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Blog Post | April 27, 2022

Biden’s USPS Nominees Seem Fine With Letting DeJoy Wreck The Post Office

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Biden’s USPS Nominees Seem Fine With Letting DeJoy Wreck The Post Office

Though President Biden signed the Postal Service Reform Act (PSRA) into law on April 6th, the chaos at USPS is far from over. Trump-appointed Postmaster General Louis DeJoy is pressing ahead with his widely-criticized 10-year agency plan to hike postage rates and lengthen delivery times, and is doubling down on a gas-guzzling anti-union contract for USPS’ next-generation fleet. To deflect from his disastrous leadership and new ethics scandals, DeJoy has even cited the passage of PSRA (which wiped clean nearly $57 billion in USPS’ financial liabilities by repealing a Bush-era mandate requiring the Postal Service to pay into future retiree health benefits) under his tenure as reason to continue serving as Postmaster General (it’s worth noting that, in exchange for DeJoy’s support for PSRA, Democrats and postal unions had to set aside calls to fire him and discard proposals to restrict his political activities). 

As we’ve explained before on this blog, DeJoy remains in power because he retains the support of the USPS Board of Governors, who have the sole power to hire and fire him. The recent departures of termed-out board members Ron Bloom and John Barger have left the board with two vacancies, giving Biden a rare opportunity to flip control of the board. 

Unfortunately, Biden appears to have squandered this opportunity. After wasting months of valuable Senate floor time, Biden announced last November that he would appoint former Trump official Derek Kan and former Obama official Dan Tangherlini to fill these two vacancies. Based on their professional backgrounds and testimony to the Senate last month, it is unlikely that either Kan or Tangherlini would push to fire DeJoy if confirmed to the board. 

Derek Kan: McConnell Ally And Serial Corporate Revolver

Let’s start with the more troubling of the two nominees: Derek Kan. A former high-ranking Trump White House official, Kan immediately stands out as an odd pick by Biden – who pledged during the campaign to “stop Donald Trump from destroying the Postal Service.” His selection of Kan to replace Barger is a gift to Republicans amidst their quiet seizure of independent agencies and ongoing destruction of political norms. Biden would still have been within statutory USPS board partisan balance limits if he’d replaced both Bloom and Barger with Democrats. Worse yet is Kan’s record, which is laden with revolving-door corruption on behalf of America’s worst political actors and corporations. 

Kan began his public sector career as a Program Examiner for the Office of Management and Budget in the Bush White House from 2004 to 2006. He was subsequently a Policy Advisor in the Senate Republican Leader’s Office under both Bill Frist and Mitch McConnell from March 2006 to May 2010. It was during Kan’s time at McConnell’s office that the Kentucky Senator became infamous for his scorched-earth opposition to bills like the 2009 stimulus package, Employee Free Choice Act (the precursor to the PRO Act), and an FY2010 omnibus containing emergency financial relief for the USPS. Kan’s ties to McConnell later served him well in climbing up the D.C. ladder (more on that below.)

From 2012 to 2014, Kan was a consultant at Bain & Company, a corporate consulting firm which is infamously tight-lipped about its official client list. Kan has mentioned working on “infrastructure” and “technology, utilities, and biotech” while at Bain but never named his actual clients. Bain is known for providing controversial restructuring plans to financially-distressed organizations (sound familiar, USPS watchers?). Kan’s statements that Bain taught him how to “drive financial and operational excellence at large organizations” are troubling, given the firm’s track record advising large, distressed organizations. More recently, Bain has been in the headlines for its $11 million contract to restructure the South African government’s revenue collection service, which was rife with incompetence and led to a major corruption scandal

In 2015, Kan joined Lyft as a General Manager for California. According to official ethics filings, he earned a lucrative $217,000 salary in this role. The rideshare giant’s shameful advocacy to classify its drivers as independent contractors and deny them the wage and employment benefits granted to employees was in full swing during Kan’s time as a Lyft executive. In a 2016 Guardian op-ed, Senator Elizabeth Warren blasted Lyft and other gig companies for exploiting the independent contractor model to cheat workers out of pay and benefits. A four-year California class-action lawsuit over Lyft’s independent contractor model (which left drivers footing the bill for pricey gasoline and maintenance expenses) was settled by the company in 2017 for $27 million, only after a judge rejected a low-ball offer from Lyft for less than half that amount. The company also invested millions in lobbying to pass deregulatory laws in states like Texas, fighting tooth-and-nail to override municipal rideshare safety regulations and defeat their proponents. It was also during Kan’s time at Lyft that the firm first came under scrutiny for its failure to protect or compensate drivers from on-the-job violence

Kan returned to public service in 2016 when he was nominated by President Obama (at McConnell’s behest) to serve on the Amtrak Board of Directors. Kan remained at Lyft throughout his first year on the Amtrak Board, arguing that keeping his day job “[added] a lot of value because [Lyft] works with transit authorities a lot and understands their budgeting processes.” Curiously, a ridesharing agreement between Lyft and Amtrak was later revealed to the public in August 2017 – only three months after Kan left Lyft and had pledged to divest his remaining vested restricted stock in the company.  

