bill did.
This comes directly from the U.S. Postal Service itself, which as put out a fact sheet. They describe the 2006 model from that bill, the Postal Accountability and Enhancement Act of 2006, being (quote) “imposed on us.” Here’s what it did. It said that the U.S. Postal Service, the products that they could offer, would be divided into two categories. It eliminated anything that didn’t fall into these categories, and you might remember from the John Oliver special that included, you know, some creative merchandizing stuff.
Andrew: Like U.S. Postal Service costumes for dogs and things like that.
Thomas: [Laughs] Oh yeah!
Andrew: Yeah. Again, who knows, but it seems weird to have a criticism of “the Postal Service isn’t being run by a business,” and then stripping it of an entrepreneurial thing that it did.
Andrew: Trying to sell and partner with-
Thomas: More dog costumes, dammit!
Andrew: Yeah! Instead they divided up their products into two categories. Market dominant, i.e. monopolistic, and competitive classes. So, the market dominant products were first class mail, periodicals, parcel post, media, bound printed mail, library mail, special services, and single piece international mail. Those are the things that only the Post Office really can deliver.
Andrew: Then competitive products were defined as priority mail, expedited mail, bulk parcel post, bulk international mail, and mail grams – and I don’t know what the hell that fifth thing is. [Laughs]
Andrew: But those first four things, those are things that UPS and FedEx and other services do. By segregating out into the two categories they then – and that was driven by Republicans who were alleging that they were using their market power over their monopoly products to subsidize their competitive products. That’s a good argument. It makes you wonder why Republicans only ever raise that argument against the Post Office! [Laughs]
Andrew: And not against actual monopolies, who do that. That’s called an illegal tying arrangement when companies do that, and Republicans haven’t cared about that for 40 years, but we’ll file that one separately.
So the 2006 model segregates those out into two separate categories and then says okay, with respect to your monopolistic products you can only increase the price consistent with the consumer price index for all urban consumers, the CPIU, which is basically tied to a measure of inflation.
Thomas: Well that sounds like a good thing probably. I mean, again, under the theory that the Post Office is a service and not a profit center.
Andrew: That’s exactly right! It’s a great thing from the civic mindset-
Andrew: But it’s a terrible thing from the business mindset. Imagine if you told companies, “you can only increase the price of your goods and services by the amount of inflation.” That would cause a great many companies to go out of business. Whatever happened to “let the market decide?” Again, it’s a fair argument to say back “well there’s no competitive market here because it’s a monopoly,” but I would point out conservative economists for years have been saying – I mean, for a century – have been saying, you know this from your undergraduate degree, that monopolies have, in individual times slices, have incentives to price their goods optimally because that ensures the maximum return. Even in a monopolistic market assuming that you don’t have completely inelastic demand, and we know you don’t because there are alternatives, that even in a monopoly you have incentives to price your goods fairly. I don’t wanna get too deep in the woods on an econ debate, but I will tell you, yeah, you can see that passing with Democratic support, being like yeah, let’s make sure the Post Office can’t jack up your rates. But that straightjacket – when you say “oh the Post Office is losing money,” well, you know, no Clownhorn!
Thomas: Yeah. [Laughs]
Andrew: [Laughs] Because the kind of things a business would do in this situation are the things that they’re prohibited by law from doing. On the flip side [Laughs] “prices of products in the competitive class” – I’m reading directly from the law here – “must be based on market factors such as costs attributable, which are defined as the direct and indirect portal costs attributable to such products through reliably identified causal relationships.” What that means is that the Postal Service can’t set the price on their competitive goods lower than the actual cost to deliver.
In other words, they’re always going to come up short compared to FedEx and UPS because the comparison is to what other companies in the market are charging! So this is designed to make the USPS not a competitive business entity. Again, in any sensible country we would just be like “yeah, right.” That’s the cost of doing business of having that last mile service, of having any service. Alaska! That’s why the Postal Service is under attack.
