The U.S. Postal Service is exploring the possibility of seeking additional financial support from Congress to prevent the largely self-funded agency from depleting its cash reserves early next year.
Postmaster General David Steiner noted that while USPS has not formally proposed the idea to lawmakers, it remains a viable option for stabilizing the agency’s finances. He added that USPS will spend the next month finalizing its list of legislative requests before presenting them to Congress.
During a March hearing before the House Oversight Committee, Steiner warned that USPS could run out of money by early 2027 if it continues meeting its financial obligations on schedule. In the meantime, the agency is implementing emergency measures to preserve cash.
“To their credit, Congress isn’t interested in quick fixes — they’re focused on lasting solutions,” Steiner said Friday at a public meeting of the USPS Board of Governors.
Several Republican lawmakers criticized the notion of Congress bailing out the Postal Service again, pointing to the landmark postal reform legislation passed in April 2022 that wiped out $107 billion in the agency’s accumulated debt.
“Everything you’re raising now, we already addressed five years ago,” Committee Chairman James Comer (R-Ky.) told Steiner during the March 17 hearing.
Congress previously provided USPS with $10 billion in emergency funding in 2020, when the agency last warned of a cash shortage. Lawmakers also allocated $3 billion through the Inflation Reduction Act to help USPS transition to a mostly electric delivery fleet.
Steiner outlined two potential paths for congressional assistance. The first would involve Congress removing “mandates that guarantee the Postal Service loses money.” This approach would give USPS more freedom to shutter unprofitable post offices, reduce delivery days, and lower service standards. Under this scenario, USPS would also push for greater authority to increase postage rates.
“We could make significant progress toward profitability. But Americans would experience diminished service levels and higher prices,” Steiner said.
Steiner informed House lawmakers that reducing delivery days, closing post offices, and cutting staff are all “on the table” if USPS approaches insolvency.
Alternatively, Steiner suggested Congress could increase USPS funding through the annual appropriations process. According to the National Association of Postal Supervisors, USPS is eligible to request up to $460 million annually from Congress as “public service reimbursement.” However, the agency has neither requested nor received this reimbursement since 1982.
While USPS primarily funds itself through its own revenue, it does receive a small amount of congressional funding to operate a program that enables legally blind individuals to mail certain items for free. Congress allocated more than $38 million to support this program in fiscal year 2026.
Steiner emphasized that such funding would not constitute a “bailout” for USPS, but rather a subsidy for the agency’s increasingly expensive mission of delivering mail and packages to 163 million addresses six days a week.
“It’s simply Congress paying for a service that no other business would provide,” he said.
Steiner explained that the public service reimbursement is designed to “partially offset the costs tied to our expensive mandates.” Since 1971, the number of addresses USPS serves has grown by tens of millions, yet mail volume has dropped by half.
“The math is straightforward: Revenue and cost savings can’t cover the expenses of the universal service obligation under the current business model. It’s simply not sustainable,” Steiner said.
Prior to 1971, Congress fully funded the U.S. Post Office — then a Cabinet-level department — and determined postage rates. The Postal Reorganization Act transformed the agency into the Postal Service and required it to operate on its own revenue.
As part of its 10-year reform plan, USPS has reduced total work hours and transportation costs. However, now halfway through the plan, the agency has failed to reach its “break-even” target. Steiner acknowledged that USPS “cannot cut its way to profitability.”
USPS posted a $2 billion net loss for the second quarter of fiscal 2026 — an improvement from the $3.3 billion loss recorded during the same quarter the previous year. USPS Chief Financial Officer Luke Grossmann reported that every product category experienced year-over-year volume declines. Package revenue rose 4.5% despite a 1.4% drop in volume.
“Management actions alone won’t resolve our financial challenges,” Grossmann said.
By urging Congress to take an active role in reshaping its business model, USPS leadership is charting a different course from Steiner’s predecessor, former Postmaster General Louis DeJoy. Following the passage of the 2022 Postal Service Reform Act, DeJoy maintained that the agency could solve its long-term financial issues independently, provided its regulators and Congress stayed out of the way.
“My hope is that our regulator and Congress step aside, because this is a crisis,” DeJoy told House lawmakers in May 2023.
Steiner cautioned that if USPS runs out of cash, the fallout would extend well beyond its own customers and 640,000 employees. Companies like Amazon and UPS compete with USPS in package delivery while also ranking among its largest customers — paying the agency to deliver packages to rural areas that are otherwise unprofitable. Steiner warned that a USPS collapse would threaten a nearly $2 trillion mailing and shipping industry that sustains roughly 78 million jobs.
“It’s an economic powerhouse driving an entire ecosystem of American jobs, livelihoods, businesses of all sizes, success stories, and tax revenue,” he said.
USPS Governor Ron Stroman, a former deputy postmaster general, said recent gains in on-time delivery performance have been “significant.”
“I believe we can all expect those improvements to continue,” Stroman said.
USPS delivered 87.26% of first-class mail on time this quarter, up from 82.55% during the same period last year.
USPS is asking Congress to raise its $15 billion borrowing cap with the Treasury Department. It is also requesting that the Office of Personnel Management recalculate its contributions to the Civil Service Retirement System, a defined-benefit pension plan for federal and postal workers and retirees who joined before January 1987. USPS, its inspector general’s office, and the National Association of Letter Carriers all maintain that the agency has overpaid into the CSRS fund.
USPS informed OPM last month that it will suspend its contributions to the Federal Employees Retirement System (FERS), a move expected to conserve cash in the short term. FERS covers federal and postal employees who began their careers after January 1987.
Additionally, USPS is seeking greater flexibility in how it invests its pension assets. By law, USPS can only place its retiree and pension funds in low-risk, low-return Treasury bonds. USPS Governor Dan Tangherlini, a former administrator of the General Services Administration, noted that USPS retirement plans are among the best-funded in the federal government but remain underfunded due to this restriction.
A report from the inspector general’s office last year found that if USPS had been permitted to invest those funds in a portfolio consisting of 60% stocks and 40% bonds, it would currently hold an $800 billion surplus.
“With that kind of money, letter carriers could have flying cars,” Tangherlini said.
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