The chief business of the American people is business. If you are wondering why we are starting off this editorial with a famous quote from Calvin…
“The chief business of the American people is business.”
If you are wondering why we are starting off this editorial with a famous quote from Calvin Coolidge in the 1920s, it might have something to do with a wish that the current president would draw a few lessons from “Silent Cal” and hold his fire once in a while. Or it may just be that we are looking back to when presidents, out of respect for the role businesses play in society, weren’t known for singling out specific companies for repeated criticism.
That, of course, is not Donald Trump’s style. But as he goes after Amazon it is important to note the danger of having a president targeting individual businesses and leaders. The Oval Office comes with immense power, and that includes the power to inflict financial damage on companies led by people who disagree with the leader of the free world. It also includes power to undercut media organizations that are doing their part to preserve the republic by keeping our political class honest. In this case, Trump’s comments are doing both of those things.
Trump’s recent broadside against Amazon started over Easter weekend, with tweets that claimed the United States Postal Service loses a “fortune” in its package delivery agreement with the online retailer.
The USPS does lose money, but not because it delivers Amazon packages. In recent filings, the USPS reported $2.1 billion in package revenue, an increase of nearly 12 percent over the previous year. While Amazon’s agreement with the USPS is proprietary, we know it is at least a break-even deal. Under the 2006 Postal Accountability and Enhancement Act, USPS cannot price parcel delivery below cost. “By law, our competitive package products, including those that we deliver for Amazon, must cover their costs,” Joseph Corbett, the CFO of the USPS, told the Wall Street Journal .
The president further claims Amazon doesn’t pay taxes and has put “many thousands of retailers out of business.” In truth, aside from third-party vendors, Amazon collects sales taxes on purchases in all states that charge sales tax. Amazon also pays property taxes where it maintains a presence. And Amazon employees pay federal and state income taxes, where applicable. While Amazon accounted for 44 percent of all e-commerce retail sales in 2017, it accounted for only 4 percent of retail sales overall.
And finally, Trump used Twitter to attack the Washington Post, claiming the newspaper distributes “fake news” and acts as a lobbyist for Amazon. The reason? Jeff Bezos owns the Post and is CEO of Amazon. But Amazon has no stake in the Post, and the paper has maintained its journalistic integrity, notwithstanding Trump’s attacks.
The market reaction so far has been to punish Amazon’s stock, which dropped 6 percent in the wake of Trump’s comments. That should worry Texans, 20,000 of whom already work for Amazon with another 60,000 possible jobs in play if Austin or Dallas is picked for the company’s second headquarters.
But once the dust settles, we’re betting Trump’s tweets will reveal Silent Cal was on to something. Americans want to see American companies succeed, even in the face of presidential criticism. What’s your view?
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