Key Takeaways
- •David Steiner (Postmaster General and Chief Executive Officer, United States Postal Service) announced that the agency will run out of cash within 12 months without significant financial reforms.
- •David Marroni (Director, Physical Infrastructure, U.S. Government Accountability Office) testified that the current postal business model is unsustainable due to declining mail volumes and rising retiree healthcare costs.
- •Rep. Comer (R, KY-1) pressed Steiner on why the agency is insourcing logistics and spending $1.5 billion on the Ship program instead of using cheaper private sector alternatives.
- •Rep. Sessions (R, TX-17) emphasized cutting labor costs, while Rep. Mfume (D, MD-7) argued against privatization and for protecting universal service obligations in rural and urban areas.
- •Congress must now decide whether to increase the agency's $15 billion borrowing authority or mandate service reductions to prevent a total liquidity crisis by the end of 2027.
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Hearing Analysis
Overview
This hearing examined the precarious financial state of the United States Postal Service (USPS) and the effectiveness of its "Delivering for America" (DFA) modernization plan. With the agency projected to exhaust its cash reserves within 12 months, the discussion focused on the tension between the USPS’s universal service mandate and its requirement to remain self-sustaining. Lawmakers evaluated the agency's request for increased borrowing authority, the impact of recent postage rate hikes, and the operational shifts intended to compete with private logistics firms.
Key Testimony & Policy
Postmaster General David Steiner, who assumed his role in July 2025, testified that the USPS is at a "critical juncture," facing a liquidity crisis by early 2027. He attributed the agency's $9 billion net loss in FY2025 to a massive decline in mail volume—dropping from a peak of 213 billion pieces to 109 billion—and several "financial anchors" imposed by law. Steiner specifically identified the requirement to pay an unfair share of Civil Service Retirement System (CSRS) benefits, a $15 billion borrowing limit that has not kept pace with inflation, and the mandate to deliver to 170 million addresses six days a week as primary drivers of the deficit. He proposed increasing the price of a first-class stamp from 78 cents to 90 or 95 cents to align with international standards and requested that Congress increase the agency's borrowing capacity to $30 or $40 billion.
David Marroni, Director of Physical Infrastructure at the Government Accountability Office (GAO), maintained the USPS on the GAO "High-Risk List," noting that while the Postal Service Reform Act of 2022 provided relief by eliminating retiree health benefit pre-funding, it was not a "silver bullet." Marroni emphasized a fundamental mismatch between costs and revenues, warning that the USPS will face an additional $6 billion annually in retiree healthcare costs within five years. He expressed skepticism regarding the DFA plan’s ability to reach a break-even point by 2030, citing inconsistent service performance and the difficulty of capturing enough package market share from established competitors.
The hearing also scrutinized specific programs, such as the USPS "Ship" program. Rep. James Comer (R, KY-1) highlighted a USPS Office of Inspector General (OIG) report finding that the agency spent $1.5 billion on the program to recreate technology already available in the private sector. Additionally, Steiner defended the Regional Transportation Optimization (RTO) initiative and the rollout of Regional Processing and Distribution Centers (RPDCs), arguing that moving to a hub-and-spoke model has already saved $2.1 billion in transportation costs, despite initial projections of $3.6 billion.
Notable Exchanges & Partisan Dynamics
Partisan divides emerged regarding the agency's mission and operational priorities. Republican members, led by Chairman Pete Sessions (R, TX-17) and Rep. Virginia Foxx (R, NC-5), focused on "controllable costs" and criticized the agency's "insourcing" of local transportation. Rep. Foxx shared personal anecdotes of severe mail delays, questioning why rates continue to rise while service quality declines. Rep. Tim Burchett (R, TN-2) challenged the expenditure of billions on electric delivery vehicles from Oshkosh Corporation and Ford Motor Company, suggesting that operational reliability should take precedence over environmental goals.
Democratic members, including Ranking Member Kweisi Mfume (D, MD-7) and Rep. Maxwell Frost (D, FL-10), expressed alarm over potential privatization and the impact of network consolidation on rural and underserved communities. Rep. Frost questioned Steiner on a controversial pilot program involving the Census Bureau, where postal workers would assist in 2030 Census data collection. Steiner clarified these are small-scale pilots ($200,000) intended to determine if postal carriers can perform census duties "faster, better, and cheaper" due to their existing presence in neighborhoods. Rep. Eleanor Norton (D-DC) pressed Steiner on the "disproportionate" burden of rate hikes on low-income residents and requested a report on why local post offices in the District of Columbia are frequently closed during business hours.
