Privatize the Post Office

The U.S. Postal Service is losing money because it is built for a market that is disappearing.

As Chris Edwards argues in a recent Cato post, the USPS has lost money every year since 2007, mail volumes have kept falling, and the package business is no longer enough to make up the difference. Congress still acts as if the old postal model can be preserved. Paper mail is fading, private firms are winning more package business, and the case for privatization is getting harder to ignore. 

USPS Is a Smaller Part of the Economy

The decline is clear. USPS revenue fell from 0.61% of GDP in 2000 to 0.26% in 2025. The non-package side of the business dropped from 0.53% of GDP to 0.16%. Package and shipping revenue held up better for a while, but even that category remains small and has weakened in recent years.

That matters because it shows the problem is not just annual losses. The Postal Service is taking up a smaller place in the economy over time. Traditional mail is no longer central to how Americans communicate, pay bills, or manage daily life. Email, online billing, digital payments, and electronic documents replaced much of the business the USPS once depended on.

Congress Is Still Defending an Outdated Model

Congress continues to treat the Postal Service as if demand will come back. It will not.

Post office visits are down 54% from 2000 even though the U.S. population has grown 21%. Yet the USPS has reduced its number of post offices by only 8%. Its workforce is down 31% since 2000, but total product volume is down 48%. Those numbers point to a system that has not adjusted to the market it actually serves.

Lawmakers still resist major changes to retail locations, delivery schedules, and the agency’s overall structure. That leaves the USPS stuck with old obligations and shrinking demand.

Packages Will Not Rescue USPS

For years, defenders of the status quo pointed to package delivery as the Postal Service’s future. That argument is weaker now.

Private firms are more flexible and more competitive. Edwards notes that package and shipping volume has flattened as the USPS faces stronger competition and Amazon relies less on the agency for last-mile delivery. The one segment that was supposed to offset the collapse in paper mail is now under pressure as well.

That should not be surprising. Competitive delivery markets reward speed, efficiency, and adaptation. Government-run systems usually struggle to match that.

Privatization Is the Answer

Cost-cutting steps such as closing unneeded locations and reducing delivery frequency would help, but they would not fix the core problem. The deeper issue is that the Postal Service remains a government-run enterprise in a market that now demands flexibility and constant change.

Privatization is the only serious long-term solution. A privatized system could cut excess costs, modernize operations, respond to consumers, and compete on market terms instead of relying on Congress to manage decline.

CFE Takeaway

The Postal Service is shrinking because the country changed and the agency did not. Paper mail is disappearing. Package competition is getting tougher. Congress is still pretending the old system can be preserved.

The longer Washington delays, the more money taxpayers will lose trying to prop up a model that no longer fits the market. Privatization is the only path that matches reality.