The Plight Of The U.S. Postal Service

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0:35You know, to most people, the vast job of handling the mails is a mystery. Folks simply drop their mail in the neighborhood box, then don't give it another thought. They just have faith that it will be delivered to the addressee within a day or so, anywhere in the United States, or the whole world, for that matter. Your post office has given such dependable service for so long that speed and accuracy are taken for granted. We're glad for this confidence. Our USA occupies only 150th of the globe, but we handle nearly two-thirds of all the mail in the world. These are happy facts for our people, but they create real problems for your postal service.

1:15Passports, prescriptions, mail-in ballots, magazines. The United States Postal Service has been a key piece of infrastructure since it was established in 1775. We rely on the agency to deliver, rain, or shine. But for nearly every year since 2007, the agency has been plagued with money troubles to the tune of billions of dollars in losses each year. And now the situation is even more dire. Here's what Postmaster General David Steiner told members of the House during a hearing last week. At our current rate, we'll be out of cash in less than 12 months. So in about a year from now, the Postal Service would be unable to deliver the mail if we continue the status quo.

1:55We asked you what you think about USPS. Here's what Stu in Richmond told us. The United States Postal Service is in a state of absolute dysfunction where I cannot rely on it to send a letter three miles down the road within four weeks' time. How can we fix this? How can we fix this? And what, if anything, can or should Congress do to save USPS? I'm Jen White. You're listening to the 1A Podcast. We turn to our guests with those questions and more after this short break.

2:545 % off your Babbel subscription right now at babbel.com slash NPR, spelled B-A-B-B-E-L.com slash NPR. Rules and restrictions may apply. This message comes from Charles Schwab. When it comes to managing your wealth, Schwab gives you more choices, like full-service wealth management and advice when you need it. You can also invest on your own and trade on Think or Swim. Visit Schwab.com to learn more. Let's get right into the conversation with our Postal Service experts. Joining us in studio is Kevin Kosar. He's a senior fellow at the American Enterprise Institute. That's a public policy think tank in Washington, D.C.

3:33Kevin, welcome to the program. Thanks for having me. Also with us from Washington, D.C. is Hansi Lo Wang. He's an NPR correspondent covering elections, the census, and the U.S. Postal Service. Hansi, it's always great to have you. Thanks for having me back, Jen. Now, USPS has been operating at a loss almost every year since 2007, with the exception of 2022. Hansi, what are the biggest factors contributing to that trend of loss? The main bottom line here is that fewer people and businesses are relying on the U.S. Postal Service. Think about the rise of paperless billing, digital communication, especially over the past two decades.

4:11And that has really upended what is a self-funding model for the U.S. Postal Service. A lot of people may think, may assume that because the Postal Service is a federal government agency, it's run by tax dollars. It is not. It is set up currently to be a self-funded agency. It relies on stamps and service fees. And again, with fewer people in businesses relying on first-class mail, which is its most profitable product, That means it's not bringing enough revenue to offset its costs, which are increasing given the currency of the economy, giving pension benefit issues, retiree health benefit issues, how it's going to fund that going forward.

4:50This is a problem long term in the making, long time in the making. Well, a 2024 study conducted by USPS shows that male per household fell 37 percent from 2014 to 2024. Here again is Postmaster General David Steiner. We got here because of the drastic reduction in the use of the mail. From historic peak volume of 213 billion pieces per year to today at 109 billion pieces per year, we've lost over 104 billion pieces per year in our system. For perspective, if all that lost volume was paid at the current price of a stamp, which is 78 cents, that's about$81 billion of lost revenue. No company could weather that much revenue loss.

5:35Now, we reached out to the Postmaster General, but he was unable to join us. The invitation remains open. We got this from Dean, who's listening on WFYI in Indianapolis. Why does USPS need to make money? It's a vital government service. Otherwise, should we demand profitability from Congress, the military, law enforcement? And Kevin, what was the argument around making USPS self-funded? Well, the Postal Service was created as a self-funding entity back in 1970, And it was recreated under this model because the old model of having it be a government agency that got annual appropriations plus stamp revenue didn't work.

6:12One of the problems is when an agency takes money from Congress, usually there are strings attached. And so members of Congress over the decades got deeply involved in postal operations. And as a logistics enterprise, that's problematic. When you have members of Congress deciding to set prices based upon interest group and constituent pressures, demanding jobs for people, et cetera, et cetera, the postal service fell apart in the 60s. So they tried to rebirth it as a government corporation. But Hansi, at the same time, it does work as a piece of important infrastructure in the U.S. And so it sounds like while there is this desire for it to be self-funded and to be able to operate outside of certain perhaps government oversight, it's infrastructure.