In 2017, Kan again spun through the revolving door when he was chosen by Trump to serve as the Transportation Department’s Undersecretary for Policy, a powerful role overseeing the development of DOT grant rules. Kan’s personal ties to McConnell greatly shaped his work at DOT, which at the time was led by McConnell’s wife Elaine Chao. In 2019, the Trump DOT – in a grant-making process overseen by Kan – awarded Kentucky’s Boone County a whopping $67.4 million grant despite fairness complaints from multiple career agency staff and the Government Accountability Office. A cornerstone of McConnell’s successful re-election campaign the following year was centered on bringing home the bacon – including at least $78 million total from the DOT – to Kentucky. Kan also helped Chao misuse her official position to promote her family’s interests by personally contacting colleagues at the DHS to expedite a work permit application for a foreign student who had received Chao family philanthropic funds. 

Outside of being McConnell’s puppet, Kan also advanced bad policy at DOT. According to TransitCenter’s Steven Higashide, Kan played a key role in defanging DOT environmental regulations by rewriting grant application rules to discount the cost of carbon emissions, and “injected an unwelcome dose of Silicon Valley boosterism into the department” by praising Elon Musk’s impractical Hyperloop proposal. 

For his service as a loyal McConnell ally, Kan was floated for a Federal Reserve seat and later named Deputy Director of the Office of Management and Budget (OMB) in 2019. As a top OMB official, Kan had a front-row seat to witness the lawless, far-right, obstructive behavior of the office in the final year of the Trump presidency. He also served on Trump’s dysfunctional and scandal-ridden coronavirus task force, where he made national headlines for trying to crowdsource pandemic response ideas from his Stanford business school alumni network. Kan left the Trump White House in December 2020. 

Between his time in the Trump administration and nomination to the Postal Board last year, Kan has racked up even more corporate ties. He currently serves as Chief Business Officer of Deliverr Inc, a shipping fulfillment company that rents warehouse space to large e-commerce companies and which has received funding from a venture capital arm of Brookfield Asset Management. Brookfield is not only responsible for rescuing the Kushner family from financial peril, but the firm where former Postal Board Chairman and DeJoy ally Ron Bloom serves as a senior executive and where DeJoy himself holds over $300,000 in bonds. Kan has also joined the board of luxury real estate builder Toll Brothers, a concerning move that comes as some privatization advocates are hoping to exploit the USPS’ “untapped real estate fortune.”

Kan has also recently become an advisor to private equity giant Oaktree Capital, which is majority-owned by Brookfield and has filed to evict hundreds of tenants from its properties during the pandemic. Oaktree, which has said it hired Kan to advise on the firm’s “infrastructure and emerging technology” business, is also a leading investor in the fossil fuel industry and has a reputation for “vulture capital” investments in distressed retailers and governments. The firm was part of the B-4 creditor group that pushed Toys R Us from bankruptcy into liquidation, firing 33,000 employees in the process. It has also been fighting the Puerto Rican government to collect on over $410 million in government employee pension debt, as the island still struggles to rebuild from Hurricane Maria and Congressionally-imposed economic austerity. 

Kan has thus far faced little scrutiny for his shady record. His initial nomination to the Postal Board was met with almost no pushback from Congressional Democrats, despite Kan’s ties to Trump and McConnell being widely reported and commented on in the press. His confirmation hearing last month was devoid of any close examination or tough questions of his Trump administration and private equity work – instead, committee Democrats largely took at face value Kan’s vague promise to review the Postal Service’s acquisition process for its next-gen fleet and delivery service standards without concrete follow-up asks (for example, a commitment to set higher EV targets). Kan’s assertion during the hearing that “nobody [had] asked” him to support the removal of DeJoy likewise went by without a peep from Democratic committee members Gary Peters and Tom Carper. Most concerning was Kan’s response to a question from GOP Senator Rob Portman about DeJoy’s 10-year plan, which Kan called a “good start”. Contrast that to Biden postal board member Ron Stroman, who has openly blasted the plan as “strategically-ill conceived” and “dangerous”. 

