The U.S. Postal Service (USPS) is on track to run out of funds to pay its workers and vendors within a year and as early as February 2027, and cause interruptions in mail service.
USPS ended fiscal year 2025 with a net loss of $9 billion. And after finishing its busiest mailing and shipping season of the year in December, it recently posted its fourth quarterly loss in a row ($1.3 billion), partly due to increases in workers' compensation, retiree health benefit and operating expenses.
Under federal law, USPS can take on no more debt under federal law, which has capped the agency's borrowing at $15 billion.
In a written statement, Postmaster General David Steiner told the House Oversight subcommittee hearing, 'I am not sure that the American public is aware that the Postal Service is at a critical juncture. I know that I wasn't aware of the extent of it before I took on this role, but at our current run rate and if we continue to pay our required obligations in the same manner as we have done in recent years, then we will be out of cash in less than 12 months.”
According to Steiner, defaulting on more benefit obligations is not a long-term solution, and at some point, USPS will no longer be able to maintain operations in the short-term through such defaults, and those obligations include payments to employees and vendors.
USPS has faced longstanding money problems – a federal government agency that relies on stamps and service fees, not tax dollars, to deliver mail and packages six days a week to every address in the country.
Mail deliveries have not stopped up to now because USPS has been able to borrow money from the U.S. Treasury, while holding off on paying some pension obligations in recent years. Under federal law, USPS can take on no more debt under federal law, which has capped the agency's borrowing at $15 billion.
The USPS is an independent agency of the executive branch of the U.S. federal government. Established in 1971, it acts as a government-business hybrid, which is selfsupporting through the sale of postage and services rather than taxpayer funding. It is legally mandated to provide universal mail service.
Since 2007, the mailing agency has been operating with a financial shortfall almost every fiscal year with fewer people using first-class mail and people using paperless billing and digital communication.
Steiner’s statement also referred to what USPS sees as burdensome regulations and requirements.
Steiner has called for increasing the Postal Service's debt limit, which has not changed since 1992, and allowing USPS to raise postage prices beyond the current limits, along with possible layoffs as well as reforming its retiree benefit obligations.
USPS is currently trying to boost revenue by taking bids from businesses for special shipping rates. Some industry experts say that could push big shippers like Amazon to stop relying on USPS, making its financial situation worse.
David Marroni, a senior official at the Government Accountability Office testified at the meeting and told lawmakers it is unlikely that USPS will be able to get back on track on its own, noting that lawmakers need to step in to decided exactly what level of mail service the country needs going forward.