36. Wasteful Spending - USPS and Amtrak

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Hugh Sifu: [00:00:00] All right. Everybody, welcome back to Thoughts of a Random Citizen. I'm your host, as always, Hugh Sifu, and just finishing up my trip through Italy. Holy hell, Italy is amazing. I was extremely surprised to see as many Americans traveling over here as usual. The people I did talk to say it was unusual to have this many-- well, not this many Americans because they're used to that, but this many tourists this late in the season. It finally sounds like travel is opening up a bit and people are definitely wanting to get back out there. Good news on that front.

I'll go into a bit more about the specific travel in Italy, places that were amazing, and vice versa on the next episode probably. I also want to get a investing episode out there, a forecast for the market at the moment and where we're at; I never did a Q3. I was going to lump Q3 and Q4 into another episode as well. I have a few others lined up, so I'm just going to start throwing them out there for you guys; however, this episode is specifically about Amtrak and USPS.

This is actually an episode that I would recommend going back and listening to episode number two because it is an update on that episode. I absolutely love when people message me and let me know about something that they thought was maybe wrong or anything of the like. I go back, research more, and figure out what the real situation is going on. Somebody was kind enough to do that to me, shout out to William, and he mentioned that the USPS doesn't actually take any money from the [00:02:00] government or the taxpayers as I had suggested in episode two. Upon further research, I thought, "Oh, crap. He's right."

I'm going to get into that this episode because, while he was right, I was also right. I'm not trying to say right and wrong here, but again, this is a podcast where facts and logic rule the day. If ever I'm wrong, I love it. Please let me know so then I can further address it and we can have a conversation. You don't have to be upset because you're wrong or you made a claim in the past, just own it. Then whatever the fact is, whatever the most logical thing is, be like, "Oh, yes. That's right." Don't fight logic or facts down to your grave because that's just idiocy, I think that's a word.

Anyways, so please go check out that episode first. You can listen to the whole episode if you've never heard it before, but what I'm covering in this episode will be a brief and an extension on what I did up from like 00:06:30 to 00:11:00 minutes, so feel free to skip over that part or just start at 11 minutes or just listen to the whole thing; it's all good information. The second half of that episode, episode two, that is "The Flow of Money", is probably my more favorite part of that episode, but I'll get it started here.

I wanted to go back and update this section because, again, I had someone message me about the accuracy of the statements made in this part of the podcast, the part of episode two. Of course, I absolutely love it when people reach out to me because, again, when you make a claim, make sure it's factual and logical. If somebody says that it's not, go do more research.

Of course, I did a bit more research, and I found out that the USPS stopped using taxpayer [00:04:00] money for the operations of the USPS in 1971. Ironically, that's the same year FedEx was created, but more on that later. Of course, I planned on going back to episode two and scrapping that part and updating it accordingly with the accurate relevant facts.

Then as I continued my research, I found more and more information that actually suggested that I was initially correct. Before I continue, one Google search doesn't always cut it. People dive into the fine details, and you might be surprised, surprise, surprise, that headlines can be misleading. It's funny how the government uses millions or billions of taxpayer dollars every year quite inefficiently until a company thought, "Hey, I can do a lot better than that. No, I don't need funding every year." The whole, "We're going to use billions of dollars to not make a profit," and FedEx comes along and is one of the more profitable companies today.

I'm assuming you guys have heard of FedEx, yes? They seem to destroy and create an entire company that doesn't need any funding, yet the government hadn't figured that out until 1971. Oh, wait, they still haven't? And we continue. This is exactly what the Postal Service website says, "The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations." Yes, leave it up to the professional rhetoricians to trick you into thinking that it doesn't use any taxpayer money for the USPS. The beautiful word 'generally' says it all.

Something else that they like to tote is that they don't use direct taxpayer money [00:06:00] to operate the USPS. Exactly, they don't use direct taxpayer money; instead, they average an $18 billion gift to keep it running. They don't directly fund, they gift the USPS from taxpayer money. They don't generally receive tax dollars for operating expenses because it relies on the sale of postage, products, and services to fund its operations.

