Postmaster Warns USPS Faces Cash Crisis by October

Postmaster General David Steiner warned Congress that the U.S. Postal Service (USPS) could run out of money as soon as October unless significant financial reforms are implemented immediately. According to multiple reports from PBS, NPR, and Reuters, the agency faces severe financial strain due to declining mail volume and regulatory constraints that limit its ability to raise revenue.

The USPS reported net losses of $118 billion since 2007, with first-class mail volumes falling to their lowest levels since the late 1960s. Steiner emphasized during his testimony before the House Oversight Committee that without urgent action, the agency could default on obligations to employees and vendors within months.

Steiner proposed a series of reforms to address USPS's financial woes, including raising the price of a first-class stamp from 78 cents to potentially $1.05 or more. He also called for lifting the $15 billion borrowing cap imposed since 1990 and allowing the agency to invest funds beyond Treasury bills. Additional measures under consideration include restructuring pension and retiree health benefit obligations, reducing delivery days from six to five per week, and closing post offices in remote areas.

The USPS has lost over 104 billion pieces of mail since its peak volume in 2006, translating to a revenue loss of $81 billion at current stamp prices. The agency's financial struggles have been longstanding, with nearly every fiscal year since 2007 operating at a deficit. While the Postal Service Reform Act of 2022 provided some relief by eliminating the requirement to prefund retiree health benefits and canceling $57 billion in past-due payments, Steiner emphasized that further action is urgently needed.

Industry experts have raised concerns about potential destabilization if large shippers like Amazon stop relying on USPS's last-mile delivery network. Meanwhile, advocacy groups such as Keep Us Posted urge Congress to pass legislation limiting rate increases and tying them to service performance. The outcome of these discussions will determine the future viability of the Postal Service and its ability to continue delivering mail across the country.

According to The Guardian, Steiner warned that without lifting the borrowing cap, USPS could run out of cash by February 2027. He also emphasized the need for authority to raise postage prices, including increasing the first-class stamp price from $0.78 to $0.95.

Reuters reported that Amazon plans to drastically cut the number of packages it sends through USPS, potentially reducing them by at least two-thirds by September when its current contract ends. Steiner acknowledged ongoing negotiations with Amazon but could not predict the outcome. This reduction in volume adds significant pressure on USPS's already strained financial situation.

CNBC added that Amazon accused USPS of 'walking away at the eleventh hour' during recent contract renewal negotiations, which fell apart in December. Amazon expressed its desire to continue the partnership but indicated that the window for a solution is rapidly closing. The company has been expanding its own logistics network, reducing reliance on external carriers like USPS.