MAIL 10XAct 3 · The rebuttal — step 11 of 12
Act 3 — the rebuttal

The Density Trap

The town killed the Mail 10X pitch with one sentence, in the same voice that moved the rate hikes: ten times the mail means ten times the cost. It sounded like arithmetic. It is a reflex — and every document needed to take it apart is published by the Postal Service's own regulator.

RANDY:Ten times the mail means ten times the cost. You boys aren't saving the Post Office, you're bankrupting it ten times faster.

CARTMAN:...he's got a point, Kyle.

KYLE:He doesn't. And it's the same guy who moved the rate hikes, using the same math that got us here. The Postal Service's own regulator published the proof.

STAN:Also, the Postmaster General is standing right there and he hasn't objected once.

OBJECTION OVERRULED

Wrong as stated. USPS cost is dominated by costs that do not move with volume — and the PRC has spent a decade formally proving it. One narrow piece of the objection survives.

Kyle goes to the board

Cost has two terms, not one

total cost = (cost per piece × volume) + (cost per location × locations)

Only the left term moves when you send more mail. The right term is the network — roughly 167 million delivery points, visited six days a week, growing every year whether or not a single extra piece is mailed. Steiner priced the whole business as if only the left term existed.

Volume fell. Cost didn't.

Total mail volume, billions of pieces, FY2006–FY2025. The flat band is the point: the cost base underneath it never followed the line down.

0B50B100B150B200Bcost base — roughly flat, and last-mile cost rose 19.4%2006: 213B2025: 109B200620102014201820222025

Endpoints per PRC, State of the Postal Service (FY2006 = 213B, FY2025 = 109B); intervening years shaped to the published trend. Cost band per GAO-20-190.

The exhibits

Exhibit A

You already ran this experiment. Backwards.

Volume fell nearly 50%. Costs didn't.

FY 2006 peak: 213 billion pieces. FY 2025: 109 billion pieces — 104 billion pieces gone. If cost tracked volume, cutting volume in half would have cut cost roughly in half. Instead USPS has posted losses through almost that entire stretch, because revenue fell with volume and cost stayed put.

You claim a straight line your own twenty-year decline already disproved.

Source: PRC, State of the Postal Service

Exhibit B

A third of the cost is bought before the mail exists.

Last-mile cost rose 19.4% while volume collapsed.

GAO-20-190: last-mile costs — street delivery, carrier compensation, vehicle maintenance — were nearly one third of USPS operating costs in FY 2018 and rose 19.4% from FY 2008 to FY 2018, while modified operating costs fell 0.9%. GAO's reason, quoting USPS: it cannot cut last-mile cost despite falling volume, because of six-day delivery and constant growth in addresses served.

The carrier walks the route whether the satchel is full or empty. You already pay for the truck.

Source: GAO-20-190 (Dec 2019)

Exhibit C

You are running a 50% margin and pricing like it's zero.

$45.8B revenue against $22.5B attributable cost.

FY 2025 Annual Compliance Determination: Market Dominant products generated $45.8 billion in revenue against $22.5 billion in attributable costs. Attributable cost is the part the PRC's own methodology says actually moves with volume and handling. Everything above it is contribution toward institutional cost.

Incremental volume isn't free. It's roughly half margin. You're treating it as break-even.

Source: PRC, FY 2025 ACD (Mar 27, 2026)

Exhibit D

The regulator built a whole rate formula on the opposite premise.

total cost = (cost per piece × volume) + (cost per location × locations)

Density rate authority (39 CFR 3030.162) exists precisely because volume per delivery point keeps falling. Cost has two terms: one scales with pieces, the other scales with delivery points — and USPS keeps adding delivery points regardless of volume, now roughly 167 million residences, businesses and PO boxes.

The PRC hands you extra rate authority because density fell. Rising density lowers average cost per piece. You were just offered the cure and called it the disease.

Source: 39 CFR 3030.162; Brennan, The Economic Implications of Density-Based Rate Authority

Exhibit E

You sell this exact logic to mailers every single year.

Workshare discounts are priced against avoided cost.

Every workshare discount is certified against how much USPS saves when a mailer does part of the work — the PRC checks the passthrough percentage product by product. The entire apparatus assumes granular, well-understood, non-linear per-piece cost behavior.

You can't run sophisticated marginal costing when you're setting discounts and then claim linear scaling when you're rejecting volume.

Source: PRC, FY 2025 ACD — workshare passthrough compliance

Where Steiner is right

Winning the scene matters less than being right. Four places the objection has real teeth.

It's not linear — but it is a step function.

At 1.2x or 2x, incremental cost sits far below incremental revenue. At 10x you exceed the designed throughput of plants, sorters, transportation and route time. You don't glide up the curve; you hit a wall and buy capacity in large discrete chunks.

Labor is the binding constraint.

Personnel is the dominant expense line. More volume per route means overtime, then added routes, then hiring — and carrier compensation is contractual, not elastic.

One cost really is linear: human keying.

841,260,847 images were hand-keyed at the last Remote Encoding Center. That's one person per image, so 10x reject volume genuinely means 10x that cost — unless the reject rate itself collapses. This is the one place Steiner is right.

Mail mix matters.

10x of non-compensatory Marketing Mail behaves nothing like 10x of First-Class. Four of 28 Market Dominant products still failed to cover their costs in FY 2025.

The scene closes

KYLE:So of everything the town just said, exactly one line item scales the way Randy claimed. The people typing bad addresses by hand.

STEINER:...eight hundred and forty-one million images a year. Son, I've been saying this in front of the Senate.

STAN:Then why is the stamp eighty-two cents?

STEINER:Because I don't set the price. That's Act Three.

BUTTERS:Oh hamburgers. There's a whole other guy?

Sources

The planThe ask