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Trump Targets a Postal Service Rainmaker: Package Delivery

14 April 2018

President Donald Trump has formed a new task force to examine the operations model of the U.S. Postal Service, in view of mounting financial losses.

The President did not mention Amazon in the order but he has often railed against Amazon - in public and in private conversations with his advisers and friends - complaining about Jeffrey P. Bezos, the company's billionaire founder and chief executive, the daily said. Amazon is owned by Jeff Bezos, who also owns the Washington Post.

But Amazon is probably helping, not killing, the USPS: A Citigroup analysis a year ago reportedly said that Postal Service prices would have to be increased by $1.46 per package in 2017, $1.41 in 2018 and $1.31 in 2019 to reflect the true costs of delivery and close its revenue shortfall. "The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout". Amazon likely gets a volume discount on its packages, but the Postal Service isn't losing money from the deal.

The order said a decline in first-class mail volume, coupled with legal mandates that force the USPS to incur substantial and inflexible costs, resulted in a deficit where revenues can no longer fund pension liabilities and retiree health obligations owed to current employees.

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Fox News politics editor Chris Stirewalt on President Trump's attacks against Amazon and what the president's motives for attacking the e-commerce giant may be.

While acknowledging its serious fiscal situation, the Postal Service issued a statement late Thursday saying the order provides an opportunity to consider "fundamental statutory reforms". Package deliveries have been rising year over year, so some suggest Amazon is actually helping USPS stay financially afloat. Will this task force manage to dig up the nonexistent findings that the president desires, or will it go the way of Trump's Election Integrity Commission (that he established to prove voter fraud in the election he won) and eventually be dissolved like a sad balloon?

Whether or not Amazon spurred the government audit, Schulman says its analysis of the Postal Service should be conducted as a part of routine business.

The Postal Service says the law requires that such negotiated contracts must cover the Postal Service's costs and that postal regulators have studied the contract and approved it. Credit Suisse estimates this could amount to a hit of $1 billion to $1.8 billion to Amazon's bottom line. That appears to be working out for USPS, which said the growth in its package business was "a result of our successful efforts to compete in the ground shipping services and "last mile" e-commerce fulfillment markets, including Sunday delivery", in another financial report past year.

Trump Targets a Postal Service Rainmaker: Package Delivery