Postal Service Faces Cash Crisis, Warns of Potential Shutdown by 2027

The U.S. Postal Service could run out of cash within a year unless Congress lifts a decades-old borrowing cap, according to a stark warning from Postmaster General David Steiner. Without legislative action, the agency risks being unable to pay employees or vendors by February 2027, potentially crippling mail delivery nationwide.

“How long are employees going to work and vendors going to show up if we’re not paying them?” Steiner asked during an interview with The Associated Press on Wednesday. He specifically highlighted the $15 billion borrowing limit that has remained unchanged since 1990 as a critical constraint.

Steiner, who took the helm of the struggling agency last July after serving as CEO of the nation’s largest waste management company and as a FedEx board member, is scheduled to testify before Congress later this month about the USPS financial crisis. He will advocate for significant regulatory changes to address the agency’s mounting challenges.

The Postal Service operates in a unique position – carrying all the responsibilities of a government agency, including delivering mail six days a week to every address in the nation, without receiving annual federal budget appropriations. Instead, it relies primarily on revenue from postage and services.

“We have to have a conversation with the American public,” Steiner explained. “If you want us to deliver everywhere, every day, we’ll do it. That’s not a problem. But who is going to pay for it?”

The financial picture is increasingly grim. USPS reported net losses of $9 billion for fiscal year 2025, following $9.5 billion in losses the previous year. This occurred despite a modest increase in operating revenue of $916 million (1.2%), driven largely by its Ground Advantage shipping service.

Steiner believes raising the borrowing limit is the most immediate step Congress can take to provide breathing room. “That will buy us the time to make the fixes we need to make, and we can sail on down the road,” he said.

Beyond the borrowing cap, Steiner has outlined several critical reforms needed to stabilize the agency’s finances. His strategy includes expanding revenue sources by extending the USPS last-mile delivery service – the final step of transporting packages from local distribution centers to customers’ doorsteps – to more shipping companies and e-commerce businesses.

The postmaster general also advocates for greater authority to raise postage prices. He calculates that increasing the price of a first-class stamp to 95 cents from the current 78 cents would significantly address the agency’s fiscal problems. A decade ago, that same stamp cost just 47 cents.

“If the Postal Regulatory Commission adopted our pricing model, problem solved,” Steiner said, adding that the package delivery side of the business could then effectively subsidize traditional mail services. Despite the price increases, Steiner noted that U.S. postage remains “the lowest price in the industrialized world and covers a delivery range that’s ten times farther than in other countries.”

Additionally, USPS officials have called for reforms to pension and retiree health benefit obligations, including the ability to diversify investments beyond Treasury bills. Congress partially addressed these concerns in 2022 with the Postal Service Reform Act, which eliminated the requirement to prefund retiree health benefits, but left other constraints intact.

The agency has faced unprecedented challenges as mail volume has plummeted from approximately 220 billion pieces annually to about 110 billion today, as more people shift to digital communications and online bill payment.

“Take those 110 billion and put a 78-cent stamp on them. That’s $86 billion of revenue that evaporated in 15 years,” Steiner explained. “If either FedEx or UPS lost $86 billion of revenue, they would have no revenue.”

The advocacy group Keep Us Posted, which was established in 2021 in response to price increases and service delays, recently warned that the USPS was “headed for a taxpayer bailout” given its cash flow problems. The organization has urged Congress to pass legislation that would limit rate increases to once annually and tie them to service performance metrics.

Steiner admitted he didn’t fully comprehend the severity of the Postal Service’s financial situation until assuming his position last year. “Interestingly, I’m not sure some of the people at the Postal Service realized how dramatic it was,” he reflected.

As the crisis looms, the fate of this essential American institution now rests largely with Congress, which must decide whether to grant the flexibility and reforms needed to secure the Postal Service’s future.