7:00So how are we squaring that circle? So many people rely on the service. That's the conundrum. It is under a federal mandate to deliver mail and packages six days a week to basically every address in the country. This is a key part of the country's infrastructure that isn't replicable right now by any private companies. And so this is a major conundrum. How does it continue providing this service with this self-funding model at a time when fewer and fewer people and businesses are relying on the mail? That's what is before the Congress right now, why the Postmaster General went to Congress and is ringing this alarm.

7:41But again, this has been a long time in the making. There are some really key structural questions about how the Postal Service can continue in this environment. Well, speaking of structure, we got this from Doug in D.C. There's so little letter volume and even less legitimate or timely mail that six-day-a-week delivery should cease. Let them sort the mail one day and deliver it the next, if that. Is that part of what's on the table right now, Kevin? Perhaps fewer days of mail delivery. Yeah, I think if Congress is going to do something, and that's a huge if, it's going to come as a package of reforms.

8:15You may have loans in there, but also decreased days of service in an attempt to reduce the employee compensation costs, which comprise about 75 percent of the Postal Service's annual operating costs. A lot of overseas posts, they've also cut the days of delivery just in response to the dropping of demand. Again, mail volume has plunged about 50 % in this country since 2008. Well, even though USPS hasn't turned a profit in almost 20 years, as we've been talking about, mail delivery doesn't stop. And that's because the agency borrows money from the U.S. Treasury to maintain operations. Now, in recent years, it's also suspended pension payments and some retiree benefits.

8:56But federal law caps USPS borrowing at$15 billion, and the agency has reached its debt limit. So Hansi, how does that current borrowing limit set for USPS by Congress affect the organization? Well, the U.S. Postal Service officials say that is really tying its hands in a way and not allowing it to continue investing in infrastructure and developing new ways to become more efficient. And it also is just hurting its bottom line because it can't borrow more money. The Postmaster General says, you know, this is a cap that was set back and it's been in place since 1992. So more than three decades now.

9:35And the Board of Governors at the Postal Service has also been calling for Congress to revisit that law to allow the Postal Service to borrow more money. That's something that's, you know, the top Democrat on the House Oversight Subcommittee, where the Postmaster General went to give testimony, seemed to support. But there seemed to be some skepticism from Republican lawmakers. So that is one of many options that lawmakers right now are considering, given what the Postmaster General has requested. Well, how much of an effect is the agency's suspension of pension payments and some of those retiree benefits having on its debt and operating budget, Hansi?

10:11Well, back in 2022, there was a law that passed that forgave about$57 billion in past due pre-funding payments to retiree health benefits and also got rid of a requirement to prepay future retiree health benefits requirement under an earlier law. And that resulted in the only year in the past two decades, only fiscal year, where the Postal Service didn't end without a shortfall. And so that was a big support for the Postal Service's bottom line, but we're at a point now where that didn't get rid of all of the requirements for the Postal Service to pay into its pension fund for retired workers as well as retiree health benefits.

10:52So it's a complicated system, complicated set of systems, and there are a lot of reforms that the Postmaster Journal says needs to be made in order to help make sure that the Postal Service remains stable and also that its retired workers get their benefits and their pensions when they retire. Well, we got this from Matt in New York. This is a great opportunity for Democrats to show they care and understand the lives of rural America. Snail mail is vital to this rural and older voting population. Now, 2026 is shaping up to be an important midterm election year that could shift the balance of power in Congress.

11:30Kevin, briefly, what role does USPS play in our electoral infrastructure? sure? Oh, they carry a huge amount of ballot material, materials that are going out to voters, whether it's the voter guides or whether it's the absentee ballots that are requested. In some states, you don't even have to request them. They just go out automatically. I think last election, 2024, there were about 48 million Americans who voted by mail, deposited their ballot with the USPS. Elizabeth on VPR emails, when we lived in North Carolina, one of the simple rituals of daily life was seeing our mail carrier arrive. We knew him, we talked with him, he was part of the neighborhood.

12:10It was just a small positive moment in the day, but it felt like a real thread in the social fabric, and it was our link to home. Back with more from you and our guests in just a moment.

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13:08Same goes for where you invest. Level up and invest smarter with Schwab. Get market insights, education, and human help when you need it. Learn more at Schwab.com. Let's get back into the conversation and add a new voice. Richard R. John is a history and communications professor at Columbia Journalism School. He's also the author of Spreading the News, the American Postal System from Franklin to Morse. Richard, thanks for joining us. Thanks for having me. So the founding of USPS predates the country itself. And though dire, the agency's current financial crisis isn't unprecedented. In 2020, the agency had a similar financial outlook.