I thought it was really, really important to look through the structural problems that were imposed as a result, not just of that 2006 law but kind of the history of Republican attacks on the Postal Service.
Thomas: Well so, okay, just to clarify, the retirement thingy doesn’t account for everything, but-
Andrew: It does not account for everything.
Thomas: I mean, other-
Andrew: But it does account for a lot! [Laughs]
Thomas: Well yeah, yeah. Like half of the total shortfall kind of.
Thomas: But also, the other reasons are other Republican attacks on the Post Office? Or how would you overall summarize?
Andrew: The other things are – I would say this, to try and steelman as much as possible. The other things are structural conditions about the Post Office that either reflect civic obligations or efforts to sabotage the Post Office. [Laughs] Some of them are well meaning, like we just talked about.
Andrew: The inflationary provision.
Thomas: If we just – if Congress, if there were such a thing, just passed a bill that said “well now they have more funding,” then there’s not really a shortfall. I guess I don’t understand, are we just judging this thing as a thing it shouldn’t be? Are we judging the Post Office as a profit center, as a business, when that’s not what it is and we should think of it as a service?
Andrew: Yeah, at the end of the day you’re talking about moving around accounts on paper. Let me give you this as an example: in 2009 during the height of the great recession.
Thomas: During the first economic collapse that millennials had to deal with …. Yeah.
Andrew: That was the first time that the Postal Service defaulted on that prefunded healthcare costs for the future retirees. So they couldn’t make that payment in 2009. Then Obama’s 2010 budget reduced the obligation by $4 billion dollars on paper, but [Laughs] and this is contributing to it now, they didn’t just forgive the $4 billion dollars, they amortized it after 2016. [Laughs] So in other words, the failure to make payments in the late 2000s and early 2010s just got shifted forward to now.
Andrew: When you’re looking at the Post Office being unable to make payments during this COVID-related economic crisis. I guess that’s a way of saying that all of this is an accounting measure. At some point there needs to be an understanding of how all of the various divisions of the government get funded, right? [Laughs] Whether the liabilities, say, for military employees, are allocated to the treasury or allocated to the Postal Service, they still have gotta be paid by somebody. As it turns out, they get paid by the United States borrowing money from China.
Andrew: So all of that is a way of saying this is inter-related. I’m not poo-pooing the debt, the United States debt crisis. I am saying the idea that you want the Postal Service to be self-sufficient because the Postal Service is doing a thing that you can do in the private sector is not a great argument. Not just not a great argument from a political perspective, but I think when you examine the law you see that the Postal Service provides services not provided by the free market and are constrained in ways that the free market is not constrained. So, the next time you hear Uncle Frank say “well you know, FedEx can do X, Y,” no they can’t, and there’s not a chance in hell that FedEx would want to deliver to rural addresses in Alaska. Alaska’s a reliably Republican State. We wanna lose all of their mail-in ballots? I mean, we’re not the party that does that. It really is, as with so much of the Trump administration, it is Trump’s voters who are going to be the most hurt by Trump’s policies.
Thomas: Yup, he does not care. [Sighs] What’s the overall bottom-line on the, you know, the pictures we’re seeing? The mailboxes removed, I know you mentioned it and I was wondering too how much of this is routine, how much of it isn’t? The mail sorters. If you could bottom line that for us, how much of that is misunderstood, it’s kind of routine, and how much of it do you think is part of this attempt to totally undermine the election?
Andrew: The answer is we don’t fully know yet, but we will know soon.
Andrew: And to the extent that you can put the genie back in the bottle I think we will, here’s why. As a part of the same 2006 law- [Laughs] What the Republican Congress giveth they’re allowed to take away. It is 39 U.S.C. § 3661 and it requires that the Postal Regulatory Commission provide an opportunity for hearing on the record under the Administrative Procedures Act with input from the Postal Service from users, public notice and comment, before there are any major policy changes undertaken to the Postal Service. As we’ve talked about with the Trump administration’s dismal record in administrative cases, DeJoy came in and crammed these policies through. There was no notice and comment, there was not administrative hearing, there was no opportunity to be heard, there was no opinion by the Postal Regulatory Commission. It is clear as Kushner that they violated the law and they violated the Administrative Procedure Act and a court will issue an injunction undoing – ordering DeJoy not to implement the changes, the cost cutting initiatives that we described in those opening segments. That’s why I spent so much time talking about how much can be undone and how much can’t be.