Therapists will say, "Never use always or never statements," which is funny because they say, "Never use," anyways, because they're rarely true. Our government understands this quite well. I know most of you are saying, "They don't use any taxpayer money to operate the USPS." Yes, you're right, they don't use any taxpayer dollars to operate the USPS, and that's the word where they trip you up, is because they do this.

That's how easy it is to just misunderstand a direct quote, like you can read, "The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations," and think, "Oh, cool, they don't use taxpayer dollars." That's wrong, they do. The issue is that, yes, the USPS generates revenue through the sale of postage and products to cover its operating costs. They use zero taxpayer dollars for the operating expenses of the post service, but what about the pension and retiree and healthcare liabilities? Oh, yes, that is when they operate at a loss.

From 2008 to 2018, the USPS lost a total of $69 billion. In 2019 alone, they lost $8.8 billion. Yes, the USPS uses the sale of postage and products to fund its operations. If you take [00:08:00] the company as a whole, the USPS, like you would a FedEx, they're in the red every year by billions of dollars. Funny, FedEx can pay its pension and retiree and healthcare liabilities perfectly fine, but the USPS still can. While they generally don't receive direct tax dollars, they get it from gifts. They gift with taxpayer dollars, and they have to fund for its losses outside of its operating expenses.

Now, if you're wondering what a gift is in how it applies to the fact that the US taxpayer on average aids about $18 billion to the USPS every year, I'll explain a bit on what exactly a gift means. When they lose so much money every year, for the 10 years that I mentioned earlier, they lost 69 billion, how do they continue to get money? If it was a corporation, there's no way anyone would loan them money because they can't and don't turn a profit.

First off, they have a monopoly on first-class mail, and it's the law that they're the only providers for that. This alone is unique to the US that most other countries around the world don't even have, even though we're so against monopolistic practices. Other companies don't even have access to our mailboxes, if you think about that; yes, they can deliver a package at our doorstep. For mail, something that could probably be a lot cheaper, they're not even allowed access to our mailboxes. You can figure in to the amount we lose, the people, paying for things like [00:10:00] stamps that could, with competition, be cheaper.

On top of that, they get massive tax breaks from state and local property in real estate taxes. They don't have to pay for things like tolls or tickets or vehicle registration. They have cheap borrowing from the treasury, much cheaper than would be allowed for any normal corporation. On top of all these things, the USPS pays far more in working salaries than a competitor in the same industry; labor alone counts for over 80% of the USPS costs, that's ridiculous.

When they have massive tax breaks, they have the cheapest legal borrowing rate that no one else could get at less than 1.2%, and they pay their workers more than they should, this accounts for about $18 billion annually that we are paying because the government is giving these gifts, these breaks to the USPS. I totally understand the opposing argument that, "Oh, we're not directly funding, that's not our taxpayer dollars." One, it is. Two, that's taking away from money that could be allocated elsewhere in the economy; for startup businesses, for individuals, for grants for school. This is money that could be going elsewhere when it's instead being discounted and gifted to the USPS.

I understand if you look at it with a narrow view of, "No, we're not giving them specific exact money from my pocket," but we are. You got to look at it at a broader view because that's how the government's looking at [00:12:00] it because they know how that shit works. You can't look at it with a narrow view either. Again, it's just funny to me how companies don't get that safety net; apparently, some do now. Companies like FedEx and UPS do all of this without the aid of billions of taxpayer dollars, which begs the question, why do we fund this crap?

I know I've said the same thing like three different ways, repeatedly one after another, but it's because I feel like it's needed to be repeated, [chuckles] that kind of rhymed, to get the point across. However, now the taxpayer money isn't just saving crappy government companies, it's also saving companies that are falling through on their own. The people of the United States are just owning a bunch of crap companies and crap debt.

If you're confused about crap debt, please go over to Toarc United, my website, and see the article that I wrote, "What is... Tapering?" under the resources. It goes into how the US government right now is just buying a bunch of crap debt to stir the economy and stuff. Anyways, this is an example of how we are terribly hurting the free market. When we buy and bad companies that are supposed to fail, as unfortunate as it is, it's what's supposed to happen to get rid of bad practices implemented by companies to introduce leaner and more efficient companies that, at the end of the day, will help you, the consumer.

