The United States Postal Service has issued a stark warning to federal lawmakers, stating the agency may be unable to fulfill its nationwide mail delivery obligations within the coming year unless Congress grants it new financial tools. In testimony before the House Oversight Committee, Postmaster General David Steiner indicated that without additional borrowing capacity, authority to raise prices, or legislative reforms, USPS cash reserves could be depleted by October or November of 2026.
A Deepening Financial Crisis
The agency's financial position continues to deteriorate sharply. For the 2025 fiscal year, USPS reported a net loss of $9.0 billion under generally accepted accounting principles. The situation worsened in the quarter ending December 31, 2025, with an additional loss of $1.259 billion. Chief Financial Officer Luke Grossmann attributed the results to a "continued decline in volume" occurring within a cost structure that management has limited ability to alter. Steiner was more direct, telling legislators, "We're in a crisis."
The core of the problem lies in the collapse of first-class mail, historically the service's most profitable product. Volume has plummeted from 213 billion pieces in 2006 to just 109 billion in 2025. Steiner valued this decline at approximately $81 billion in forgone revenue at current postage rates. He emphasized the systemic nature of the challenge, noting that 71% of all delivery routes and 58% of post office locations do not generate enough revenue to cover their operating costs. The Postmaster General argued that even private logistics giants like UPS or FedEx would struggle to absorb a revenue shock of such magnitude.
Political Gridlock Over Solutions
Steiner presented Congress with a series of difficult options to stabilize the service's finances. His requests include raising the statutory debt ceiling, which has been fixed at $15 billion since 1992 and has already been reached. More contentious proposals involve reducing mail delivery to five days per week, which USPS estimates could save $2.9 billion to $3.5 billion annually, and shuttering underperforming postal facilities for roughly $840 million in yearly savings. He also suggested the price of a first-class stamp may need to rise to $1.00 or more from the current 78 cents.
However, Congress faces political hurdles in authorizing significant changes. The Postal Service Reform Act of 2022 codified six-day delivery into law and provided about $57 billion in noncash accounting relief, but no fresh operating capital. This means any major service reduction would require a new legislative vote, reopening a politically sensitive debate. Reaction from lawmakers was mixed. House subcommittee Chair Pete Sessions acknowledged "tough decisions" were ahead but expressed opposition to higher stamp prices. Representative Kweisi Mfume urged action, stating lawmakers could not "do nothing and watch the Titanic sink."
Broader Pressures and Long-Term Challenges
Complicating the outlook is pressure on the package delivery business, a segment USPS has relied on for growth. According to a source familiar with the matter, Amazon plans a significant reduction in volume sent through the Postal Service before their current agreement expires on September 30, 2026. Amazon confirmed it has spent over $5 billion annually with USPS in recent years and hopes to continue a partnership, even at a reduced level. Steiner declined to predict the outcome of ongoing negotiations, but a sharp drop in Amazon volume would leave USPS with less package traffic to offset its massive fixed network costs.
David Marroni, the Government Accountability Office's director of physical infrastructure, described the situation as a "fundamental tension" between the universal service mandate Congress expects and the revenue the Postal Service can realistically generate. Service quality has also suffered; first-class mail on-time performance fell to about 86% in fiscal 2025 from 91% in 2022, even after delivery standards were relaxed from a 1-to-3-day window to 1-to-5 days. Watchdogs have warned that service cuts or price hikes would disproportionately affect rural communities.
The GAO has warned that USPS is approaching a critical juncture before billions in new retiree health benefit costs come due around 2031. While increased borrowing authority or postage hikes could provide temporary relief, they would not automatically fix the underlying business model. Higher prices risk driving more volume out of the system, and a shift to five-day delivery would most impact remote areas. The Postal Service has retained consulting firm Alvarez & Marsal to model various scenarios and plan for all potential outcomes.
For now, the focus is on the immediate cash shortfall. In his March 17 testimony, Steiner warned that "less than a year from now the Postal Service will be unable to deliver the mail" if the current trajectory holds. The burden now falls on a divided Congress to choose between granting higher borrowing limits, greater pricing autonomy, or authorizing cuts to a service they have previously mandated be preserved.