Andrew: They’re all illegal.
Andrew: I wanna be very, very clear about that, 100%. They’re not illegal because substantively, they’re illegal because the Postmaster General can’t come in and implement unilateral changes to service without a notice and comment period. The law’s crystal clear on that. So now the question is how broad can a court craft injunctive relief to undo the damage? That we’re gonna have to find out. For example, I listed the plans were to decommission 671 mail sorting machines including 502 of the high speed DBCS, the most crucial ones, and apparently, they’ve done 95% of that already.
Andrew: Can we get those back in service? I dunno. It depends on the record that is elucidated as to exactly what transpired with DeJoy’s instructions and exactly what the court can order him to undo. The court’s gonna say these are invalid and you’ve got to undo it and the question is how much can they get away with anyway? It’s gonna be tough. We need to be vigilant. This is an area where – again, even if you’re wrong, we talked about that. Viewing a picture of a mailbox strapped to a truck is not prima facia evidence of anything improper, but keep taking those pictures.
Thomas: Right, yeah.
Andrew: Because this is an area where within a week 20 different States filed or joined federal lawsuits against the USPS and DeJoy; where State investigations were opened, again because people are sort of rightly suspicious about federal action right now; where, because this is interfering with people getting their mail.
Andrew: I just had on an unrelated litigation matter I had a letter come in that was sent hard copy to my office. It was written and dated August 5th, it arrived in my office [Laughs] which, again, is down the street from the agency that sent it, twelve days later on August 17th.
Andrew: Yeah. As a result, people are complaining to their elected representatives, and even Republicans have felt that because if you don’t get your mail you might be 100% pro-Trump, but you know… this has happened to us. My son’s prescriptions for his medication got delayed in the mail because the mail sucks right now and when that happens people get angry and people call their elected representatives. One of the things that elected representatives know is when my constituents are super angry saying “well yeah, but this helped Donald Trump” is not a great answer. Keep doing it, this is an example of minimal citizen activism has really resulted in tremendous response. I don’t wanna sugarcoat it, I don’t wanna say it’s not bad. It’s bad, and they may not fix all of it, but we’re not powerless and that’s a good thing.
[Patron Shout Outs]
T3BE – Answer
Thomas: It is time for the answer to last week’s T3BE.
Andrew: This was a “one weird trick”-ish question. We took a look at a state law that restricted abortion, was challenged in state court as violating the due process clause of both that state constitution and the U.S. Constitution. It went all the way up to the state Supreme Court which said that the law violated the due process provisions of both the U.S. and the state constitutions. So, the question was, the losing party, here would be the state, petitions the U.S. Supreme Court. May the Supreme Court grant cert and take up this case? You narrowed it down to A, no because the state court’s decision in this case rests on an adequate and independent state law ground, or D, yes because the U.S. Supreme Court has appellate jurisdiction over decisions that find state laws in violation of the federal Constitution. You hemmed and hawed at the last minute- Oh, I do wanna say by the way, you eliminated B and C and really, really good work on that.
Andrew: These are the two best answers.
Thomas: Alright, alright.
Andrew: You parsed out that B, while sort of superficially appealing is nonsense.
Thomas: It’s kind of backwards right?
Thomas: Oh okay, good, I’m glad. [Laughs]
Andrew: [Laughs] Absolutely! Again, look at the reasoning you used, because B says the Supreme Court has appellate jurisdiction only over state court decisions that determine the constitutionality of federal laws.
Thomas: Yeah, that didn’t make any sense.
Andrew: Yeah, that’s not true. Or yes, they have jurisdiction over any ruling of a state’s highest court based on an interpretation of federal law.
