The United States Postal Service is facing a financial collapse that its own leadership says cannot be resolved without direct congressional intervention. Postmaster General and CEO David Steiner told the Senate Committee on Homeland Security and Governmental Affairs this week that USPS is functionally out of cash, borrowing against its employees' retirement funds to keep the mail moving.
At a Glance
- USPS will have accumulated nearly $31 billion in missed retirement and other required payments by the end of fiscal year 2025.
- Cash on hand stood at $8.9 billion as of May 31, 2026, less than a third of deferred obligations already owed.
- Without structural reform, the agency's unrestricted cash position could fall to negative $125.9 billion by 2035.
- An Amazon contract shift that cuts USPS parcel volume by at least two thirds threatens to accelerate the revenue decline.
- Emergency measures already in place are expected to preserve roughly $2.5 billion through September.
The Numbers Behind a Broken Balance Sheet
The scale of USPS's financial distress is difficult to overstate. By the close of fiscal year 2025, the agency will have deferred approximately $31 billion in retirement and other mandatory payments, a figure that already dwarfs its $8.9 billion cash reserve recorded as of May 31, 2026. Steiner was direct in his written testimony: if USPS were required to pay everything it currently owes, the organization would exhaust its cash before this fiscal year ends.
The longer the agency delays action, the more severe the trajectory becomes. Even under a base case scenario in which deferred payments continue, USPS projects its unrestricted cash position will peak at $17.5 billion in fiscal year 2031 before reversing sharply, falling to negative $3.4 billion by 2035 as retiree health benefit payments come due and the associated funding pool runs dry. The worst-case projection, in which all obligations are paid on schedule, produces a cash deficit of negative $125.9 billion by 2035.
For context, the agency has accumulated roughly $120 billion in net losses since 2007. That 18-year erosion traces directly to the collapse of first-class mail volume, the service's historically most profitable revenue stream, as digital communication displaced physical correspondence. The losses are structural, not cyclical.
Steiner's Case: Four Walls the Agency Cannot Break Through
In his testimony, Steiner identified a cluster of statutory constraints that he argues prevent USPS from responding to its crisis the way any private organization would. The borrowing cap offers perhaps the starkest illustration: the agency's debt ceiling has been frozen at $15 billion for more than three decades, a limit Steiner said should be raised to between $30 billion and $40 billion once adjusted for inflation and current revenue. That figure has not moved even as the agency's cost structure and obligation load have grown substantially.
A separate restriction requires that USPS retirement funds be invested exclusively in Treasury notes, a policy that limits potential returns compared with the broader investment strategies available to private pension managers. The agency is also legally obligated to deliver mail to more than 170 million addresses six days per week, a mandate Steiner singled out as carrying an annual cost of $3.4 billion. Seven out of every ten delivery routes operating under that commitment run at a loss. Post offices compound the problem: according to Reuters, approximately 58 percent of them are unprofitable. Pricing, meanwhile, is regulated by the Postal Regulatory Commission, further constraining the agency's ability to adjust rates in response to market conditions.
What Congress Is Being Asked to Do
Steiner's requests to lawmakers fall into three categories. First, he asked Congress to raise USPS's statutory borrowing authority, pegging a reasonable ceiling at $30 billion to $40 billion. Second, he called on lawmakers to resume a congressionally authorized public service reimbursement that has lapsed, which would channel federal funds toward the cost of services the agency provides as a matter of public obligation rather than commercial logic. Third, he asked for permission to diversify the retirement fund's investment portfolio beyond the current Treasury-only restriction.
Absent those changes, Steiner warned that USPS may be forced to reduce delivery days, close a significant number of post offices, and raise the price of a First-Class stamp. None of those outcomes, he implied, would be sufficient on their own to close the financial gap without addressing the underlying statutory framework.
Amazon's Exit and the Package Revenue Gap
The timing of the fiscal disclosure coincides with a significant commercial threat. Amazon, which has been one of USPS's largest parcel customers, has moved to cut its volume with the postal service by at least two thirds before its current contract expires. Package delivery revenue had become one of the few growth areas capable of partially offsetting the long decline in first-class mail. Losing the majority of Amazon's business narrows that buffer considerably and arrives precisely when the agency has the least financial flexibility to absorb the shock.
Emergency Measures Already in Motion
USPS announced last month that it had frozen non-essential expenditures and suspended its employer-side contributions to a federal pension program. Those two steps together are expected to preserve approximately $2.5 billion in cash through the end of September. The moves buy time, but Steiner's testimony made clear they do not address the structural deficit. Borrowing against retirement funds while freezing pension contributions is, in effect, compressing the timeline on an already deteriorating obligation stack.
Frequently Asked Questions
Why can't USPS simply raise its prices to cover the gap?
Postal rates are subject to oversight by the Postal Regulatory Commission, which places constraints on how quickly and by how much USPS can increase prices. Steiner cited this regulatory structure as one of the key reasons the agency cannot respond to its financial situation the way a private company would.
What happens if Congress does not act?
According to Steiner's written testimony, USPS could be forced to cut delivery days, close post offices, and raise stamp prices. In the most severe scenario, the agency's unrestricted cash position reaches negative $125.9 billion by 2035 if deferred obligations are paid as they come due.
How much has USPS lost since 2007?
Accumulated net losses since 2007 stand at approximately $120 billion, driven primarily by the structural decline in first-class mail volume as digital communication replaced physical correspondence.
What is the public service reimbursement Steiner mentioned?
It is a congressionally authorized mechanism through which the federal government compensates USPS for the cost of services it is legally required to provide regardless of their commercial viability, such as universal six-day delivery to all 170-plus million addresses. Steiner asked Congress to resume making those payments.
A Fiscal Clock with Limited Runway
The cash peak that USPS itself projects under its most optimistic scenario, $17.5 billion in fiscal year 2031, still falls short of the deferred obligations already recorded. Every year that structural reform is delayed pushes the agency deeper into a cycle where borrowed time is paid for with borrowed money. Steiner's testimony framed the choice plainly: Congress can act now, or manage a much larger failure later.
