The USPS is warning Congress that it will run out of money within a year without changes
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I US Postal Service It will tell Congress on Tuesday that it faces a major fiscal crisis and is on track to run out of money in less than a year without significant reforms.
Postmaster General David Steiner testified before a House Oversight subcommittee and told lawmakers that the USPS needs higher stamp prices and the ability to borrow more money and other changes — including changes to pension and debt accounting, workers' compensation and retirement fund investment strategies.
Steiner put forward the possible options to reduce costsincluding ending six-day-a-week delivery, closing post offices or raising first-class postage stamp prices from 78 cents to $1 or more.
“In order to survive beyond next year, we need to increase our borrowing capacity so we don't run out of money,” Steiner said in prepared testimony. “Failure to do this could lead to the end of the Postal Service as we know it now.”
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USPS Postmaster General David Steiner will ask Congress for reforms and funding to avoid a financial crisis at the Post Office. (Bess Adler/Bloomberg via Getty Images)
Stamp prices it is up 46% from the beginning of 19 years, when it was 50 cents. Steiner argues that those prices are still much lower than the cost of international postage.
The USPS has also reached its current borrowing limit of $15 billion, which prevents the agency from taking on more debt.
Reuters previously reported in December that Steiner thought the USPS was on track for bankruptcy as soon as 2027 amid mounting losses.
USPS reported net loss of $118 billion as of 2007 as volumes for its most profitable product, first-class mail, fell to the lowest level since the late 1960s.
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USPS package volumes have steadily declined in recent decades. (Andrew Harrer/Bloomberg via Getty Images)
Steiner said that if the USPS were to reduce delivery to five days a week, it would save the agency about $3 billion a year, while closing small post offices in remote areas would save about $840 million.
However, Steiner warned that both of those options “may not be palatable to Congress or the American public.”
USPS currently delivers to more than 170 million US addresses on a six-day-a-week schedule.
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USPS is facing rising pension costs in addition to its operating costs. (Luke Sharrett/Bloomberg via Getty Images)
I Government Accountability Office (GAO) is expected to tell lawmakers on Tuesday that it's important to “talk about the unsustainable USPS business model before it becomes responsible for billions in annual health care costs for retirees, possibly by 2031.”
The highest price for USPS postage capacity it was 213 billion pieces of mail in 2006, and that number has dropped by more than half to 104 billion pieces of mail by 2025.
Steiner noted that at current stamp prices, that translates to a loss of $81 billion. He added that in the years since 2006, the USPS “was thrown into the water and instead of throwing us a life jacket, we were thrown an anchor.”
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Congress by 2022 provided the USPS with $57 billion in financial relief over ten years and required the agency's retirees to enroll in a federal health insurance plan.
Reuters contributed to this report.