13:49It was able to turn around with Congress's help. But Richard, from your perspective, when was USPS's greatest fiscal crisis and what brought it on? The greatest fiscal crisis confronting the post office was in the 1840s, when by some estimates it lost half to two-thirds of its revenue due to competition from private independent firms, so-called expresses. This problem was seen as such magnitude that Congress responded by, in effect, forcing expresses out of the market, dropping postal rates, and granting the post office what we would today call a legal monopoly, which had not been settled before that time.

14:33Congress responded quickly because of the enormous importance of the institution, which was recognized by all, not only to the commerce, but also to a public life, to elections, to the pattern of everyday existence, as your commentators have so well emphasized. So that was the greatest crisis, and the crisis today perhaps would be right up there, but there really is a question as to whether we should call it a crisis or simply a difference of opinion about, as you put it so well, the importance of infrastructure in our daily lives. Well, today, USPS faces competition from other private delivery companies.

15:13There's Amazon, UPS, FedEx, particularly when it comes to packages or parcels. And some of you are weighing whether to use USPS or a competitor. Hi, my name is Janet, and I'm from Cleveland, Ohio. and I am a full-time eBay seller and I use the United States Postal Service quite frequently. Most of my packages go out using USPS and I've seen price increases in the past five to ten years and it's just too much. So if they keep increasing this, this can hurt online resellers, people who are self-employed, people who use it for their small business to survive. I wish FedEx or UPS would lower prices on smaller packages that are one pound or less, that would make things a lot more affordable.

16:00So then if USPS did raise their prices, I could go with another company. Hansi, how are these other big shipping companies gaining the upper hand in the package market over USPS? Well, USPS has been for a long time just really focused on delivering letters, mail, not so much parcels in postal service lingo or packages. And certainly with the rise of online shopping, a lot of more people receiving, sending packages nowadays. And it's trying to boost its revenue by investing more resources and really restructuring its systems to get more into that business side. That's something that the Postmaster General David Steiner said is one of his focuses.

16:41But it is coming kind of late with the rise of online shopping and these shipping companies, they're ahead of the curve right now. And it is a big question whether or not USPS can catch up. It is interesting to point out, though, that what the Postal Service does have an advantage here is that it has what's known as the last mile network. A lot of places in the country are so remote that FedEx, UPS, they cannot reach, they don't have the infrastructure to reach that last leg of the trip to get a package to certain parts of the country. And that's where USPS comes in and has that network, again, because it's under a federal mandate to reach basically every address in the country.

17:25And right now, the Postal Service is trying to increase the revenue from that last mile network by opening up bids from big shippers and small shippers to try to see if it can get more money from utilizing that network from companies like Amazon. Well, that competition with companies like Amazon is why Postmaster General Steiner is pushing for looser regulations. We're regulated like a monopoly, but we no longer exist as one. In fact, we're regulated worse than a monopoly because even a monopoly is allowed to make money. Our regulator causes us to lose billions annually. Just recently, they passed an order that by their own estimate could lose us nearly a billion dollars a year.

18:07Clearly, they're not following their mandate to make the Postal Service financially viable. USPS is regulated by the Postal Regulatory Commission. The commission is made up of five members, each appointed by the president and confirmed by the Senate for six-year terms. Kevin, what do you make of the Postmaster General's assessment that USPS is too strictly regulated? Well, I've heard postmasters in the past blame the Postal Regulatory Commission for the Postal services woes. And I think that's a common Washington line where it's, the problem is not us. The problem is those guys over there. The PRC, as we call it, it does not have a lot of authority.

18:51I mean, the Postal Service, if it wants to change prices, submits it to the PRC, the PRC reviews it, and then it could say thumbs up or thumbs down. But the Postal Service can then just kind of do what it wants. PRC has very little enforcement authority. You know, again, the real problems with the Postal Service's finances is just the drop for what they do. There's fewer people who demand the mail. And, you know, most Americans don't pay a penny towards this public service. We don't have taxpayer dollars supporting it. And that's why we are where we are. Richard, your thoughts, especially when you look at the long history of USPS?

19:29The post office has lost money for much of its history, but that was not a public issue. because it was understood, as you put it so well, as infrastructure from 1851 until the 1960s. It was so important that the issue almost never came up. In fact, the 1880s, the presumption was the post office was doing a better job than Western Union and the leading network provider platform for what we now call email. So it's an odd claim that the problem is somehow the market has changed. The post office has been constrained by Congress from day one. Congress has prevented it from getting into lucrative markets.