Andrew: Well that’s not true either, because a state might say “we are interpreting this federal law as violating the state constitution and being inapposite” and if the federal law was not designed to preempt state law that could be a valid holding in that state-
Andrew: That would nevertheless not be reviewable by the Supreme Court.
Thomas: I had hoped there would be some exception.
Thomas: I couldn’t think of that one off the top of my head, but okay.
Andrew: Exactly right. Sadly, the answer is A.
Andrew: The reason why – you were so close.
Andrew: The reason why – so really the question comes down to is the state’s Supreme Court decision reviewable based on the way that it’s pled by the parties or based on the way that it’s decided by the court?
Andrew: So if it’s D then the answer becomes that it depends upon how the parties plead it. If the parties say “this violates the U.S. Constitution,” then even if the state Supreme Court were to say either yes or no or we don’t care, they can’t get around it, that would then automatically make that case potentially appealable to the Supreme Court. Under A you can say the state Supreme Court has the right to opine on its interpretation of the U.S. Supreme Court, that interpretation would not be binding, would be dicta-
Andrew: So long as the decision in the case rests on independent and adequate state law grounds. In other words, if we say this definitely violates our state equal protection clause, we think it also violates the federal equal protection clause, then that’s not appealable to the Supreme Court. Think about why that is.
Andrew: Because the Supreme Court could take that up and say “yeah, yeah, yeah, you’re totally wrong about the federal equal protection clause, we’re remanding back,” and then the states would be like “right, but it still violates our state equal protection clause,” so it wouldn’t change the result. The only thing it would do is clarify that the state Supreme Court result is dicta, and the state’s Supreme Court has already announced that it’s dicta. If there are adequate and independent state law grounds then their decision is not binding on future courts outside the state anyway so there’s no reason for the Supreme Court to take it up and there’s no effective relief that they could award in that situation. Real, real close.
Thomas: I should’ve gotten it. I blew it.
Andrew: It’s a hard question, it’s a very, very narrow distinction between A and D and it really is a question of how was it pled versus how did the court decide. You thought it depended on how the parties pled it and it depends on how the court decides it. There you go, great analysis. I’m sorry you got it wrong, I feel like you should get partial credit but I can’t do that.
Thomas: I’m disappointed in myself. [Sighs] I should’ve had it, I shouldn’t known also from an efficiency standpoint I feel like you don’t wanna create unneeded reasons why another court could look at something.
Andrew: Yup, yup.
Thomas: I should’ve – [Sighs]
Andrew: That’s a good one too.
Thomas: I should’ve been able to figure it out. Oh well.
Andrew: It’s tough.
Thomas: I’m disappointed.
Thomas: Future Andrew, why don’t you tell us which amazing listener got it right and bested me on this week’s T3BE.
Andrew: Well Thomas, this week’s winner is Andrew Drake on patreon over at patreon.com/law, who in the thread says “I’m going to go with Answer A, because the Supreme Court can only take up a case if they can do something about it. The 14th Amendment’s presence in this question is an Attractive Distraction. The question is testing the Separation of Powers between the Supreme Court of the United States and the State’s Supreme Court. The State Supreme Court’s decision rests on an interpretation of the State’s Constitution. SCOTUS can only review such decisions if the State’s Constitution is in conflict with Federal Law.” That’s an excellent, pithy explanation. Better than the one that I gave. While a lot of people on Twitter also came up with A, a lot of people went with D, a lot of people went with C, I’m gonna give Andrew the win here because this was just an outstanding explanation. So congratulations, and thank you for supporting the show over at patreon.com/law, and enjoy your never-ending fame and fortune outside the patreon forums.
Thomas: Thanks so much for listening! And we will see you fine folks on Friday for another rapid response. Hopefully a few more Trump cronies are indicted last minute so Andrew can do some more research.
Andrew: [Laughs] I promise to do research whenever Trump cronies get indicted.
Thomas: There you have it! We’ll see you next time!