Above all, Kan’s nomination is a misguided decision by Biden to adhere to outdated political norms by tapping a Republican to balance out a Democrat’s concurrent nomination. As mentioned earlier, while federal law limits the number of concurrently-serving governors from the same party to a total of five, the USPS board’s current composition (excluding vacancies) is of three Republicans (all Trump appointees), three Democrats (one Trump appointee and two Biden picks), and Biden-appointed independent Amber McReynolds, a vote-by-mail advocate. Biden would have been well within the law to fill both the Bloom and Barger vacancies with reform-oriented Democrats (giving the board a five-member Biden-appointed majority that could potentially oust DeJoy). Instead, he chose to adhere to Senate norms of pairing Tangherlini, a Democratic nominee, with Kan, a Republican (and a Trump/McConnell alum, no less!). Given how Mitch McConnell spent the Trump years blowing up these norms by refusing to nominate and confirm minority-party commissioners, this is an utterly baffling choice. While going tit-for-tat with McConnell’s escalation would be a major step requiring unanimous support from Senate Democrats, it’s worth noting that even the Senate Democratic Caucus’ least reliable members have opposed DeJoy’s leadership and voted for anti-DeJoy board nominees like Stroman. 

Dan Tangherlini: Another Revolver With Dubious Management Experience

While Biden’s other postal nominee Dan Tangherlini is no McConnell toadie, his record is nonetheless checkered with journeys through the revolving-door and questionable stewardship of public institutions. 

From 2007 to 2009, Tangherlini served as the DC City Administrator under then-mayor Adrian Fenty, working on – among other things – Fenty’s Housing-First homelessness elimination initiative. This initiative received massive criticism from unhoused D.C. residents and housing justice advocates at the time for prioritizing shelter closures over securing permanent housing for the homeless: Fenty’s closure of the 300-bed Franklin School homeless shelter in October 2008 sparked a lawsuit from former shelter residents alleging he “systematically displaced largely African American homeless people from the downtown area to the poorest and most violent parts of the city” and failed to guarantee them alternative shelter.  

Prior to joining the Fenty administration, Tangherlini also co-founded and ran the now-defunct educational services firm EdBuild with several politically-connected associates of Fenty, including Neil Albert, who served as Fenty’s Deputy Mayor and later succeeded Tangherlini as City Administrator. The company was nearly awarded an unusual $57.6 million no-bid contract with D.C. Public Schools (DCPS) in 2007 by the city’s Board of Education despite having little to no experience in modernizing or renovating school facilities. EdBuild made several alarming requests in its initial contract pitch, including sweeping authority to draw contract funds from a third-party managed escrow account, a whopping 9 percent construction fee (much higher than the industry standard of 3 percent), and vastly reduced oversight by the school system contracting officer’s technical representative. While several of these requests were scaled back in the final offer, EdBuild was still able to secure a $57.6 million sole-source from the Board without approval from DCPS chief procurement officer Kevin Green, before the DC City Council ultimately scuttled the deal. EdBuild quietly shuttered shortly thereafter, but not before embroiling Albert in an ethics controversy over his lobbying for the company while serving in the Fenty administration. For his part, Tangherlini seems to have omitted all mention of EdBuild from his official resume (the only record remaining documenting his involvement is this 2009 Washington Post article).  

After serving as a top official in Obama’s Treasury Department, Tangherlini was tapped in 2012 to lead the scandal-plagued General Services Administration (GSA). During his tenure, Tangherlini was protested by federally-contracted service workers over wage theft and mistreatment of workers by contractors in the GSA-owned Reagan building. As Josh Eidelson wrote for Salon, when striking workers ultimately secured a meeting with Tangherlini to ask GSA to audit all of its contracts for potential wage theft, they “left with the sense that the GSA was unlikely to be of help.” 

Under Tangherlini, the GSA also finalized a lease to the Trump Organization to convert the Old Post Office Building into a Trump Hotel, despite Trump’s bankruptcy and fraud-laden record being well-known at the time. While the Trump deal was first announced under Tangherlini’s predecessor in February 2012, Tangherlini largely allowed it to proceed unobstructed and finalized it in June 2013. This was despite the Trump team changing the architect and financial backing for the hotel in the middle of negotiations, something top former GSA officials told Buzzfeed News amounted to a “bait and switch.” Former GSA officials also maintained that Tangherlini and GSA leadership could have pulled out of the deal before finalizing it in 2013, but chose not to out of a desire to avoid undoing months of work or “picking a fight with Donald Trump.” Tangherlini spoke highly of the final leasing agreement, stating it would “save millions of taxpayer dollars while restoring a unique and important historic asset.” 