20:14Congress has limited its autonomy. Congress has burdened it in various ways, sometimes in good faith, sometimes not. The post office provides a service in many communities that cannot be matched at same cost by other providers. And if the post office were not there, cost would go up because the other providers do not have the same kind of obligation that the post office has. So I find it to be somewhat bad faith to contend that the problem is somehow existential issues over which the post office has no control. I agree with the postmaster general. The institution has been put in a bad box by Congress.

20:50Congress can do something about it. It's been under the authority of Congress right from the start. And I do believe that if constituents are heard from, that constituents will want to preserve this vital American institution. Important not only at election time, but all around the year, especially for small business, especially in parts of the country that are outside of the metropolitan core. And that is something that may not be obvious to listeners from, say, Washington, New York, Boston. This is a nationwide institution that's absolutely essential to our civic fabric. I mean, Kevin, you hear Richard's response there, and I'm curious from your perspective, could two things be true?

21:29That on one hand, the market has changed in ways that weren't anticipated when the USPS was first established, and at the same time, the regulations that Congress has put in place make it more difficult for the agency to respond to those changes in the market? Oh, absolutely. I was contending that picking on the regulator, the PRC, was a diversion from the real problem. No, I mean, the U.S. Congress requires the Postal Service to deliver mail six days per week. The U.S. Congress does not provide money to support that public service. Rather, they say you, the Postal Service, have to earn it. And by the way, you also have to have unionized labor.

22:10And by the way, you have to do all sorts of stuff. And all these things cost money. And we were able to afford them under the self-funding model when we had mail volume growing year after year and when first-class mail was this fantastically lucrative business. But those days are done, and that's where we have to have a serious conversation. What do we want from the Postal Service, and how are we going to pay for it? We're also hearing from so many of you. Nomi in Indiana says, although many people in the country have other options for sending mail and packages. Many do not. People in rural areas, remote areas, and poorer areas simply have no other choices.

22:49The USPS as a government service serves everyone. How about Congress asks us what we want? And Isla emails, I have financial power of attorney for my mom, and I pay all of her bills. She lives in a place where not all bills can be paid online, so I rely on the USPS to take proper care of her. The USPS, in other words, is her lifeline. I mean, Hansi, how are Americans responding to the potential of the USPS going away, as we heard from the Postmaster General? I mean, is Congress clear on what the American people want? Well, if you listen to how lawmakers responded at this recent House Oversight Subcommittee hearing, there seems to be bipartisan interest in stabilizing the Postal Service.

23:40and a general consensus, as much as there can be in today's Congress, that the Postal Service is a really vital part of the country and it should not go away. There is bipartisan support right now to not privatize the Postal Service among lawmakers in Congress. And so you can take from that that there is a recognition that this is, generally speaking, a publicly beloved institution that should be saved in some way. The big question is, how do you do that? There are a lot of people, again, who still rely on the Postal Service to receive medication, to vote, to do very vital things. There are some places in the country where you can't register to vote online.

24:26You can only do it in person or by mail. And so this is a real key part of the infrastructure that a lot of people out in the public still recognize needs to exist. Now, Kevin, when I asked that question of Ponzi, I saw a tiny little shake of your head. when I asked if Congress was aware of what the American people want. So I'd love to hear your perspective as well. Yeah, it's been my observation of, with two decades of observing Congress up close when it deals with postal issues, mostly they hear from organized interests and the postal service itself. The conversation tends to be very within the beltway.

25:00And there's a whole range of other interests out there that do not get representative in congressional hearings. And sure, members of Congress do get mail and emails and things like that, so they may hear about it there. But the official conversations like we had on Capitol Hill the other week, you didn't have an average member of the American public there. You did not have an elderly individual in a rural area saying, here's why the Postal Service is important to me. You didn't have somebody who during the COVID pandemic relied upon the Postal Service to get them parcels and COVID tests. Those voices are not being heard.

25:33And I think it does distort policymaking and biases, things towards kind of a status quo. Let's just keep doing what we're doing and hope it gets better. But it's not. Yeah. Richard, when you think about the history of the USPS, I wonder if it is in part a victim of its own success. We talk about that in public health, that we don't see certain diseases anymore because public health efforts have been successful. but not having visibility of the impact of those illnesses sort of makes that public health infrastructure disappear and be into the background and be a little less valued. Is USPS in a similar boat?

26:11I agree entirely. Like so many things we take for granted, you hit a light switch, light goes on. We just assume that it's part of the fabric of everyday existence, and we don't really think about what would happen if it were gone. I don't think the post office is going away. There have been talks about the crisis of the post office now for decades. This is part of an elaborate political drama, which is fine. And I agree with Kevin that certain groups are being heard and other groups are not being heard. But, you know, when Mitt Romney, he was running for president, he was going to defund the big bird, but he didn't want to defund the post office.