When the USPS was first created, it was an essential component of the American infrastructure. At the time there was no free market alternative. The US government was the only organization that had the necessary resources to undertake such a huge endeavor.
Times have since changed. There are now multiple competitors to the USPS (e.g. Fedex, UPS). Then there is simply the changing nature of mail delivery with the advent of alternative forms of communication (e.g. email, facebook, IMS). The market has demonstrated that it is more than capable of handling these sorts of products.
If the USPS were a private entity, they would have long ago made the changes necessary to ensure profitability. As long as they have a tax-payer backstop, they will never be competitive.