Possible Presidential Takeover of the USPS

Possible Presidential Takeover of the USPS

American Enterprise Institute Senior Fellow Dr. Kevin Kosar joined NAPS Director of Legislative & Political Affairs Bob Levi on the Feb. 21 episode of NAPS Chat to discuss press reports that President Trump plans to take over the U.S. Postal Service by firing its Board of Governors and folding its governance and operations into the Department of Commerce. Newly confirmed Commerce Secretary Howard Lutnick has expressed interest in privatizing the USPS.

Levi: Today we have with us a returning guest, Kevin Kosar, a senior fellow at the American Enterprise Institute. His expertise covers Congress, the administrative state, American politics and the Postal Service. Kevin, welcome!

Kosar: Bob, good to be back.

Levi: It is rather auspicious for you to appear with me on this episode of NAPS Chat. Yesterday, the Washington Post broke a story indicating that President Trump shortly would sign an executive order that would dismantle the Postal Service as we know it by firing all the Board of Governors and folding the agency into the Department of Commerce, led by Secretary Lutnick, who has been quoted as supporting privatization of the Postal Service. What’s your reaction to all this?

Kosar: On the one hand, it’s stunning because it would be an action that is brazenly contrary to the plain language of the law. The 1970 statute has been around 55 years and says quite clearly the Postal Service is an independent establishment of the Executive Branch.

It has an appointments provision that provides for the president and Senate to choose the governors. Ulti mately, those governors choose the postmaster general; the board is supposed to serve a very important function in the design of the Postal Service—managerial, but also representative.

The idea is the Postal Service is a public service, so you should have America’s pluralism reflected to some degree on that board. So, for President Trump to just say we’re going to fire everybody on the board and fold it into another department, it runs clearly against what the statute says.

On the other hand, if I intuit what they are up to, essentially, this is part of a larger conservative play against the administrative state, much of which comprises independent agencies not directly answerable to a president. We’ve seen this with the Consumer Finance Protection Board, for example.

I think the strategy here is Trump will act and then say, “Sue me.” And, no doubt, somebody will sue. The Washington Post article indicated the governors themselves are thinking about filing suit. Then it will go up to the court and the high court is going to have to decide whether or not the statute, 55 years old though it is, if its appointments provisions are unconstitutional or whether there are larger constitutional questions.

BLet’s say you believe the 1970 Postal Reorganization Act, on which the Postal Service is structured, is unconstitutional because of its appointments—it subsequently created an inspector general who is accountable and hired by the Board of Governors that may no longer exist. You have a Postal Regulatory Commission that has certain functions within that act that are presidentially nominated and Senate-confirmed. You have rate-setting processes, you have a whole series of intertwined federal responsibilities and rules. How do you untangle that in the Department of Commerce, which has had absolutely no experience in postal operations in the history of our country.

Kosar: I would say immediately, regarding the idea the Postal Service would be folded into Commerce, you can’t do that without passing a new law. The Postal Service is empowered, for example, to go through the appropriations process each year and submit a budget on its own. You can’t just throw it into the Department of Commerce and say, “Now you have to run your budget through Commerce and be part of that budget request.” That can’t fly.

I think what they’re going to do, if I read the story correctly, is that if the secretary of Commerce will wear two hats running this thing, then he will exert some level of authority over the agency, its strategic plans, possibly its budget requests. But getting back to what the high court is going to do, assuming it takes the case, it’s hard to say. Sometimes the court decides to rule on very narrow grounds. Other times, it makes a big, sweeping ruling.

So whether this can spill over into a larger area where rate-making could be affected or other agencies like the Postal Service, other independent establishments, would be ruled unconstitutional, I just can’t predict.

Levi: What’s unique about the Postal Service, and this goes back to the founding of our government, is that it’s an Article I. It is a congressional responsibility to establish a postal service. Only in the 1780s, through the Postal Act of that year, did you have the creation of a separate agency with the presidentially nominated, Senate-confirmed postmaster general. Prior to that law, the postmaster general was hired by Congress.

