The U.S. Postal Service is warning that it may be forced to drastically cut the number of post offices and scale back some mail services if Congress doesn’t step in to address its worsening financial troubles, with plans for reductions expected early next year.
Postmaster General David Steiner laid out the stark warning during a Board of Governors meeting Tuesday, saying the agency has few options left to shore up its finances without congressional action. The Postal Service reported a $6.5 billion net loss for fiscal 2026 on Tuesday, an improvement from its posted $9 billion loss the previous year. Still, officials warned that the agency’s financial position remains precarious.
“We will need to make drastic changes in the number of post offices and marketing mail service levels,” Steiner said. “And we will need to look at other areas to generate the cash we need to meet our obligations to our employees and to the American public.”
“We are also seeking legislative actions to establish a better and more durable business model for the Postal Service and for the benefit of the American public we serve,” he said. Steiner also noted that the agency would have fully developed plans for the potential service reductions in the first quarter of 2027, which he would present to government leaders as Congress weighs whether to intervene.
Steiner said Congress has three choices: overhaul the retirement funding requirements and other mandates weighing on USPS, provide funding to cover those obligations or accept reduced levels of service. He warned that the agency faces another impending financial cliff within five years, when its retiree health benefits fund is expected to be exhausted.
“As I’ve been saying in many venues, the postal service cannot be financially strong in the long term without fundamental changes to our legislatively dictated business model,” Steiner said. “We require congressional attention and action, and we require action fast,” he added, arguing that retirement costs outside the agency’s control are creating an “untenable situation” for employees.
The agency is asking Congress to raise its $15 billion borrowing cap — which hasn’t changed since 1992 — and to modify the rules that dictate how it funds retirement pension benefits. USPS also wants greater flexibility to invest retirement funds and changes to how it administers workers’ compensation claims.
Board of Governors Chair Amber McReynolds echoed the warning Tuesday, arguing that previous bipartisan efforts to overhaul the Postal Service’s finances had not gone far enough.
“Ultimately, our fiscal cliff is here,” McReynolds said. “The board continues to make uncomfortable default decisions, and we do not want to continue to operate in an unsustainable position as we have.”
McReynolds pointed to the 2022 Postal Service Reform Act — which eliminated a requirement that USPS pre-fund retiree health benefits decades in advance — as an important first step, but said other sweeping changes are needed to address the agency’s long-term financial problems.
The Postal Service has taken steps to shore up its own finances, including reducing 19 million work hours, consolidating transportation networks and raising prices. Operating revenue rose 3% to $82.9 billion, though First-Class Mail and Shipping and Packages categories saw a continued decline in volume.
Steiner said the agency has also halted nonessential hiring and suspended certain retirement contributions to conserve cash while Congress considers potential reforms. USPS deferred roughly $2.6 billion in retirement contributions this year after receiving temporary regulatory relief and suspending certain payments, but officials acknowledged those obligations will eventually be due.
“We cannot continue to jeopardize our employees’ retirement plans,” Steiner said.
Steiner took over the agency last year after Louis DeJoy resigned amid bipartisan criticism of his management of the Postal Service. Shortly before stepping down, DeJoy confirmed the agency was working alongside the Department of Government Efficiency — run at the time by Elon Musk — and announced plans to eliminate 10,000 jobs as part of efforts to reduce costs.
President Donald Trump has previously floated the idea of privatizing the Postal Service or merging it with the Commerce Department. USPS employed over 530,000 workers across the country last year.
