USPS is a Failed Sovereign Wealth Fund

The road to riches isn't paved with stamps.

With the stroke of a pen, President Trump ordered the creation of an American sovereign wealth fund (SWF). Rumor is that this fund will be used to buy a controlling interest in TikTok. But, until the Secretary of the Treasury and the Secretary of Commerce draft up plans for this fund, all that can be surmised is the SWF, (a) will draw money from somewhere (read: taxpayers); and (b) use that money to “invest” in assets, projects, or even a rainy-day fund.

Though it is difficult to justify an American SWF, Norway and Saudi Arabia demonstrate one possible approach. In this model, countries usually have a large stake in an asset (e.g., oil), accumulate plenty of money from said asset, and use it to purchase other assets such as stocks and real estate. Norway’s fund holds assets approaching $2 trillion and owns an astounding 1.5 percent of all listed stocks globally.

The U.S. government has a direct stake in natural resource wealth, collecting royalties from the extraction of minerals on federal land. In a good year, these royalties (which are dispersed to states) total around $20 billion, although the historic annual average is closer to $10 billion.

These figures pale in comparison to what is arguably America’s largest commercial endeavor: the U.S. Postal Service (USPS). The USPS relies on its vast network of land, buildings, trucks, and processing machines to generate about $80 billion in revenue per year. The obvious problem is that, unlike with Norway and Saudi Arabia’s black gold, the USPS can’t turn a profit on its large asset holdings. The agency lost $9.5 billion on net in FY 2024, and has burned through $100 billion over the past fifteen years.

The reasons are many, ranging from bloated labor contracts to the agency likely underpricing parcels. The USPS does leverage its assets to invest in its own operations and business initiatives, but these investments are debt-fueled (e.g., backed by one-off federal appropriations) and showcase deep dysfunction. For example, Congress handed the USPS $3 billion in taxpayer funds to purchase pricey electric trucks, and the agency has preciously little to show for it. The agency recently decided to make permanent a pilot offering called “Connect Local,” a shipping initiative that allows businesses to partner with their local post offices for same or next day delivery services. Except, businesses haven’t exactly been eager to use the service. For FY 2024, the USPS reported less than $13,000 in revenue for Connect Local while incurring more than $27,000 in costs.

Unfortunately, financial fiascos are par for the course for the USPS. Agency watchers remember the ill-fated stamp reselling program, which gave middlemen deeply discounted postage to sell in exchange for resellers procuring new, high-volume consumers. It turned out that the resellers were taking these bottom-barrel stamp prices, marking them up a bit, selling to small firms shipping only 50,000 pieces of mail a year, and pocketing the difference. These were straight losses for the USPS, which could have sold stamps directly at regular rates to these small businesses. The USPS finally ended the reseller program in 2022 after more than twenty long years of losses.

To sum up: the U.S. isn’t Norway nor Saudi Arabia. Our largest asset-rich enterprise is really bad at making money and channeling investments to productive uses. And, it is for lack of trying; the USPS can do a far better job generating a return on assets such as property. As former R Street Institute fellow and postal guru Nick Zaiac notes,

if it so chose, the USPS could engage in value-capture real estate development agreements in a bid to monetize its otherwise underused landholdings … out of about 8,000 owned properties, a few hundred are ripe for immediate redevelopment at much higher density than existing post offices and sorting centers using the USPS’ [sovereign immunity from zoning laws].

Regarding the Curseen-Morris postal facility in Washington, D.C.,

even if the agency retains the entire facility and one floor of parking, current zoning would allow it to add as much as 8 million square feet of building to the site, or between 8,000 and 10,000 two-bedroom apartments, generating $100-250 million in revenue each year—even if rented only at a below-market $1,500 per unit.

Congress could also give the USPS a hand in maximizing returns. As the Inspector General noted in 2023,

By law, the Postal Service’s retiree assets are invested exclusively in U.S. Treasury securities, which pose little risk and generate low investment returns. … the Postal Service could have had $1.2 trillion in retirement assets at the end of [FY] 2022, had it invested retirement funds in a mix of 60 percent stocks and 40 percent bonds. … Generating higher returns could free up money to invest in the processing and delivery network, strengthen the workforce, and minimize price increases.

Maybe the U.S. should try its hand at these modest asset-maximization schemes before creating a dedicated SWF that eats through taxpayers’ hard-earned dollars. Or maybe the USPS’ incompetence and ill fortune is a preview of the many problems posed by an all-American wealth fund.