The United States Postal Service (USPS) is facing the risk of depleting its cash reserves as early as next year. To tackle its persistent financial challenges, the agency is currently evaluating a broad spectrum of potential reforms. These options are contingent upon Congressional approval to resolve its long-term fiscal issues.
In March, Postmaster General David Steiner informed members of the House that USPS anticipates exhausting its funds by early 2027. He emphasized that swift legislative action is essential to ensure the agency can continue its operations.
The comprehensive list of legislative reforms, detailed in a paper titled “Accelerating Progress: Elements of Postal Reform,” mirrors several long-standing suggestions previously recommended by postal industry watchgroups and labor unions. Furthermore, the document explores more contentious strategies. These include the potential shuttering of local post offices and a reduction in weekly delivery days, measures USPS estimates could yield billions in annual savings.
In response to inquiries regarding the document, a USPS spokesperson clarified that “this is an old document that lays out a broad set of options/ reforms as related to the Postal Service’s tenuous financial position.” Metadata analysis confirms the paper was prepared on Jan. 13 by the chief of staff serving the postmaster general.
Among its considerations, USPS is also exploring the possibility of requesting the dissolution of its own regulatory body. If realized, this move would grant USPS increased autonomy to adjust its service rates and negotiate various agreements with corporations in the private sector.
The oversight subcommittee under the House Oversight and Government Reform Committee has scheduled a session with the commissioners of the Postal Regulatory Commission (PRC) for Thursday. A representative for the PRC opted to decline to make any statements regarding the upcoming hearing.
According to three sources familiar with the contents of this internal document, the paper provides crucial insight into the internal strategy discussions at USPS regarding its financial jeopardy. One insider noted that after assuming office last year, Steiner tasked USPS leadership with compiling a “comprehensive menu” of viable reform alternatives. This extensive array of proposals is expected to form the groundwork for a finalized, streamlined list to be formally presented to the legislative branch.
A significant portion of the “Accelerating Progress” document corresponds with recent public statements made by Steiner. During a recent USPS Board of Governors meeting, he offered two potential scenarios for Congressional action. The first involves targeted financial aid to sustain the self-funded agency. The second involves Congress granting USPS more latitude to shutter underperforming branches, cut delivery days, and lower overall service requirements while also seeking permission to increase postage prices.
While Steiner confirmed that USPS hasn’t yet formally submitted its requests to Congress, he explained that the agency is currently fine-tuning its legislative proposals. He also highlighted that last week, the agency implemented strict rules regarding nonessential spending to prevent a premature depletion of its cash funds.
Former Representative Kevin Yoder (R-Kan.), who currently leads Keep Us Posted—a coalition representing consumers, non-profits, and small businesses—criticized the document. He stated it “lacks a serious approach towards solving the problem they’re facing.”
“Those service reductions and price increases are a recipe for further volume loss, customer loss, and as the USPS loses more customers, it’s going to run even greater deficits,” Yoder explained.
Yoder also firmly dismissed the concept of entirely eliminating the Postal Regulatory Commission, noting that the body functions as a “consumer advocate” for the general public.
He continued, “We believe the regulator ought to be fortified. A significant part of the issue is that USPS hasn’t been subjected to the proper level of scrutiny. Both Congress and the regulator should be more actively involved.”
To further extend its financial runway, USPS has resorted to additional extraordinary measures. In early April, the agency informed the Office of Personnel Management (OPM) that it would defer its contributions to the Federal Employees Retirement System (FERS), a strategy intended to conserve immediate financial resources.
Brian Renfroe, President of the National Association of Letter Carriers, advocated for a reform strategy that prioritizes proposals with bipartisan consensus while avoiding service cuts.
“I’ve encouraged them to remain consistent regarding the legislative and administrative reforms they advocate for,” Renfroe said. “They should refrain from pushing for policies like reducing delivery frequency that clearly lack any legislative traction.”
Currently, nearly 1 in 3 post offices operate at a loss, with approximately 60% losing money annually. The internal document indicates that USPS is actively seeking the authority to close these local offices if alternative methods can provide adequate service coverage. The agency projects that it spends roughly $744 million a year operating smaller post offices, many of which are situated in rural and remote communities.
In a bid to boost revenue, USPS estimates it could generate an additional $5 billion per year by raising the cost of a first-class Forever stamp by 14%, bringing the total to 90 cents from 78 cents. This follows the agency’s recent authorization to increase stamp prices to 82 cents on July 12.
USPS concluded in the document that “There are a number of steps that can be taken to help make the USPS profitable again.”
