The United States Postal Service, the U.S.' Most Trusted Government Agency for six consecutive years, is nearing closure due to lack of cash, a clear signal that the traditional mail service has been taken over by the Internet revolution.

The Postal Service is due to make payment amounting to $5.5 billion this September and unless there is Congressional action to help address its dire financial situation, it may be forced to close shop.

“Our situation is extremely serious. If Congress doesn’t act, we will default”, USPS postmaster general, Patrick R. Donahoe told the New York Times in an interview.

The New York Times reports the Postal Service may run out of funds early next year, which could have an impact on the agency's ability to deliver around three billion mail weekly.

In a statement posted on its website in August, the Postal Service said it will be insolvent this month due to significant declines in First-Class Mail volume, the effects of a Congressional mandate to prefund retiree health benefits and increases in network costs, wages and benefits.

The Postal Service underscored its importance to the United States economy, stating that seven million Americans are employed by the Postal Service and businesses using its service accounts for around $1 trillion, representing 7% of the total Gross Domestic Product (GDP) in the United States.

According to the Postal Service, it has been facing financial strain since 2007. In the four year period through Fiscal Year (FY) 2010, it said mail volume declined 20%, to 171 billion pieces from 213 billion pieces, while prices for postal products remained capped at the rate of inflation—resulting in net losses over the period of just over $20 billion, including a loss in FY2010 of $8.5 billion.

It said First-Class Mail declined by 20% during four-year period and "the volume decline and change in mail mix outpaced even the most pessimistic forecasts and, along with unique legislative mandates, has now placed the Postal Service at the precipice of insolvency."

"These volume declines are the result of the recent recession, the resulting economic slowdown and the shifting of hard copy communications to digital alternatives, which has been exacerbated by the economic slowdown," the Postal Service added.

The company said the decline in First-Class Mail volume will continue" because the movement to electronic alternatives—accelerated by the recession—constitutes a fundamental and permanent change in mail use by households and businesses" which would have a significant impact on its business.

It noted that hard copy communication continues to shift to digital alternatives and more people are paying bills and transacting business online.

"While online purchases have increased the volume of packages, this part of the Postal Service's revenue stream is not large enough to offset overall mail volume trends," it said.

In response to the continuing decline in mail volume and revenue, the Postal Service has taken unprecedented steps over the past decade to reduce cost in areas within its control, including cost reductions totaling $12 billion in the past four fiscal years.

The Postal Service has already identified and is pursuing a number of needed legislative changes that would help to return it to solvency, it said.

This legislative action includes allowing the Postal Service to establish its own health benefits program, allowing it to administer its own retirement system and giving it the ability to adjust the size of its workforce to match operational needs and the changing marketplace.