The Real Story Behind Trump’s “Amazon.com” Tweet

A tweet from President Donald Trump the other day about Amazon.com appeared to come out of left field.

“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?” he asked. “Should be charging MUCH MORE!” read the tweet.

As seemingly random as the tweet was, it was likely sparked by something in The Washington Post (which is owned by Amazon founder Jeff Bezos) that ticked him off.

And he’s right, by the way. While Amazon boasts a market value of nearly $600 billion at the time of writing, they are subsidized by the USPS when it comes to shipping. The independent government agency saw revenues of $68.9 billion in 2015 – and lost $5.5 billion on that. They lost roughly the same in 2016.

While the American Postal Workers Union claims that the service runs entirely on funding from stamps and postage, that’s not entirely true. They do technically receive $100 million annually in federal funding, but that’s less than one percent of their budget. The real lie comes from the fact that the agency has tens of billions of dollars in debt, and you’d be fooling yourself if you think it’s anyone other than the American taxpayer who will be responsible for bailing them out.

Oh – and it’s worse then it seems. The government literally gives the USPS a monopoly on daily mail delivery, which one analyst estimates gives the agency a $14 billion revenue boost. In other words, if there were private firms allowed to compete, the USPS would do $14 billion less in revenue every year. Can you imagine being granted a $14 billion handicap and still managing to lose money?

Regardless, while the agency are hemorrhaging billions, does it really make sense that they should be subsidizing Amazon?

As the Washington Examiner reported,

Since 2007, the Postal Service has been required to allocate 5.5 percent of its fixed costs to package delivery and to incorporate that into its pricing. That figure made sense then, but today, 25 percent of the Postal Service’s business is package delivery. And thanks to features of the Amazon deal – such as Sunday delivery, grocery delivery, even delivery from fish markets to local restaurants – the expenses have climbed.

In fact, they’ve climbed so much, according to a recent analysis by Citigroup, that the Postal Service should be charging Amazon $1.46 more per package than the $2 or so it does now. “Amazon now enjoys low rates unavailable to its competitors,” the Journal story said. “It’s as if Amazon gets a subsidized space on every mail truck.”

For every Amazon package it delivers, the Post Office loses $1.46. Following this formula is one that has allowed them to mount $60 billion in losses over the past decade.

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