The USPS’s Frightening Fiscal Failures
The U.S. Postal Service will be delivering its fiscal year (FY) 2025 results soon after Halloween. It will leave a sour taste that will be like getting only Sour Patch Kids, Sour Gummy Worms, and Sweetarts in the bag during trick or treat. The results will not only continue the frightful losses that have happened in every quarter since 2009 but also raise questions about how Postmaster General David Steiner will respond and act to move financial results in a more positive direction.
Glowing expectations of improvements to the financial condition and core functions of the USPS were set forth in the Delivering for America (DFA) plan. The stated goal of the DFA when it was released on March 21, 2021, was to quickly transform the postal service, reduce costs, and break even in FY 2023. But on November 14, 2023, the USPS reported a loss of $6.5 billion for FY 2023 and on November 14, 2024, the USPS reported a loss of $9.5 billion, of 46 percent greater than the FY 2023 loss. The USPS is expected to lose less in FY 2025 than in FY 2024, but it is likely to still exceed $9 billion.
New USPS leadership provides the opportunity for new direction. Five years of mounting losses and chronic service performance failures under the DFA plan is enough and should prompt PMG Steiner to halt those aspects of the plan that have made things worse and focus on generating immediate and long-term improvement. There are several actions that the USPS can take to strengthen finances and raise service performance standards while continuing to deliver mail and packages together, six days a week, to every address everywhere in America.
At the top of the list is the immediate termination of the misnamed Regional Transportation Optimization (RTO) initiative. The RTO has caused a 50 percent reduction for pickup of mail and delivery at 24,000 post offices, located mostly in rural areas, where customers are most in need of affordable mail and package delivery services. The Postal Regulatory Commission (PRC) excoriated the RTO in a January 31, 2025, Advisory Opinion, finding that it had a negative impact on service, overstated its savings, and used a defective model that will fail to create a more efficient network than it is currently using.
The USPS should also stop spending money on things it does not need and cannot afford, like new processing facilities that duplicate existing efficient private sector operations. The construction was part of former PMG DeJoy’s attempt to turn the USPS into an end-to-end operation. Spending billions of dollars to duplicate efficient and competitive private sector middle mile processing and transportation is an obvious waste of money. There should also be an analysis of the USPS’s entire real estate portfolio to determine what is needed solely for final mile delivery of mail and packages six days a week.
The USPS must concomitantly adjust the size of its labor force. PMG Steiner is inheriting more employees that the USPS had 20 years ago to process half of the mail volume. Former PMG Louis DeJoy exacerbated this problem when he converted 195,000 positions from part-time to full-time. There should be an immediate hiring freeze for all non-delivery positions. However, letter carriers should be exempt, since addresses continue to expand nationwide and delivery to every address is the core of the USPS’s mission.
To enable the USPS to become more compliant with President Trump’s executive orders to make the federal government more efficient, there should be an increase in the work done with the private sector on processing, logistics, and transportation of mail and packages close to their final destinations. The private sector has performed these tasks for decades, and the USPS should take greater advantage of pricing incentives that will allow these tasks to be performed more efficiently.
Prompt and decisive action by PMG Steiner to terminate the RTO, suspend duplicative and costly construction of new processing facilities, impose a hiring freeze for non-delivery positions, and increase work with the private sector would help restore confidence in the future of the USPS. It would also divert attention from its fiscal failures and service performance woes to its public service mission to connect communities with affordable and efficient delivery of mail and packages. That would be an appropriate outcome as the USPS continues to celebrate its 250th anniversary.
