USPS axing its regulator is on the table, as it looks for ways to avoid running out of cash

CORRECTION: An earlier version of this story incorrectly stated GAO support for CSRS reforms. GAO hasn’t taken a position on this issue. 

The Postal Service, on the verge of running out of cash early next year, is pricing out a wide range of possible reforms that, if passed by Congress, could address the agency’s long-term financial problems.

Postmaster General David Steiner told House lawmakers in March that USPS is set to run out of cash in early 2027 and that lawmakers need to act soon to keep the agency running.

The agency’s wish-list of possible legislative reforms, outlined in a document titled “Accelerating Progress: Elements of Postal Reform,” includes several longstanding proposals supported by postal watchdogs and unions. The document also considers more controversial options, such as closing post offices and reducing delivery days to save USPS billions of dollars each year.

A USPS spokesperson said in a statement that “this is an old document that lays out a broad set of options/ reforms as related to the Postal Service’s tenuous financial position.” Metadata shows the document was drafted on Jan. 13 by the postmaster general’s chief of staff.

The agency is also considering whether to ask Congress to eliminate its regulatory agency — a move that would give USPS greater freedom to raise mail prices and strike deals with private-sector companies. A PRC spokesperson declined to comment.

The oversight subcommittee of the House Oversight and Government Reform Committee will hold a hearing with the commissioners of the Postal Regulatory Commission on Thursday.

Three individuals familiar with the internal document told Federal News Network that it sheds some light on USPS’s internal deliberations about its financial predicament. One individual said that Steiner, soon after taking office last year, called on USPS officials to lay out a “menu” of possible reform options. That broad array of proposals is likely to serve as the basis for a more refined list of proposals formally submitted to Congress.

Many of the proposals in the “Accelerating Progress” document line up with some of Steiner’s recent public remarks. Last month at a USPS Board of Governors meeting, he floated the possibility of Congress stepping in to provide more financial assistance and keep the largely self-funded agency from running out of cash.

Alternatively, Steiner said USPS would ask Congress for greater flexibility to close unprofitable post offices, slash days of delivery and reduce service standards. If lawmakers go down this path, USPS would also seek more authority to raise mail prices.

Steiner said USPS hasn’t officially submitted any proposals to Congress, but said the agency is refining its wish list of legislative proposals before sharing it with lawmakers. Last week, USPS put new restrictions on nonessential spending to avoid running out of cash sooner than expected.

Former Rep. Kevin Yoder (R-Kan.), the executive director of Keep US Posted, a group representing consumers, nonprofits and small businesses that rely on USPS, said the document “lacks a serious approach towards solving the problem they’re facing.”

“Those service reductions and price increases are a recipe for further volume loss, customer loss, and as the USPS loses more customers, it’s going to run even greater deficits,” he said.

Yoder pushed back on the idea of eliminating the Postal Regulatory Commission, which he said has been a “consumer advocate” for the public.

“We think the regulator needs to be strengthened and that part of the problem is that USPS has not had proper oversight,” he said. “Congress should engage more, and the regulator should engage more.”

USPS is also relying on other extraordinary measures to avoid running out of cash. In April, USPS told the Office of Personnel Management that it will hold off paying its contributions to the Federal Employees Retirement System (FERS), a move that’s expected to conserve cash in the near term.

Brian Renfroe, president of the National Association of Letter Carriers, said USPS should focus on pitching reforms to Congress that have bipartisan backing and to avoid proposals to cut service.

“I’ve encouraged them to just be consistent in what they talk about in terms of legislative and administrative reforms, not spend their time on things like reducing delivery frequency that there’s clearly no interest in,” Renfroe said.

Roughly 60% of post offices lose money. According to the internal document, USPS is looking for the authority to close post offices “if service can be adequately provided through other means.” USPS estimates it spends about $744 million annually on small post offices, mostly in rural or remote areas.

USPS also figures it could generate up to $5 billion in additional revenue each year if it raised the price of a first-class Forever stamp to 90 cents — a 14% increase from the current 78-cent price. USPS has already received approval to raise stamp prices to 82 cents on July 12.

“There are a number of steps that can be taken to help make the USPS profitable again,” the agency wrote.

