Because there is no incentive to come in under budget. All it means for a government program to do that is that the budget for next year gets cut.
Why is the U.S. Postal Service a money pit while Fedex and UPS are profitable? Why can't Amtrak operate at a profit even while having a near-monopoly on RR passenger travel? And even while selling soft drinks for $5 and reheated grocery-store frozen hamburgers for $10?
Nobody in the world would pay $100 for a hammer or $300 for a toilet seat, but the U.S. Air Force does, or did for a long time.
Let me tell you a story. Sit back and enjoy yourself, I will try and keep the politics to a minimum. The year is 2006, and the USPS is efficient and adapting to a changing world. Both the Senate and House have procured republican majorities with the rise of the tea party. It is self funded and efficient, despite the fact that email was becoming more and more mainstream every day. It was held high in regards by much of the public and often listed as the perfect success story for a government run program. USPS employees were well compensated and had full benefits, including a very nice pension plan. Sure, it wasn't perfect, but by and large they had done an admirable job for 231 years.
FedEx, UPS, and other companies had joined the package distribution industry over the years, and yet the USPS was continuing to be successful. This didn't sit will with the ideologues of the republican party. Something must be wrong. Why was the USPS thriving, despite the introduction of competitive private companies?
The answer was simple. USPS did not prefund their employee pensions. They paid pensions based upon the money they made in their day to day operations. Private companies, on the other hand, have to pay their pension fund up front. This is because a company may not exist in the future, so paying a pension out of future earnings is in no way guaranteed. (See Bethlehem Steel, for example)
Deeming this an unfair advantage, the republican congress passed a new law ordering the USPS to prefund their pensions. As USPS employees were government workers, this presented a fairly large financial risk to the US Government. With email gaining in popularity, the possibility of private package transport taking USPS market share, and internet ordering its infancy, there was justified concern. If the USPS folded, the government could be on the hook to pay pensions totaling in the billions. The republican legislature took aim to protect themselves from this eventuality. Not unreasonable.
Here's where things take a crazy political turn.
The republican legislature does not act in a way to make the USPS pension fun comparable to private plans. It does not act in a way to protect the government from potential future unfunded pensions. The measures required by congress direct the USPS to prefund all pension costs for the next 75 years, and it requires
them to do so in just 10 years. Furthermore, they direct the USPS to prefund all of their future medical expenses in the same period. Without going into details, the USPS is forced to fund future medical and pension cost at a level
far exceeding the requirements put upon private employers that offer pensions.
This was a massive change for an organization that had been doing business for 231+ years, and there was no way to raise that kind of funding in just 10 years. So, the USPS set upon a goal to fully fund these requirements in 50 years (2056). However, on the books, they will carry over hefty losses until the fund is fully paid for.
I'll take a break from the politics free stuff for a bit. I absolutely believe that the republican congress went too far. Certainly the motivation was there to prove that even a well-running government organization was bad, and to force the USPS to raise prices, making private companies more affordable. Many of those same congressmen had received generous donations from FedEx and UPS as well. Most importantly, people can now point to the USPS as a failure.
Back to politics free. A few other random things to note:
FedEx and UPS do not service rural customers, as it is not profitable for them. They contract USPS to do so. USPS bears the burden of unprofitable, rural areas. FedEx and UPS are nowhere near ready to replace the USPS.
The employees of the USPS are better paid, and have better benefits than their private counterparts. This actually puts them at a competitive disadvantage, and yet their pricing is usually better than the private carriers.
The USPS was not designed to be profitable. It was designed to deliver mail across America.