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The Trump Era

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How Trump would Resolve Insolvent U.S. Postal Service

December 30th 2017

Mail Room

President Donald Trump, who continues to show his prowess in the use of social media to reach the American public, suggested how the U.S. Postal Service might show a profit in the future. The President wrote: “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging much more!”

Amazon and USPS have worked out a deal to deliver Amazon’s packages for less than it would pay for other delivery services. According to Bloomberg, analyst David Vernon estimated that the postal service delivered 40 percent of Amazon’s packages in 2014. Citigroup estimated this year that delivery of an average package through USPS an additional $1.46 should be charged if costs were “fairly allocated.”

Because Amazon ships millions of packages each year, the subsidy adds up to a substantial amount of money each year. Amazon recently purchased the Whole Foods grocery chain, which means that it deliver perishable food, too.

Amazon pays USPS half as much to deliver packages on the “last mile” or final leg of delivery from the company’s several shipping hubs to their ultimate destinations than either FedEx or UPS would charge, according analyst Vernon. In the Wall Street Journal, Josh Sandbulte wrote in July, "It is as if every Amazon box comes with a dollar or two stapled to the packing slip — a gift card from Uncle Sam."

Sandbulte added, "Amazon is big enough to take full advantage of 'postal injection,' and that has tipped the scales in the internet giant's favor." The deal with Amazon does yield some benefits to USPS. Delivering packages is profitable for USPS, even while letter delivery is a loser. In the most recent quarter of this year, USPS lost $2.1 billion. Amazon is owned by Jeff Bezos -- one of Trump’s frequent critics, who also happens to own the Washington Post.

Meanwhile, cities throughout the country are wheedling the retail giant to choose one of them as the site of its second headquarters: HQ2. Some cities have offered to re-name themselves, others have offered tax breaks and other inducements. Philadelphia has shown its brotherly love to Amazon by spending some $245,000 to woo the company, according to Philadelphia Weekly. For its part, Amazon is offering to bring 50,000 new jobs and and investment of $5 billion to build its new headquarters. Cities and states are spending hundreds of thousands of dollars to see Amazon build there.


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