USPS estimates it could save up to $3.5 billion each year if it went from six-day to five-day delivery each week. The Postal Service Reform Act that Congress passed in April 2022 requires six-day delivery of mail and packages. In return, the legislation erased $107 billion from the agency’s financial liabilities.

According to the document, USPS’ “top choices” for reform include asking the Office of Personnel Management to recalculate its contributions to the Civil Service Retirement System, a defined-pension plan for federal and postal employees and retirees who joined before January 1987.

USPS, its inspector general’s office and NALC claim the agency has overpaid into the CSRS fund. USPS estimates that it has overpaid its obligations by more than $153 billion, and that recalibrating its contributions could save the agency $3.5 billion annually.

“There is no vocal opposition to CSRS reform,” USPS wrote, adding that its IG office and its unions all support this proposal. USPS is also asking Congress to increase its maxed-out $15 billion borrowing limit with the Treasury Department to $35 billion.

USPS is also considering asking Congress to eliminate its regulatory agency or to pass legislation that would diminish its oversight role. It wrote that the Postal Regulatory Commission “fundamentally harms our competitiveness and ability to operate in a rational, business-like manner.”

“The PRC is an unnecessary agency that exercises its authority in a highly bureaucratic manner that places unnecessary barriers to the ability of the Postal Service to compete in the marketplace,” USPS wrote.

Among its duties, the regulator must approve USPS-proposed price hikes on stamps. In December 2020, it gave USPS the flexibility to set mail prices higher than the rate of inflation.

Since then, USPS has generally fallen into a pattern of raising mail prices each January and July. Earlier this year, the Postal Regulatory Commission limited USPS to raising mail prices once a year through September 2030. USPS wrote that these changes “certainly reduce our flexibility in pricing and our ability to generate needed revenue.”

The Postal Regulatory Commission also oversees contracts between USPS and companies, which often focus on discounted pricing in exchange for a guarantee of sending a certain volume of mail or packages. USPS wrote that this regulatory requirement “harms our ability to sign and on-board customers and is completely unnecessary.”

Former PRC Chairman Michael Kubayanda told Federal News Network last year that the commission oversaw a 400% increase in these negotiated service agreements between 2021 and 2024.

“There are other ways in which the PRC hampers our ability to achieve our public service mission in a financially sustainable manner that are too numerous to mention here, and we cannot identify any truly tangible benefits that the PRC provides to the American public,” USPS wrote.

USPS wrote that its Board of Governors should “be vested with the clear authority to make pricing and product decisions.”

“Postal Service management is subject to oversight by the Postal Service Governors, and there is simply no reason why an agency headed by one group of principal officers appointed by the President and confirmed by the Senate should be regulated by another agency made up of another group of principal officers also presidentially appointed and Senate-confirmed,” it wrote.

The Postal Regulatory Commission’s $30 million annual budget is funded entirely by USPS.

Short of completely eliminating the Postal Regulatory Commission, USPS wrote that Congress could pass legislation or the White House could issue an executive order limiting the regulator’s authority and “direct them to recognize the importance of the Postal Service’s financial stability when exercising any authority they do retain.”

USPS is also looking for more flexible pension investment options. By law, it can only invest its retiree and pension funds in low-risk, low-reward Treasury bonds.

USPS Governor Dan Tangherlini, a former head of the General Services Administration, said at last month’s board meeting that USPS retirement plans are among the best-financed of any in the federal government, but remain underfunded because of this limitation.

A report last year from the inspector general’s office found that if USPS had been able to invest those funds in a portfolio of 60% stocks and 40% bonds, it would currently have an $800 billion surplus.

USPS is currently prohibited from shipping alcohol, but expects it would see $190 million in new revenue if Congress passed a bill eliminating this ban. Lawmakers have introduced several bills to remove the ban, but none have made it far in Congress.

USPS has slashed total work hours and transportation costs as part of a 10-year reform plan. But the agency, which is midway through this plan, has fallen short of its “break-even” goal.

Under this reform plan, USPS has tried to expand its package business and has invested heavily in facility upgrades to expand its package-handling capacity.

“Those steps can cut our anticipated net loss nearly in half, but they take time,” USPS wrote

USPS delivered about 6.8 billion packages in fiscal 2025, down from 7.3 billion packages the previous year. USPS recently struck new deals to deliver packages for Amazon and DHL. 

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