Organizations Mentioned
- United States Postal Service (USPS): The primary subject of the hearing, currently undergoing a 10-year modernization plan while facing a 12-month cash runway. - Government Accountability Office (GAO): Provided testimony identifying the USPS as a "high-risk" entity and critiquing the lack of transparency in the agency's financial reporting. - United States Postal Service Office of Inspector General (OIG): Cited for its investigation into the $1.5 billion "Ship" program, which it recommended terminating due to waste. - FedEx Corporation and United Parcel Service (UPS): Mentioned as primary competitors in the package market and as entities that the USPS is attempting to emulate through its new hub-and-spoke network. - United States Census Bureau: Discussed regarding a pilot program where postal workers would assist with the 2030 Census. - Oshkosh Corporation and Ford Motor Company: Identified as the manufacturers of the USPS's next-generation delivery vehicles, including new electric models. - Postal Regulatory Commission (PRC): Mentioned as the regulator that Steiner claimed "causes us to lose billions annually" through restrictive pricing orders.
What's Next
Postmaster General Steiner committed to providing the subcommittee with a final decision on the future of the "Ship" program and detailed quarterly breakdowns of cost savings from new processing centers. Rep. Norton mandated a 30-day follow-up regarding post office closures in Washington, D.C. The subcommittee indicated it would continue to review the USPS request for increased borrowing authority from the Treasury, while Rep. Gary Palmer (R, AL-6) suggested potential legislation to address mandates regarding electric vehicles and pension fund management. The agency faces a critical deadline in early 2027 to avoid a total liquidity collapse.
Transcript
Good afternoon. The Subcommittee on Government Operations will come to order, and I'd like to welcome everyone to this important hearing today. Without objection, the chair may declare a recess at any time, and I recognize myself for the purpose of making an opening statement. Welcome to today's hearing regarding the Postal Service's financial future. The Postal Service is charged with delivering mail to every address in the nation six days a week. This mandate is one that brings with it huge costs that no private company is required to deal with. It is on the post office. For each year, the Postal Service loses billions of dollars, and now we know that in 12 months they will run out of cash. And so we have been engaging, both Mr. Mfume and I and this subcommittee, with the Postmaster General for quite some time about the meaning of that and how we might address those issues. The last Postmaster, Lewis DeJoy, launched his Delivering for America plan, which was designed to revive the Postal Service. And unfortunately, those expectations were not reached. Mr. Steiner now has taken that new role as our new Postmaster General. Congratulations and thank you for being here, Mr. Steiner. A role that is very focused on taking on full advantage of the last-mile capacity to grow revenue. Raising revenue, cutting costs, and utilizing the capacities and capabilities of private industry, we believe, will be the path forward. Understanding which aspects of Delivering for America plan will remain and which have been stopped is a key path to that as we move forward. Without proper transparency and oversight, Congress will be unable to see whether further action is necessary, and that is why we are also here today. And with the Postal Service's request for increase in borrowing authority from the Treasury, Congress needs to have confidence not only that they'll be able to pay it back, but that they're on the right road to achieve financial security. For Congress to consider this request, the Postal Service must also prove that they have exhausted their options already. And this is a part of the regular interaction that takes place between this subcommittee as well as our staff and the Postmaster General and his staff as they work through the needs of understanding the ideas and where they meet with revenue objectives. Like so many actions that are available to the Postal Service, they need to look at them and understand what those ramifications mean. And while we have been in dialogue over those, some of those have taken place, and we look forward to today to hearing about those outcomes and answers. So I am delighted to be here today. I think Mr. Mfume and I both wake up, as Mr. Steiner does, at 3:00 some mornings with this on our mind. But I would also say that many of our other members do that also as well, the huge industry that surrounds this. It is a very important competitive marketplace. It is a very important part of the American economy and the vibrancy of this country. But we also come at this as members of Congress from our opportunity to serve people back home who want and need the Postal Service to be viable, but to be cost-effective also. And so all of these things come to point today, another day where we're able to have the Postmaster General, and I am delighted that he is here. I would like to yield now the time to the gentleman, distinguished gentleman, my good friend and a gentleman who I think he and I both share many of the same ideas not only about America's bright future, but about our responsibility in oversight. Distinguished gentleman from Maryland is recognized.
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