I believe you have that backwards. junk mail is subsidizing the first class mail. bulk mail get's cheaper rates, but it is also cheaper to deliver, and often is presorted for them by the sender, which is one of the reasons why it is cheaper to deliver because some of the work has already been done for them. also junk mail is a constant revenue stream whereas the first class mail is more sporadic.
No, I really dont have that backwards. Bulk mail accounts for the vast majority of the post office normal( meaning daily) volume. Often times there isn't even any first class mail going to a given address. The sum total of first class mail just doesn't make a very big difference to the post office bottom line. All else being equal, if the post office charged first class rate for all bulk mail, they would be in the black. OTOH if the post office charged $2.00 instead of $0.40 for first class stamps (or whatever it is these days), they still wouldn't be cash flow positive. This means that the post office is undercharging for bulk rate mail. The pricing is still working from the assumption that the post office would have to go to every mailbox every day due to first class mail needing to be delivered. With the dramatic reduction in first class mail over the last decade, the post office no longer needs to go to every mailbox every day. This means that first class mail is now subsidizing bulk rate. A complete reversal of the way it was "supposed to be". Long story short, if congress let them change the pricing for first class mail, it would make very little difference for the post office. What the post office needs to do is re-evaluate their pricing for bulk rate, and make necessary changes to account for the reduction in bulk rate mail they will see when they increase those prices to an amount that is greater than cost for the post office.