A Business That Wasn’t Allowed to Act Like One
Somewhere in a filing cabinet in 1945, Congress wrote a law with a genuinely funny premise: certain federal agencies would no longer behave like federal agencies. They would sign contracts, hold property, and pay their own bills, just like a business, because Congress had decided the government needed businesses it could own outright without admitting that’s what it was doing.
Eighty years later, the flagship product of that experiment, the United States Postal Service, has lost money in nearly every fiscal year since 2007, and its cumulative net losses over that period have run to roughly $118 billion, according to GAO’s most recent Postal Service Primer. USPS has been sitting on the Government Accountability Office’s High Risk List, the federal government’s own list of things it privately admits are broken, since 2009. It has been there so long it could apply for tenure.
This is the joke Congress never quite got around to finishing: build a business that isn’t allowed to act like one, staff it with people who can’t be fired like private employees, price its product below what private carriers charge, and then act baffled, decade after decade, when the balance sheet reads like a hostage note.
The Law Behind the Contradiction
The legal machinery behind all this is the Government Corporation Control Act of 1945, now living a quiet life as 31 U.S.C. Chapter 91. It splits federal corporations into two flavors: wholly owned entities like the Tennessee Valley Authority and the Export Import Bank, and mixed ownership entities like the Federal Deposit Insurance Corporation. All of them share one theoretical mandate: generate your own revenue, cover your own costs, and stay off the taxpayer’s tab as much as possible.
Some of them actually do this. The FDIC funds itself by charging member banks insurance premiums calibrated to risk, which is a business model roughly as old as insurance itself, and it generally runs in the black. TVA sells electricity and, whatever else you think of a federally chartered utility running seven states’ worth of dams, it mostly pays its own way.
USPS is where the model goes to die, and not for the reasons its critics usually assume. It is not that USPS is bad at commerce. Operating revenue actually rose to $80.5 billion in fiscal year 2025, up 1.2 percent from the prior year, driven partly by its Ground Advantage shipping product actually competing for package business. The problem is that Congress built USPS to run like a business and then, in the same breath, ordered it to behave like a public utility with no off switch. Federal law requires delivery to every address in the country six days a week regardless of profitability, and the Postal Regulatory Commission caps how much USPS can raise prices in response. GAO’s December 2025 report on USPS notes that unfunded liabilities and debt now sit at 206 percent of annual revenue, compared with 82 percent back in 2007. USPS itself has told GAO it could run out of cash as early as fiscal year 2026 if it makes its full required pension payments, a sentence that should alarm anyone who has ever mailed a check.
Not an Aberration — a Design Feature
Here is the part that should bother you more than the debt number: USPS is not an aberration inside this system. It is the system working almost exactly as designed, just under conditions the designers never priced in.
The government corporation model was born out of urgency, not ideology. During World War I, Washington needed to mobilize shipbuilding and war financing faster than a normal federal bureaucracy could move, so Congress chartered entities like the Emergency Fleet Corporation that could hire and contract without civil service delays. The New Deal supercharged the idea. The Reconstruction Finance Corporation alone funneled billions into propping up banks and railroads, operating with a degree of financial autonomy that eventually made Congress nervous enough to write the 1945 Act specifically to rein these entities back in.
That history matters because it explains why the USSR comparison, while tempting, lands in the wrong place. Soviet state enterprises were just extensions of a central plan, handed production targets by people who didn’t have to care if anyone actually wanted the thing at the other end. American government corporations are weirder. On paper, they’re told to hustle for their own money and act like everyone else in the marketplace. In practice, they live and die on what Congress lets them do, what Congress lets them borrow, and how generous Congress feels after the crash. This is not five-year-plan territory. It’s stranger than that: a business shoved into a market and then told, in the fine print, that it isn’t allowed to make the choices an ordinary business would have to make to stay alive there.
You can watch the same tension in the 2008 conservatorship of Fannie Mae and Freddie Mac, technically government sponsored enterprises rather than government corporations, but built on the identical fantasy that a market-facing entity can carry an implicit public backstop without anyone ever having to write a check for it, until suddenly someone does.
The Asterisk in the Promise
The quiet danger in all of this is not that the government owns pieces of the economy. Plenty of stable democracies run public rail, postal, or utility operators without collapsing into command economies. The danger is the specific American habit of pretending these entities are self-sufficient businesses right up until the moment the bill comes due, at which point Congress rediscovers that USPS’s unfunded liabilities are, in fact, everyone’s problem.
That accounting fiction has a cost, and it is not abstract. USPS retirees depend on pension funds whose solvency is now genuinely in question. Rural communities depend on a delivery mandate that the agency’s own revenue cannot support at current rates. And taxpayers who were told for eighty years that these corporations don’t touch their money are one legislative rescue away from finding out that promise had an asterisk the whole time.
This series is going to keep pulling that thread. Next up: the Reconstruction Finance Corporation, the New Deal’s favorite off-balance-sheet slush fund, and what it can teach us about every government bailout that came after it.
Bureaucracy Times 