Kosar: Yes. When you think about the various Article I authorities, it says Congress can mint coins and declare the value of money. But, ultimately, these things get moved over to the Executive Branch for execution. The Postal Service is a perfect example of that.

It would be very strange, in the name of a rigorous originalism, if the power that is supposed to be wielded by Congress could not be delegated, that it would have to be rolled back in some shape or form.

I should mention I’m no attorney, but, last year, we had the court decision Loper Bright Enterprises v. Raimondo that struck down the Chevron deference doctrine relating to regulation and how much executive agencies can regulate separate from clear congressional direction. One thing the court did not say anything about was delegation. They did not bring up if Congress can give that authority away through statute.

So, maybe rate-making and these other things that have been kicked over to the PRC and the Postal Service, maybe those things can stay there.

Levi: Let’s go up in the stratosphere and look down at the way things are happening right now with the Postal Service and other agencies. In our high school civics class, we learned about the separation of powers and checks and balances. In the construct of the current administration, what is the concept of checks and balances?

Kosar: You have unified government right now. In recent decades particularly, with unified government, when one party controls both chambers of Congress and the presidency, you get quasi-parliamentary behavior where the majority party indulges the executive and lets them run wild to varying degrees. Trump is taking that really far and the GOP has been hanging back.

Parties do not want to trip up their own president early in the administration. If they have a dispute, they want to keep it quiet. Now, I’m old enough to remember the 1970s when we had a Democratic Congress and Democratic president, Jimmy Carter; that Congress regularly slapped him down. He also turned out to be a one-term president.

One lesson I think parties have taken away is that, as a legislator, your fate is some way bound up with the president of your party’s public approval; you hurt that approval by fighting that president in an open way. So they have become increasingly hesitant to challenge presidents when they do things. And that is what is happening right now. But, eventually, they will start challenging.

Levi: That brings me to a column you wrote in November or December where there was a lot of clamor and concern about comments from unnamed sources in the Trump transition about privatizing the Postal Service. You said that would be an extremely difficult proposition, particularly with rural Republican members of the House resisting.

Do you want to revisit that analysis?

Kosar: I think it still holds. I’ve studied privatization; in some cases, privatization can be a good option. For example, in the mid-90s, the Clinton Administration partnered with Congress to engage in some privatization activities. The Elk Hill Oil Field had petroleum and mineral resources that were sold to the private sector. Privatization is not inherently a bad idea, but, for me, when I look at the U.S. Postal Service, conceptionally, I don’t know how it can work.

We are a continent-wide republic, plus we have Alaska, Hawaii, U.S. Virgin Islands and Puerto Rico. That’s very different than trying to privatize a postal service in a small European nation or something a bit bigger. It’s inherently complicated. And with mail volume sliding downward, it becomes an open question of what could privatization possibly look like?

Are we talking about making a single private company that would have to stand on its own? Or like former PMG William Henderson suggested, making it an ESOP—an employee stock ownership plan where the employees would own it and some shares would be sold to the private sector. Are we talking about multiple companies popping up in various regions that somehow would be in charge of this?

Whatever we’re talking about, it’s going to require writing a law. And right now, Congress has struggled to do that and take on something like the Postal Service. Completely rewriting its statute seems highly unlikely.

Levi: Do you think the piece written in the Washington Post by Jacob Bogage about Trump calling for folding the Postal Service into the Department of Commerce is real? Is that a pipe dream? Is it testing the waters? What is that?

Kosar: I think it looks very similar to what happened with the Kennedy Center where Trump just fired the entire board and named himself chairman. It looks a lot like what happened with USAID where Secretary of State Marco Rubio now is in charge. So, this executive power play where you’re taking these entities and pulling them closer to the presidency, it looks a lot like that.

What does it mean in the immediate term? It’s not clear to me in terms of effects on the Postal Service. Is Commerce Secretary Lutnick going to thwart DeJoy’s “Delivering for America” plan and start rolling that back? Is he going to be a caretaker? Utterly unclear.

Levi: So you suspect Howard Lutnick is going to be the de facto postmaster general if this were to come to fruition without anyone hiring him as a so-called postmaster general?