This is why FedEx and UPS kick ass. This is why the USPS, United States Postal Service, is a joke because they aren't changing because they don't need to because, at the end of the day, when they do run a terrible business, which they obviously do, then they just gift [00:14:00] them more money. Now, they're doing this with a bunch of other companies that aren't even part of the government. Hopefully, you can understand that while the USPS uses zero tax dollars for operating expenses, it 100% still uses tax dollars one way or another.

Okay, you don't like the USPS example, maybe that just upsets you for some reason, and I apologize if it does. Maybe my assholey tone isn't really helping, but let's use another example, let's talk about Amtrak. While other rail companies expand via their profits, the government decides it's a good idea to take billions of our money to build out something they can't and haven't ever turned a profit on, and then we still have to pay for it. Not only is it not free but we're paying double by allocating our tax money to it and then having to pay for riding it.

In the 50 years it's been around, not one year has it ever been profitable. What? I mean, what? 50 years a company's been around and it's never been profitable, that company should not exist. I know what you're thinking-- you're probably not. 50 years? That's odd. It is odd. Anyone want to take a wild guess as to when Amtrak started? Yes, that's right, 1971. Why does that sound so familiar? It's because that's the date the government stopped directly funding the USPS. You can fill in the rest of the blanks however you like, but I'll just say it one more time though while you fill in the blanks yourself.

USPS has stopped [00:16:00] getting direct government funding in 1971, at the same time, that's when the US government decided, "Let's build out a train station and a bunch of train tracks." Seems-- yes. What's its solution for Amtrak? We need more money to build out more infrastructure. Run, you need to have gone out of business decades ago so someone who knows what they're doing will clearly fix your flawed business structure. I really don't have to say much else because Amtrak is a joke. If you haven't heard, which I doubt it because the media is doing a great job covering up things, although maybe you have.

I am living in Italy at the moment, so I don't get the same news you guys do. Amtrak derailed last month killing three people and injuring seven others on its way to Montana. First off, what? A train derailed? That's a pretty freaking ancient technology that I think we could have figured out how not to crash, yet our government funded a program that just killed three people. I know that's twisting things a bit, so don't focus as much on that, but still. My hearts go out to the families involved in the crash 100%. While I would be mourning 100% as I assume you all are, I'd also be livid that they're funding this joke of a company.

The best part, the government is being sued because of this said that the people responsible are BNSF. Are you kidding me? Now, not only are we allocating money to a company, Amtrak, that has not ever once made a profit, but then we just have someone else maintain it and run it for us that also takes the blame? Why the hell does Amtrak even exist? [00:18:00] Just have the company that apparently is now responsible for the derailment be the entire owners of it. [laughs] I'm sorry if I'm ranting here, but what? Oh, man, it confuses me.

Don't worry, guys, the National Transportation Safety Board is investigating it, like we've heard thousands of times before, no? They litigate so as long as needed until the hype around it goes away and then they make a ruling that won't affect any company they're in bed with, but I digress. Apparently, there was another train shooting on an Amtrak in Arizona where bulk marijuana was found on it. Really good stuff, guys, really excellent work there, really good. [chuckles]

Seriously, they've reported, in 2019, a loss of $30 million. The year before that, 2018, $170 million. Last year was a $700 million loss after they received $2 billion in support, still reporting a loss. You might think, "Oh, that doesn't sound terrible, they were close to profitability before COVID." You have the numbers from above, $170 million loss in 2018, $30 million in 2019, $700 million in 2020.

What I'm about to say from 1971 to 2018, is that the federal assistance, meaning our taxpayer money, has amounted to $81 billion being allocated to Amtrak. That means that $81 billion came out of the taxpayer money to fund Amtrak from 1971 until 2017. Guys, this thing, Amtrak, has not even one single year in its 50-year existence of profits. To show [00:20:00] how much our government is deciding to spend lately, let's explain further. This is a fun one, guys. I'm actually very glad that I got this message from a listener because it just made me do much more research on an episode way back when I started podcasting.