USPS projects annual savings of up to $3.5 billion if it transitions from six-day-a-week delivery to a five-day schedule. However, the Postal Service Reform Act enacted in April 2022 currently mandates a minimum of six-day delivery for both mail and packages. In exchange for this requirement, Congress relieved the agency of $107 billion in long-term liabilities.
The document identifies some of the agency’s “top choices” for policy adjustments. This includes requesting that the Office of Personnel Management (OPM) recalculate its contributions toward the Civil Service Retirement System (CSRS). CSRS is a defined-benefit retirement plan for federal and postal workers who began employment prior to 1987.
USPS, the Office of Inspector General (OIG), and NALC all maintain that the agency has historically overpaid into this retirement fund. Internal calculations suggest an overpayment exceeding $153 billion, and USPS estimates that a recalculation could result in annual savings of approximately $3.5 billion.
“There is no vocal opposition to CSRS reform,” the agency noted. It added that both its internal watchdog (IG), labor unions, and the Government Accountability Office (GAO) have expressed support for this specific proposal. Additionally, USPS is lobbying Congress to expand its current borrowing cap of $15 billion from the U.S. Treasury to a total of $35 billion.
In a more aggressive move, USPS is debating whether to seek the total elimination of its regulatory commission or, at a minimum, to significantly curtail its supervisory powers. The agency expressed its view that the PRC “fundamentally harms our competitiveness and ability to operate in a rational, business-like manner.”
“The PRC is an unnecessary agency that exercises its authority in a highly bureaucratic manner that places unnecessary barriers to the ability of the Postal Service to compete in the marketplace,”
USPS stated.
One of the regulator’s responsibilities is to approve any proposed increases in stamp prices put forward by USPS. In December 2020, it granted USPS the ability to raise mail prices above the inflation rate.
Since that time, USPS has typically followed a routine of increasing mail prices every January and July. Earlier this year, the Postal Regulatory Commission restricted USPS to only one mail price increase per year through September 2030. USPS noted that these adjustments “significantly limit our pricing flexibility and our capacity to generate the revenue we need.”
The Postal Regulatory Commission also reviews agreements between USPS and businesses, which usually involve discounted rates in return for a commitment to ship a specific volume of mail or packages. USPS argued that this regulatory obligation “damages our ability to secure and onboard customers and is entirely unnecessary.”
Former PRC Chairman Michael Kubayanda told Federal News Network last year that the commission had overseen a 400% rise in these negotiated service agreements from 2021 to 2024.
“There are numerous other ways in which the PRC restricts our ability to fulfill our public service mission in a financially sustainable way—too many to list here—and we cannot point to any genuinely concrete benefits that the PRC delivers to the American public,” USPS stated.
USPS expressed that its Board of Governors should “be given the explicit authority to make decisions about pricing and products.”
“Postal Service management is already overseen by the Postal Service Governors, and there is simply no justification for an agency led by one set of principal officers appointed by the President and confirmed by the Senate to be regulated by another agency composed of a different set of principal officers who are also presidentially appointed and Senate-confirmed,” it stated.
The Postal Regulatory Commission’s $30 million yearly budget is paid for entirely by USPS.
Rather than fully abolishing the Postal Regulatory Commission, USPS suggested that Congress could enact legislation or the White House could issue an executive order to curtail the regulator’s powers and “instruct them to acknowledge the importance of the Postal Service’s financial stability when carrying out any authority they continue to hold.”
USPS is also seeking greater flexibility in how it invests pension funds. Under current law, it is restricted to placing its retiree and pension assets in low-risk, low-return Treasury bonds.
USPS Governor Dan Tangherlini, who previously led the General Services Administration, remarked at last month’s board meeting that USPS retirement plans are among the most well-funded in the federal government, yet remain underfunded due to this restriction.
A report released last year by the inspector general’s office determined that if USPS had been permitted to invest those funds in a mix of 60% stocks and 40% bonds, it would now hold an $800 billion surplus.
USPS is currently barred from shipping alcohol, but estimates it could gain $190 million in additional revenue if Congress enacted a bill lifting this prohibition. Lawmakers have put forward several bills to remove the ban, but none have advanced far in Congress.
USPS has reduced total work hours and transportation expenses as part of its 10-year reform strategy. However, the agency, now halfway through this plan, has not met its goal of reaching break-even.
As part of this reform effort, USPS has worked to grow its package business and has invested significantly in upgrading facilities to expand its capacity to handle packages.
“Those measures can reduce our projected net loss by nearly half, but they require time,” USPS stated.
USPS delivered approximately 6.8 billion packages in fiscal 2025, a decline from 7.7 billion packages the prior year. USPS recently secured new agreements to deliver packages for Amazon and DHL.
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