Kosar: Yes. Louis DeJoy has not resigned. In his notice earlier in the week, DeJoy said he would like to step down and have the board start looking for a replacement. But he’s not gone yet. So the question is does DeJoy get to stay on in this kind of interim period? Does he go out the door? Or does the deputy PMG float up and hold the job for a time?

Over at the National Archives, as another example, the archivist was fired by Trump; for a certain number of days, the deputy was in place. But then the deputy was shown the door and an acting Trump official was named in charge of the Archives. We might be getting that same play here.

Levi: Let’s talk about the removal authority. Do you think President Trump has the unilateral ability to remove the Postal Board of Governors and potentially the Postal Regulatory Commission commissioners under current law or within presidential authority?

Kosar: This is the collision between what the law says and what you believe the U.S. Constitution may imply. The law is quite clear: Governors on the Postal Board of Governors only can be removed for cause. Now, what’s cause? That’s a whole other rabbit hole we could go down. If the president just wants to invent a cause, is that enough? I don’t know.

But there are those who argue that statutory restrictions on a president’s removal authority are unconstitutional. They argue a president has absolute authority. So for Congress to try to limit that authority is not appropriate. And I imagine that’s going to be one of the things that will be tested by the courts.

Provisions curbing the extent of removal authority have been around for many decades. This is kind of a constitutional philosophy issue. Do you believe stare decisis—that courts and judges should honor precedent —should carry out or do you believe in a pure interpretation of the Constitution that demands you strike down even long-settled precedence? That’s just an open debate.

Levi: Do you think the failure of the U.S. Senate to confirm three governors last year, combined with the DFA not going according to plan and the difficulty most recently DeJoy has had in dealing with Congress all conspired to bring us to the point where we are today where President Trump may try to remove everybody?

Kosar: I’m not sure the failure to appoint board members makes a difference. There were plenty of people on the Kennedy Center Board, including Chairman David Rubenstein, who had raised $111 million of his own funds for the institution, and they all got wiped out, so I don’t think that plays into it.

I do think the Postal Service’s continuing financial struggles and the various logistics debacles that have occurred in places like Indianapolis and Atlanta affecting delivery—put those things together and it doesn’t look like DeJoy is doing a great job and makes him more vulnerable. But, honestly, Trump has shown that it doesn’t matter how well you are doing at a job; if he wants to remove you, he will remove you.

The archivist of the United States, Colleen Shogan, was doing a good job and standing up to a small number of “woke” employees who were pushing for politicized exhibits. Still, Trump fired her.

Levi: Do you think DeJoy not placating President Trump as the result of the 2020 election and mail-in balloting played into Trump’s disappointment with DeJoy’s leadership?

Kosar: I don’t see any evidence of that. Trump was quite clear and thought that fraud had been perpetrated at the state and local levels by Democrats in control, particularly in instances where rules were changed regarding ballot procedures and the like. I don’t make a connection there and seeing where Trump has little self-control over what he likes to say, he says what’s on his mind. If he felt that, I think we would have heard it sooner.

Levi: So you don’t think that played any role in his decision about the Postal Service, generally?

Kosar: No. I see this as part of a larger plan. One of the things I did this morning was tweeted out a post where I listed some of the other establishments of the Executive Branch, like the Harry S. Truman Scholarship Foundation. I put those out there because I think it’s entirely possible those will be dominoes falling. It’s all part of a larger plan to consolidate presidential power.

Levi: U.S. Patent and Trademark Office?

Kosar: That’s a good one! I don’t know.

Levi: I only say that because those are two congressional authorities under Article 1, Section 8, right with the Postal Service. Both the Postal Service and the Trademark Office raise their budgets from revenue, not necessarily by an appropriation. So there’s a certain synergy between the two organizations.

Kosar: That pulls me back to what you said earlier about the Senate. When Congress writes laws and puts something in a statute that says something about a president’s removal authority, whether its constitutional or not is one issue. But when they put it into law, they are laying down a marker. They are saying this is a line you should not cross, Mr. President. Otherwise, we have tools at our disposal to make your life difficult.

