Dayen on TAP: Treasury’s Role in the Postal Sabotage

After the House and Senate scheduled hearings with Postmaster General (and frequent donor to Senate Republicans) Louis DeJoy, he rhetorically gave up on his operational efforts that have slowed down the mail, saying he is “suspending these initiatives until the election is concluded.” This includes changes to retail hours at post offices, removal of sorting machines and post office boxes, closures of processing facilities, and restrictions on overtime.

This is a welcome development that shows what a dedicated opposition can accomplish, even without the levers of power. But it all needs to be verified, and the previous changes, like with mailboxes and sorting machines, need to be reversed. And congressional Democrats should still scrutinize how DeJoy’s appointment sprang from a bit of financial extortion.

In March, Democrats sought federal funding for the Postal Service, which usually sustains itself through its own revenue. Eventually, Congress approved a $10 billion line of credit, but left it to the discretion of the Treasury Department. This was a mistake.

Steven Mnuchin, the Treasury secretary, immediately took the opportunity to demand “sweeping operational changes” to the Postal Service, using the $10 billion loan as bait. Treasury sought influence in postal pay and benefits, the terms of large contracts, and hiring decisions like the next postmaster general, which happened to be open at the time.

DeJoy’s predecessor, Megan Brennan, announced her retirement last October, well before the pandemic. In normal circumstances, the USPS Board of Governors does the hiring. But there appears to have been interference from Treasury. One reason we know this is that David Williams, vice chair of the Board of Governors, abruptly resigned his position in May. I reported at the time that this was in protest of the Board of Governors caving to Treasury on handing over effective operational control. (Williams will brief the House Progressive Caucus later this week on what he knows.)

Reports have indicated that Mnuchin was “involved in recruiting DeJoy.” Treasury released the $10 billion line of credit on July 29, after DeJoy’s appointment and on the same day that the USPS informed 46 states that mail-in ballots could be delayed and disrupt the election.

DeJoy’s actions since his hiring align with the demands Treasury was reportedly seeking. DeJoy reshuffled senior management; Treasury wanted a say in staffing. DeJoy canceled overtime for postal employees; Treasury wanted to reduce postal pay and benefits. For the full blueprint, scour Treasury’s task force proposal on the USPS, which union leaders presciently warned would “slow down service, reduce delivery days and privatize large portions of the public Postal Service.”

Meanwhile, the line of credit has sat unused since July 29, even as the House prepares legislation for a $25 billion USPS grant. Treasury decreed that the line of credit cannot be tapped until USPS’s cash balance falls below $8 billion; right now it sits at $13 billion. One reason for that is … Louis DeJoy blocking overtime and carrying out operations with understaffed personnel. Reversing the managerial changes (which DeJoy promised, and the House bill would also accomplish) will intensify the need for more funding, with less than three months to Election Day.

The evidence is strong, though circumstantial, that the Treasury Department, under Trump’s direction, used a $10 billion lifeline to install a saboteur at the U.S. Postal Service. Democrats should keep digging. Maybe Secretary Mnuchin needs to sit alongside his star recruit DeJoy.