President Donald Trump charged March 31 that The Washington Post, owned by billionaire Jeff Bezos, should register as a lobbyist, insinuating that it abetted his other company, Amazon, in pulling off a U.S. Postal Service “scam” to deliver its packages at a loss.
From his Easter weekend retreat in Mar-a-Lago, the president laid out his case in two tightly packed morning tweets.
Trump’s initial charge, which he has raised before, is that Amazon is part of a “scam” because, he claims, the postal service loses $1.50 for every Amazon package it delivers. He then suggests that the scheme is protected through billions of dollars spent by Amazon on lobbyists.
Then, without noting that The Washington Post and Amazon are separate companies, Trump says Amazon’s huge lobbying effort “does not include the Fake Washington Post, which is used as a ‘lobbyist’ and should so REGISTER.”
The president does not elaborate on the Post’s alleged role nor mention that the newspaper has aggressively covered his administration.
While Trump says only that “it is reported” that Amazon packages are a money-loser for the postal service, he apparently is referring to an analysis by Citigroup last April that was later cited in a Wall Street Journal op-ed column.
The charge is that the postal services loses $1.46 for each package it delivers for Amazon. It does not note, however, that the figure is arrived at by taking into account the postal service’s huge annual losses due to the accrual of almost $6 billion in unpaid mandatory retiree health payments. USPS inherited these obligations when it was established as an independent agency in 1971 to replace the Post Office Department.
USPS Chief Financial Officer, Joseph Corbett, writing in PostalReporter.com last year, noted that the postal service is required by law to charge retailers at least enough to cover its delivery costs.
“By law, our competitive package products, including those that we deliver for Amazon, must cover their costs,” he added. “Our regulator, the Postal Regulatory Commission (PRC), looks carefully at this question every year and has determined that they do. The PRC has also noted that competitive products help fund the infrastructure of the Postal Service. It is that infrastructure that enables us to fulfill our universal service obligation to deliver to each and every address in the United States at an affordable rate.”
In July, Amazon told Fortune Magazine that PRC, which oversees the Postal Service, “has consistently found that Amazon’s contracts with USPS are profitable.”
Ironically, Amazon could hurt the postal service — and other package companies — if it successfully shifts more of its delivery to its own delivery network, which it’s been slowly building out over the past few years.
But with that network in its early stages, it’s a paying customer of the post office.
“Amazon has been a huge cash flow generating machine for the U.S. Postal Service given the scale and scope of the company’s global distribution,” said
Daniel Ives, chief strategy officer & head of technology research for GBH Insights.
As for Trump’s charge, reiterated March 31, that Amazon does not pay taxes, it did not initially collect state sales taxes when it began selling books online in 1995. However, Amazon and other big e-commerce companies now routinely collect state sales taxes.
Stifel analyst Scott Devitt said the e-retailer collects sales taxes in the 45 states that have state sales taxes and the District of Columbia.
There has been talk in Washington of taxing online commerce more. Treasury Secretary Steven Mnuchin has said the White House supports an Internet sales tax. Some in Congress support legislation to require all e-commerce companies collect state sales tax.
Overall, the Twitter attacks by the president do “not seem well-informed or detrimental to Amazon,” said Devitt, who has a Buy recommendation on Amazon shares with a target price of $1,800.
White House spokeswoman Sarah Sanders said March 28 no specific policies were currently being considered in regard to Amazon.
Contributing: Mike Snider