Last week, the United States Postal Service told federal budget officials it would suspend its employer contributions to federal retirement annuities, $200 million every two weeks, because it is running out of cash. Officials now project USPS will be unable to pay its bills by early 2027. The agency has already hit its $15 billion statutory borrowing limit. It lost $9 billion last year. Stamp prices are rising again. Congress is once more being asked to step in.
Call it what you like. I would not call it a crisis. A crisis is sudden and unforeseen. What we are watching is something more troubling: a slow-motion fiscal collapse that was documented, predicted, and ignored for more than thirty years.
The warning was not subtle. And the accounting made it visible.
What the 1991 Report Actually Said
In October 1991, the Postal Service’s own Board of Governors commissioned a report on the financial condition of the agency. Trevor Harris — my longtime collaborator, who served as the economic and accounting lead on the team — was one of its authors. The report laid out the problem in language that is, in retrospect, uncomfortably precise. The system was steadily losing money. Its ratemaking process was, in the report’s own words, “not providing for the financial health of the organization.”
Harris explains the structural trap the agency was in:
“the core problem was an imposed cost attribution system that was politically motivated and badly regulated. The mandate was to break even over a three-year rate making cycle. USPS’ competitors spent millions lobbying the Postal Rate Commission (https://www.prc.gov/) to maximize cost allocations to the areas they competed in so that USPS would be the high price supplier or exit those services as too pricey to operate. Because the postal service was mandated to deliver mail six days a week at uniform pricing, they could not allocate costs on a marginal basis (i.e., higher costs for incremental services that are more expensive to provide). So overnight or express mail could not be priced to compete.
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