Why It Matters

A Brookings researcher told a House subcommittee last week that the U.S. Postal Service's financial condition cannot be fixed by cutting costs alone — and that Congress, not postal management, is the only actor that can resolve it.

Elena Patel, a senior fellow at the Brookings Institution, submitted a statement for the record to the House Subcommittee on Government Operations on June 4, for a hearing on the U.S. Postal Service's (USPS) financial condition, postal rates, and the Postal Regulatory Commission. Her central argument: the Postal Service is not mismanaged, but structurally underfunded by design — and the design is federal law.

The Big Picture

The USPS financial crisis is accelerating toward a hard deadline. The agency ended fiscal year 2025 with approximately $8.2 billion in cash — roughly one month of operations — and leadership has warned it could run out within a year. Its statutory borrowing ceiling of $15 billion, set in 1992 and never adjusted, has been maxed out since 2012.

The tension at the center of Patel's statement is straightforward: Congress created the universal service obligation — the requirement to deliver to all 169 million U.S. addresses at uniform, affordable rates, six days a week — but has never directly funded it. Instead, it relied on the letter-mail monopoly to pay for it. That monopoly revenue has collapsed, and no replacement financing mechanism exists.

The Postal Regulatory Commission has found that the value of the postal monopoly has fallen short of the cost of meeting the universal service obligation every year since at least 2019, by roughly $0.7 billion to $3.1 billion annually.

The Postal Service business model was built on a premise that no longer holds. The Postal Reorganization Act of 1970 made USPS self-sustaining, expecting it to cover costs from postage rather than appropriations. For decades, high-margin letter mail generated enough surplus to underwrite delivery to the entire country. Since 2007, First-Class Mail volume has fallen by nearly 56 percent and total mail volume by nearly 49 percent. USPS has posted an operating loss every year since.

Package growth has kept total revenue roughly flat, but parcels carry thinner margins than letters and generate less surplus to sustain a network built for universal reach.

Critically, Patel's analysis finds that the daily work of moving the mail is not what's driving the losses. In 2025, USPS reported an operating margin of approximately negative 11.4 percent. Excluding retirement obligations, that margin was approximately positive 1.4 percent. Nearly the entire reported loss comes from pension charges set by the Office of Personnel Management — costs that USPS, unlike every other major federal employer, must cover from operating revenue rather than appropriations. The unfunded Civil Service Retirement System and Federal Employees Retirement System liabilities total more than $100 billion, according to USPS's own financial filings.

The United States is not alone. In 2025, Denmark ended traditional nationwide letter delivery, the United Kingdom scaled back Royal Mail's delivery standards, Canada converted millions of addresses to community mailboxes, and the European Commission opened a reform of EU postal law. Patel frames this as a global structural shift driven by two simultaneous forces: the collapse of letter-mail revenue as communication moved online, and the rise of e-commerce demanding affordable parcel delivery.

Patel makes four recommendations to Congress: fund the universal service obligation directly through an annual appropriation equal to the PRC-measured cost; move the $100-billion-plus pension liability to the federal ledger, where she argues it effectively already belongs; raise the frozen $15 billion borrowing cap — adjusting for inflation would bring it to roughly $36 billion today; and preserve the Postal Regulatory Commission rather than weaken or eliminate it.

Political Stakes

For the Administration

Patel's framework creates direct friction with at least three stated priorities. Her recommendations call for a new annual congressional appropriation, federal assumption of more than $100 billion in pension liabilities, and a near-doubling of the borrowing cap — all significant expansions of federal financial commitment that run counter to the administration's stated goals of reducing spending and deficits.

Her argument also pushes back against the Department of Government Efficiency's premise that operational efficiency can close the gap. She writes explicitly that operational changes "are not merely a question of cost" and cannot, on their own, "close a gap embedded in federal law."

For Democrats

Ranking Member Kweisi Mfume's (D-MD-7) decision to enter this statement into the record signals that postal service reform is becoming a vehicle for a broader argument about the consequences of federal austerity on essential public services.

For the Public

Patel's research finds that communities with less postal access have measurably lower small-business activity, and that approximately 3.7 million Medicare-eligible Americans live where limited pharmacy access and reliance on mail-order medication overlap with postal restructuring risk.

The Bottom Line

The core finding is one Congress has avoided acting on for decades: the Postal Service's universal service obligation is a public good that the market cannot sustain on its own, and the financing model Congress created to pay for it is gone. Patel's statement frames the choice starkly — either fund the mandate explicitly, or let a liquidity crisis narrow the network by default, at the expense of the communities that depend on it most.

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