U.S. Postmaster General David Steiner warned that the U.S. Postal Service will run out of cash within a year without Congress lifting a $15 billion borrowing cap set in 1990. The cap could stop payments to employees and vendors by Feb. 2027, stopping mail delivery nationwide.
Steiner, who started in July 2025 after serving as CEO of a major waste management firm and on FedEx’s board, reported the financial problems and plans to testify before Congress on Mar. 17 about the agency’s finances and restrictive rules. USPS hired restructuring firm Alvarez & Marsal to craft a plan, with all options, including service and staff cuts, on the table.
However, USPS’s financial condition remains poor. While USPS has increased revenue, its total expenses continue to outpace total revenue, leading to further losses (see fig.). In addition, USPS’s unfunded liabilities and debt have steadily increased since the fiscal year 2022. USPS projects that if it made all its required payments toward its unfunded liabilities, it would run out of cash as early as fiscal year 2026. USPS updated its strategic plan in 2024, but this plan did not include financial projections showing how near-term results from the updated plan’s actions could increase revenue or reduce expenses. Without financial projections, USPS lacks targets to show progress or to effectively communicate how its actions will restore its financial sustainability.
USPS posted net losses of $9 billion in fiscal year 2025, up from $9.5 billion in 2024, despite a 1.2% revenue bump from its Ground Advantage shipping. First-quarter 2026 losses hit $1.3 billion, flipping from a $144 million gain the prior year. Total losses reached $120 billion since 2007. Cash reserves dropped from $18 billion two years ago to $10 billion now.
Without changes, USPS risks exhausting funds by early 2027. The agency skipped billions in retiree pension and health payments to save cash, but expenses outpace yearly revenues.
The Postal Service is an independent agency funded primarily by postage revenue and the services it provides. Steiner said it has all the burdens of a government agency, such as delivering mail six days a week to every address, but none of the benefits, such as an annual appropriation from the federal budget.
“We have to have a conversation with the American public,” Steiner said. “If you want us to deliver everywhere, every day, we’ll do it. That’s not a problem. But who is going to pay for it?”
Congress set it up in 1970 to break even through stamps and fees, without tax dollars. Yet the service sinks deep into the red due to mandates such as six-day delivery to every address, no facility closures without approval, and price-hike limits set by the Postal Regulatory Commission. Mail volume crashed from 220 billion pieces to 110 billion, costing $86 billion in lost revenue as people switched to online bills and email. Packages help, but don’t fill the gap.
Unions play a big role in financial strains; about 90% of USPS’s 640,000 workers are represented by four unions, including the American Postal Workers Union, which bargains for wages, benefits, and working conditions. Labor costs eat up 78% of expenses, driven by collective agreements that boost pay and protect jobs.
Unions resist cuts, pushing for affordable services to win back customers instead of resorting to price hikes. Grievances and no-layoff clauses add costs, making efficiency tough. The union calls for keeping USPS accessible, not privatizing, but admits holiday and election mail surges help quarters.
Pensions and retiree health obligations hammer USPS harder; unfunded liabilities total $120 billion for pensions, health benefits, and workers’ comp. A 2006 law forced prefunding 75 years of retiree health over 10 years, draining $5.5 billion annually. No other agency faces that rule.
The 2022 Postal Service Reform Act ended that mandate, but damage lingers.
Pensions are overfunded by $50-$80 billion in some funds due to misallocations, yet overall deficits hit $409 billion against $290 billion in assets in 2022. Investments stuck to low-return Treasury bonds, losing value during inflation spikes with negative real returns in 2021 and 2022. Civil Service Retirement System costs misallocated since 1971 added $90 billion in unfair expenses by 2023.
Other factors pile on: Transportation costs rose by $1.3 billion over the past few years. Competition from FedEx, UPS, and Amazon erodes market share, though USPS handles last-mile delivery for many shipments. Digital shifts cut first-class mail, once the agency’s strongest revenue source.
Inflation pushes operating costs higher each year, and USPS can’t invest retiree funds in stocks for stronger returns and must rely mainly on Treasury bonds.
Proposed solutions include raising stamp prices to 95¢, expanding package services, reforming the retirement fund investments, and temporarily lifting the borrowing cap. Without structural fixes, reliable mail service faces increasing strain as deficits continue to grow, raising the likelihood of bailouts or deeper restructuring.
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