So a question I have is how many senators right now are upset about this? They haven’t necessarily spoken up; perhaps they are members of the GOP. But they are thinking, “You know what, he really wants my vote on reconciliation; he wants my vote on a number of things. He doesn’t have it right now; he’s going to have to bargain with me one way or another.”

Levi: You think this might be a bargaining chip?

Kosar: We’ll see. We like to think of the U.S. Congress when it deals with issues as dealing with them in isolation. What the merits of the issue are and decide up or down on it. But, in fact, everything is linked.

You could have a perfectly good piece of legislation introduced in the Senate and a couple members will cross their arms and decide the legislation isn’t going anywhere because they are ticked off about something else completely different. They are using that as a bargaining chip.

So, how they respond to this postal thing and whether they decide to use their leverage, we’ll see.

Levi: I also noticed in the article in the Washington Post that the Board of Governors has retained outside counsel to litigate should there be an executive order. But, interestingly enough, two of the governors did not participate in those discussions—Derek Kan, who worked in the Trump administration, and Robert Duncan, a former chair of the Republican National Committee. Should we read anything into that?

Kosar: It’s hard to say. They may be playing both sides of the game where we’ll let these other people put their names on the complaint. If it prevails, great—yea, I win. But I don’t want to anger President Trump because maybe there’s somewhere else I can help him in this administration. There could be something like that at work.

I should mention that, back in 1993, George H.W. Bush tried to fire the postmaster general and board members. A federal court judge put a stay on the action; ultimately, it didn’t play out. Could that happen again here? I don’t know.

Levi: It didn’t get up to the Supreme Court, as I recall. Do you think the Postal Regulatory Commission has something to worry about?

Kosar: Yes. I think the president has shown he’s happy to ruin just about anyone and anything—park rangers in Iowa and other parts of the country who now are without jobs. They are able to be fired—you can’t construe them as being members of the deep state. Why not an inside-DC regulatory board?

Levi: Do you also think putting Lutnick as the head or at least having authority over the Postal Service provides an opening for DOGE, Elon Musk’s crew, to come into the Postal Service?

Kosar: Sure. People think about DOGE and they think about its cuts. But the greater power of DOGE, at least from where I sit, is its ability to create a narrative. The man who runs it has 200 million followers; it’s an unbelievable quantity. He can take an agency that is not in the news and people may not have a fixed opinion about it, then tweet out screen shots of spreadsheets and make claims of waste, fraud and corruption. And it sets the conversation and bloodies up the agency and immediately puts it on the defensive. It’s the PR aspect of DOGE that is very powerful.

Levi: Let me touch on that. Yes, you can bloody up an agency that has not been in the news. The Postal Service and its problems have been in the news for quite some time. Despite the negative publicity postal operations have generated most recently, the Postal Service still is the most-valued, most-favorably rated federal agency.

The American public likes the Postal Service and they like the employees, despite everything occurring. How does that factor into what’s going on?

Kosar: It’s a peculiar dissonance. People on one hand love the Postal Service. But there’s also this kind of “Seinfeld” Newman image of, “It’s not well-run.” And people keep seeing headlines of multi-billion-dollar losses. So I think DOGE amping up the narrative of there is all this waste and inefficiencies and contracts going for useless IT—whatever they decide to say. I think that could really stoke the president’s case and build public support for a presidential takeover.

Levi: One of the things I did not mention in your introduction is not only are you an expert on Congress and politics and the Postal Service, you also are an expert on bourbon and whiskey. Should Washington take up drinking with what’s going on today?

Kosar: It might help! I think there is a lot of shock and awe going on right now. Over the weekend, perhaps, pour a glass of something stiff and tasty while the cold winds swirl outside and the tumults of government churn, sip it and take a deep breath and try to get a sense of where you are at.

It’s no good going through life being constantly anxious and rattled. A beverage could help; it would be all the better if you have that beverage with good company.

Levi: Thanks so much, Kevin, for being with me on NAPS Chat.