In 2015, Tangherlini left government to become the Chief Operating Officer of Artemis Real Estate Partners, a private equity firm co-founded by Obama Commerce Secretary Penny Pritzker and focused on “multifamily, industrial, office, retail, hospitality, senior housing and medical office” properties. Tangherlini has vaguely described his work at the firm as “maintain[ing] entrepreneurial culture” and little is known about his time at the company. More recently, the firm has been involved in acquiring and developing hospitals (an alarming trend my CEPR colleague Eileen Appelbaum has written about) and is among the many corporate landlords that have filed to evict tenants during the pandemic.

In recent years, Tangherlini has leveraged his inside knowledge of government on behalf of various tech companies. After leaving Artemis in 2016, Tangherlini worked for a year at tech startup SeamlessDocs, a cloud document platform provider for whom he led efforts to expand the firm’s business with the federal government. Since 2016, he has advised Blue Planet Systems Corporation, a carbon capture tech startup that has received funding from Chevron. The carbon capture industry as a whole has been blasted by environmental advocates for serving as PR for Big Oil rather than a meaningful climate solution. 

Tangherlini is currently the Managing Director of the Emerson Collective, a philanthrocapitalist LLC founded by Laurene Powell Jobs. The firm has been the subject of several controversies, from its employment of a top advisor to the Saudi Arabian government to its backing of fraud-plagued media company Ozy and environmentally-destructive supersonic jets. Former Assistant Secretary of Education Diane Ravitch has also blasted Emerson’s XQ Institute, an education reform initiative led by corporate-friendly charter school advocate Arne Duncan, for its failure-ridden track record. Tangherlini has been rather mum on the specifics of his work at Emerson, referring instead to this puff piece about Jobs. 

Like Kan, Tangherlini’s USPS confirmation hearing did little to ease concerns he would be a “go with the flow” governor. While he did commit to being an “active board member” on PSRA implementation and made overtures towards reviewing the EV deal, Tangherlini also denied being asked about firing DeJoy and made a troubling pitch to “find efficiency [in] Postal Service real estate” when asked about the 10-year plan. He also seemed remarkably chummy with Kan, stating that he was “excited” to be paired with him and praising his “tremendous talents.” At no point was he asked by the Committee to explain blemishes in his public service record or detail the nature of his corporate ties. While it is certainly possible (though not very plausible) that Tangherlini could prove his doubters wrong and be an avowed reformer on the Board, the lack of scrutiny during his hearing leaves him with no impetus to do so.  

December 2022: One Last Shot To Fire DeJoy

As long as DeJoy is in charge, the future of USPS remains precarious. The Postmaster General has refused to listen to his critics, calling allegations that he has sabotaged mail-in voting and stands to personally profit from agency contracts “bullshit articles” and “noise.” On postal advocates’ calls to scrutinize his privatization-friendly 10-year plan and renegotiate his fleet contract, DeJoy refuses to budge an inch: “I am against retreat, we have a good plan, we know what we’re talking about,” he adamantly told GovExec this month. As for innovative ideas like postal banking that would serve the public and strengthen USPS? DeJoy seems more interested in using them as political fig leaves than in setting them up for success. 

On his tenure – marred by crises of his own making – DeJoy has few regrets: “I sleep like a freakin’ baby,” he told Bloomberg’s Devin Leonard. 

It is a national embarrassment that someone so committed to destroying a beloved public institution not only leads it, but is able to brag about running it into the ground and still keep his job. Worse yet, the only governing body with the power to fire him is filled with accomplices who refuse to do so. 

Now, it may be too late to stop the Senate from adding two more to their ranks. The confirmations of Kan and Tangherlini would be particularly stinging for postal workers, who set aside their legitimate grievances with DeJoy to secure the PSRA’s passage, only to be rewarded with two Board members who will likely fail to hold him accountable. 

If Biden wants to make amends for betraying his campaign pledge to staff USPS with ethical leadership, he still has one last chance. This upcoming December, pro-DeJoy board members Lee Moak and William Zollars will be termed-out, meaning Biden will have another opportunity to name two candidates of his own choosing to the Postal Board. 

Instead of continuing Obama and Trump’s pattern of nominating corporate executives and privatization supporters to the Postal Board, Biden should fill the soon-to-be vacant seats of Moak and Zollars with allies of organized labor or progressive reformers (for example, postal banking advocate Mehrsa Baradaran). Given the Senate’s mounting backlog of nominees pending confirmation (something that could be addressed if Democrats changed floor time rules), he should start searching for prospective nominees quickly while his party still holds the upper chamber.

DeJoy once taunted his critics that he would be Postmaster General “for a long time […] get used to me.” Further delay or disappointment from Biden on Postal Board nominees will make this threat a reality.

The author would like to acknowledge the team at True North Research for their invaluable contributions on this topic.

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More articles by Vishal Shankar

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