Nicholas Weiss
The U.S. Postal Service is out of cash. Postmaster General and CEO David Steiner told a Senate committee this week that USPS has a broken business model and needs Congress to act or risk the collapse of the national mail and package delivery network. The numbers behind that warning are stark.
At a Glance
- USPS had $8.9 billion in cash on hand as of May 31, 2026, against nearly $31 billion in deferred retirement and other obligations by end of fiscal year 2025.
- Without payment deferrals, the agency would run out of cash before fiscal year 2025 closes.
- Even in the base case, unrestricted cash turns negative at $3.4 billion by 2035.
- Accumulated net losses since 2007 have reached approximately $120 billion.
- Emergency measures announced last month are expected to preserve $2.5 billion through September.
The Fiscal Gap in Concrete Terms
The core problem is a mismatch between obligations and liquidity that no amount of operational tinkering can close. USPS currently holds $8.9 billion in unrestricted cash, a figure that sounds workable until you set it next to the nearly $31 billion in missed payments on retirement and other required obligations the agency will have accumulated by the end of fiscal year 2025. Pay everything owed and the cash balance hits zero before this fiscal year ends.
The agency is not paying everything owed, of course. It has been deferring those obligations for years, which is why the balance sheet has not already imploded. But the deferral strategy has a hard ceiling. In the base case projection, unrestricted cash peaks at $17.5 billion in fiscal year 2031 as deferrals continue, then turns negative at $3.4 billion by 2035 when retiree health benefit payments come due and the associated fund runs dry. The worst case, in which USPS stops deferring, produces a negative cash position of $125.9 billion by 2035.
Structural Constraints Steiner Identified
In written testimony before the Senate Committee on Homeland Security and Governmental Affairs, Steiner argued that USPS cannot respond to a financial crisis the way a private company would because Congress has built a set of constraints into its operating model that effectively lock in losses.
- The agency's borrowing limit has been frozen at $15 billion for more than three decades, well below the $30 billion to $40 billion Steiner says is warranted based on inflation and current revenue.
- Retirement fund investments are restricted to Treasury notes, limiting any return potential.
- USPS is legally required to deliver to more than 170 million addresses six days a week, a commitment that costs $3.4 billion annually. Seven in ten of those delivery routes operate at a loss.
- Pricing authority rests with the Postal Regulatory Commission, constraining the agency's ability to recover costs through rate increases alone.
- Roughly 58% of post offices lose money on an operating basis.
The six-day delivery mandate is particularly notable. At $3.4 billion per year with the majority of routes underwater, it functions as a recurring structural subsidy to low-density service areas that the agency cannot offset elsewhere.
Revenue Erosion and the Amazon Factor
The longer arc of USPS financial deterioration traces back to 2007, when accumulated net losses now total approximately $120 billion. The primary driver over that period was the collapse of first-class mail volume as digital communication replaced physical letters, stripping the agency of its highest-margin revenue stream.
Package delivery was supposed to fill that gap, and for a time it partially did. The problem now is that Amazon, which had become one of USPS's largest package customers, has moved to cut its USPS parcel volume by at least two thirds before their current contract lapses. That shift threatens to remove billions in package revenue at precisely the moment the agency has no financial cushion to absorb the loss.
Emergency Measures Already Taken
USPS announced last month that it had frozen non-essential expenditures and paused employer-side contributions to a federal pension program. Together those two steps are projected to preserve $2.5 billion in cash through the end of September. Steiner described this as borrowing from employees' retirement funds to keep operations running, which is an unusual admission for a public agency to make in congressional testimony.
Beyond the immediate cash preservation moves, Steiner asked Congress for three structural fixes: raise the borrowing limit to the $30 billion to $40 billion range, resume a congressionally authorized public service reimbursement that has lapsed, and allow USPS to diversify its retirement fund investments beyond Treasury notes. Without those changes, he warned, the agency may have to cut delivery days, close thousands of post offices, and raise the price of a First-Class stamp.
| Metric | Figure |
|---|---|
| Cash on hand (May 31, 2026) | $8.9 billion |
| Deferred obligations (end of FY2025) | ~$31 billion |
| Peak projected cash (base case, FY2031) | $17.5 billion |
| Projected cash position (base case, 2035) | Negative $3.4 billion |
| Worst-case cash position (2035) | Negative $125.9 billion |
| Accumulated net losses since 2007 | ~$120 billion |
| Annual cost of six-day delivery | $3.4 billion |
| Current borrowing limit | $15 billion |
| Requested borrowing authority | $30 billion to $40 billion |
Frequently Asked Questions
Why is USPS in a financial crisis?
The agency faces a decades-long structural mismatch: first-class mail volumes collapsed as email replaced physical letters, eliminating the most profitable revenue stream. At the same time, Congress has imposed delivery mandates and borrowing limits that prevent USPS from cutting costs or raising capital at the scale needed to close the gap.
What happens if Congress does not act?
According to Postmaster General Steiner's testimony, USPS could be forced to reduce delivery days, shut thousands of post offices, and increase stamp prices. In the worst-case fiscal scenario, the agency's cash position could fall to negative $125.9 billion by 2035.
How much does six-day delivery actually cost?
Steiner cited an annual cost of $3.4 billion for the universal six-day delivery obligation. Roughly 70% of those routes operate at a loss, meaning the mandate is a net financial drag that the agency cannot offset through its profitable routes.
What emergency steps has USPS already taken?
The agency froze non-essential spending and paused its employer-side contributions to a federal pension program. Those two actions together are expected to preserve $2.5 billion in cash through the end of September 2026.
What Comes Next for USPS
The testimony before the Senate Committee on Homeland Security and Governmental Affairs sets up a direct confrontation between the agency's fiscal math and Congress's willingness to act. The borrowing limit request, the call to restart public service reimbursements, and the push to diversify retirement investments are all legislative asks, and none is guaranteed. The Amazon contract situation adds time pressure: losing two thirds of that parcel volume before a replacement revenue source materializes would accelerate the timeline toward the negative cash scenarios Steiner outlined. The agency's ability to stay solvent past 2031 depends heavily on whether those structural fixes arrive before the deferred obligations do.
Alana Hill
