The U.S. Postal Service is out of cash and borrowing against employee retirement funds to stay open, Postmaster General David Steiner told the Senate Committee on Homeland Security and Governmental Affairs this week. Without a congressional overhaul, USPS warns the nation's mail and package network could collapse.
At a Glance
- USPS had roughly $8.9 billion in cash on hand as of May 31, 2026, against nearly $31 billion in deferred retirement and other mandatory obligations due by the end of fiscal year 2025.
- Paying all obligations immediately would drain cash by the end of this fiscal year; the unrestricted cash position could fall to negative $125.9 billion by 2035 without major reform.
- Universal six-day delivery costs $3.4 billion annually, with seven in ten routes operating at a loss.
- Amazon's decision to cut its USPS parcel volume by at least two thirds before the current contract lapses threatens billions more in revenue.
- Emergency measures already in place are expected to preserve $2.5 billion in cash through the end of September.
A Financial Hole That Has Been Decades in the Making
Accumulated net losses at USPS have reached roughly $120 billion since 2007. The driver is straightforward: the rise of digital communication gutted first-class mail volumes and hollowed out what had been the agency's most profitable revenue stream. Package delivery was supposed to fill the gap, but that business is now under fresh pressure.
In written testimony this week, Steiner did not mince words. "The bottom line is that we are out of cash. We are borrowing from our employees' retirement funds to continue operations," he wrote. "The Postal Service has a broken business model and action is needed by Congress to fix it."
The numbers behind that warning are stark. Even under the base case scenario, which assumes the agency keeps deferring payments rather than settling them, USPS projects its unrestricted cash position peaks at $17.5 billion in fiscal year 2031 and then turns negative at $3.4 billion by 2035, as retiree health benefit payments come due and the associated fund is drawn down.
Structural Constraints the Agency Says Tie Its Hands
Steiner outlined four specific constraints he said prevent USPS from responding the way a private operator would. The agency's borrowing limit has been frozen at $15 billion for more than three decades. Retirement funds can only be invested in Treasury notes, precluding the kind of diversified returns a private pension might seek. The obligation to deliver to more than 170 million addresses six days a week is mandated, not discretionary. Pricing authority rests with the Postal Regulatory Commission, not with agency management.
Six-day universal delivery is the single largest target in any reform conversation. Steiner put the annual cost at $3.4 billion, with seven in ten routes running at a loss. Post offices present a similar picture: according to Reuters, approximately 58 percent of them lose money.
What Steiner Is Asking Congress to Do
The requests Steiner laid out fall into three categories. First, he called for raising the borrowing ceiling to somewhere between $30 billion and $40 billion, a figure he said reflects three decades of inflation and the agency's current revenue base. Second, he asked Congress to resume a congressionally authorized public service reimbursement that has lapsed. Third, he requested permission for USPS to diversify its retirement fund investments beyond Treasury notes.
Absent those changes, Steiner warned that USPS may have to cut delivery days, close thousands of post offices, and raise the price of a First Class stamp. These are not hypothetical contingencies; they are the logical endpoint of the trajectory the numbers describe.
The Amazon Problem and Emergency Cuts
The package business that was meant to offset declining mail revenue is itself contracting. Amazon has moved to cut its USPS parcel volume by at least two thirds before its current contract expires, a shift that threatens to strip out billions in revenue the agency was counting on. That loss arrives at precisely the wrong moment.
USPS announced last month that it has already frozen non-essential spending and paused its employer-side contributions to a federal pension program. Together, those steps are expected to conserve $2.5 billion in cash through the end of September, buying some time but not solving the underlying problem.
What the Numbers Actually Show
| Metric | Figure |
|---|---|
| Cash on hand (as of May 31, 2026) | $8.9 billion |
| Deferred obligations by end of FY2025 | ~$31 billion |
| Projected cash position by 2035 (no reform) | Negative $125.9 billion |
| Projected cash position by 2035 (base case, deferrals continue) | Negative $3.4 billion |
| Annual cost of six-day universal delivery | $3.4 billion |
| Accumulated net losses since 2007 | ~$120 billion |
| Cash preserved by emergency measures (through Sept.) | $2.5 billion |
| Borrowing limit requested by Steiner | $30 to $40 billion |
Congress Holds the Keys, and Has Not Used Them
The core tension here is not complicated. USPS is a federally mandated service operating under constraints that Congress imposed and only Congress can lift. The borrowing cap frozen since the 1990s, the investment restrictions on pension funds, the six-day delivery mandate and the regulatory pricing structure all require legislative action to change. Steiner's testimony is an explicit acknowledgment that internal management decisions, including this month's emergency spending freeze, cannot close a gap of this magnitude.
Whether Congress acts, and how quickly, will determine whether the service contraction Steiner described remains a warning or becomes a timetable. The fiscal year 2031 peak in the base case scenario gives lawmakers a narrow window, but the cash position by the end of this fiscal year, measured against $31 billion in deferred obligations, suggests the window is narrower than the long-term projections imply.