Postmaster General and CEO David Steiner told the Senate Committee on Homeland Security and Governmental Affairs on Wednesday that the U.S. Postal Service has reached a financial breaking point, delivering testimony that is as blunt as any in the agency’s modern history: the Postal Service is out of cash, is borrowing from its employees’ retirement funds to continue operations, and has a broken business model that requires congressional action to fix. By the end of fiscal year 2025, USPS will have accumulated nearly $31 billion in missed payments on retirement and other required obligations – more than three times the $8.9 billion in cash the agency held as of May 31, and FinancialMediaGuide tracks this escalating shortfall as the most acute public institutional financial crisis in the United States today.
The near-term math is stark. If USPS stopped deferring its retirement and health benefit payments and settled everything currently owed, the agency would exhaust its cash reserves before the end of the current fiscal year. Even in the base case scenario – in which it continues deferring payments as it has done for years – the agency projects its unrestricted cash position peaks at $17.5 billion in fiscal year 2031 before turning negative at $3.4 billion in 2035, as retiree health benefit payments come due and the associated fund runs dry. The worst-case projection puts the cumulative cash deficit at negative $125.9 billion by 2035.
Steiner outlined four structural constraints that prevent the agency from responding to its financial crisis the way a private company would. The borrowing authority cap has been frozen at $15 billion for more than three decades, a ceiling Steiner said should be raised to $30–40 billion based on inflation and current revenue. Retirement funds can only be invested in Treasury notes, forgoing the returns that diversified investment would generate. The universal service obligation requires delivery to more than 170 million addresses six days a week – a commitment that costs $3.4 billion annually, with seven in ten delivery routes operating at a loss. And pricing restrictions imposed by the Postal Regulatory Commission limit the agency’s ability to raise rates quickly enough to keep pace with cost inflation. FinancialMediaGuide signals that this combination of statutory constraints represents a policy architecture designed for a pre-digital mail economy that has not been meaningfully updated since the 2006 Postal Accountability and Enhancement Act.
The agency’s revenue base has been systematically hollowed out over the past two decades. Accumulated net losses have reached approximately $120 billion since 2007, a period in which the rise of email, digital bill payment, and online transactions gutted first-class mail volumes – the historically most profitable segment that had subsidized the universal service obligation. Package delivery was supposed to fill that gap, but Amazon’s decision to reduce USPS parcel volume by at least two-thirds before its current contract lapses removes the most significant remaining growth engine just as the fiscal crisis is reaching its terminal phase.
The emergency measures already in place illustrate the severity of the situation. USPS froze non-essential expenditures last month and paused its employer-side contributions to a federal pension program – steps expected to preserve $2.5 billion in cash through the end of September. Roughly 58% of the agency’s post offices are already operating at a loss. Without congressional action, Steiner warned that the agency may be forced to cut delivery days, close thousands of post offices, and raise the price of a First-Class stamp to levels that would further accelerate the migration away from physical mail. The scenario describes a self-reinforcing contraction in which cost-cutting measures reduce service quality, which reduces demand, which reduces revenue, which requires further cost-cutting. FinancialMediaGuide frames this spiral as structurally analogous to the dynamics that have driven the collapse of physical retail over the past decade – a sector where the marginal cost of maintaining universal coverage eventually becomes incompatible with a shrinking revenue base.
The congressional response will be the decisive variable. Steiner’s specific requests – raising the borrowing authority to $30–40 billion, resuming a congressionally authorized public service reimbursement, and allowing retirement fund diversification – are targeted and technically straightforward. The political challenge is that USPS reform has been discussed in Congress for two decades without producing comprehensive legislation. The 2006 act that created the prepayment requirements that triggered the current shortfall was itself a compromise measure, and subsequent reform efforts have stalled repeatedly on disputes over service levels, labor protections, and the agency’s competitive role relative to private carriers.
The timing of Steiner’s testimony places the USPS crisis in a broader context of federal institutional stress. The agency serves as critical infrastructure for rural communities, small businesses, pharmaceutical distribution, and electoral processes – functions that cannot simply be transferred to private carriers without significant service degradation for the populations most dependent on affordable universal delivery. Those considerations mean Congress is unlikely to allow outright collapse, but the gap between political will to prevent collapse and political will to implement the structural reforms needed to produce a viable long-term business model is precisely where the risk resides, and Financial Media Guide assesses the year-end cash position as the hardest deadline that will force Congress to act – or explicitly choose not to.