The new $1 trillion infrastructure package just passed has allocated $66 billion to Amtrak. Yes, that's right. In its entire 50 years of operation, it cost us $81 billion, but we just decided in one year to almost double the entire 50 years prior. We just spent $66 billion of taxpayer money to fund this, this 50-year project that has never once made money, this 50-year project that had cost us $81 billion; I'm not good at quick math, but I think that's $147 billion that it's now cost us in one year, fantastic.

Again, this is where I highly recommend going back to episode two, "The Flow of Money", to see how much $14 billion is in real terms that you might be able to comprehend because everyone hears billionaires and $14 billion, but it's shit a ton of money. It'll blow your mind just to think about how much 14 billion is. Then we just threw $66 billion at a terribly run Amtrak, almost doubling the previous taxpayer loss over the past 50 years. What will they do with that $66 billion? Pay someone like BNSF five times more than it really takes to build out and get a fifth of what they could probably actually do with that.

That's not bullshit either, this is exactly what happens; the governments pay an exponential amount more than the [00:22:00] actual cost of the projects are. Why? Don't believe me maybe? I don't know, ask all the senators who have senator salaries yet they have three or five houses in some of the most expensive real estate markets around the world or country. Also, I was just talking to a government counselor up in Verona in Italy and he was literally a younger guy, younger than me, and was just bitching about saying literally that, that they just signed a new highway project or some factory project via the government that costs five times more than it was supposed to.

I said, "Why do they do that?" This is in Italy, so maybe the US doesn't do that. I said," Why are they doing that? "He said, "That's just how they've done it." It's the guy who runs it, who runs that town or that district or whatever, he said that he's 70-something, he's been doing it his whole life, and that's what they do, they fund it way more so they can essentially pay themselves. That's Italy, so maybe not America, but yes.

Idea time, what would be a better way is to give money in grants that's $66 billion to entrepreneurs that would oversee these operations privately. Entrepreneurs who could bid and allocate that money so they can self-handle the project. We don't need our government to waste time on freaking trains, we need our government to focus on national security, our safety, our privacy, keeping our constitutional rights upheld, not a freaking train and post mail service.

Never mind the fact that we have email and potential for electrically run renewable energy trains, no, let's just keep allocating billions and billions of dollars to an inefficient fleet of mail couriers and railroads [00:24:00] that aren't built looking forward but looking backwards. Why? Because new energy-efficient trains don't please the lobbyists. All right, rant over. I'll finish up here, guys. Apologies for the aggressiveness of this episode, but government waste is becoming a very serious issue that I feel like we're just like, "Yes, it's just what happens." If it continues, it will really screw up our future, our children's future, the world's future.

Anyways, the government is supposed to operate as a service for the people, they aren't supposed to make a profit. Please leave profit ventures to the innovators and entrepreneurs, and the services-- again, those things like defending our rights, not taking them away, security, regulating ethics to a small extent and maybe aiding in forming a happy society, leave all those things to the government.

Please, give the people a chance to make a good life for themselves by allocating money to the best entrepreneur who wants to take on a project like building a railway. Don't give it to the $500-billion corporation that already operates 50% of the rail industry anyway. If you do freaking do that, then stop claiming Amtrak is operated by the government and just let the corporations operate the rails at a profit like they're designed to do.

That's it, guys. That was exciting for me. I think I'm sweating a bit after that one, but hopefully, you guys did enjoy. I am in the process of transcribing all of my episodes, so if you want to share that if you don't like listening as much or maybe don't have time. I'm also posting more articles as well under the "Resources" in Toarc United. Guys, it's a huge help if you just share with even one person, that's just [00:26:00] extremely helpful.

Hopefully, you guys do like these episodes and will be, oh, so kind enough to share and maybe get a conversation started out of it because, again, it's on us. I mean, we can sit and do nothing all we want, but if we don't start doing something or at least talking about it or-- you know. We have a massive ability to pressure the people that we vote to do stuff, as well as the corporations, the things that we fund via how we buy and purchase things to dictate what they do. Anyways, guys, again, thank you so much for tuning in, and I'll talk to you next week on Thoughts of a Random Citizen. Cheers.