Janet Yellen tells Congress US could hit debt limit in mid-January
Treasury Secretary Janet Yellen says her agency will have to take “extraordinary measures,” or special accounting maneuvers designed to prevent the nation from reaching the debt ceiling, as early as Jan. 14.
WASHINGTON — Minister of Finance Janet Jellen said her agency will have to take “extraordinary measures,” or special accounting maneuvers designed to prevent the nation from striking the debt ceilingas early as Jan. 14, in a letter sent to congressional leaders Friday afternoon.
“The Treasury Department expects to reach the statutory debt ceiling between January 14 and 23,” Yellen wrote in a letter to the leadership of the House of Representatives and the Senate. At that point, extraordinary measures would be taken to prevent the government from breaching the country’s debt ceiling. suspended until January 1, 2025.
The ministry has in the past used so-called ‘extraordinary measures’ or accounting maneuvers to keep the government running. But once these measures expire, the government risks defaulting on its debt unless lawmakers and the president agree to lift the cap on the U.S. government’s ability to borrow.
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” she said.
The news comes after President Joe Biden signed a bill That prevented a government shutdown last week, but did not include the core of newly-elected President Donald Trump demand for debt to increase or suspend the country’s debt limit. The bill was only subsequently approved by Congress intense internal debate among Republicans on how to deal with Trump’s demand. “Anything else is a betrayal of our country,” Trump said in a statement.
After a lengthy debate in the summer of 2023 over government financing, policymakers drafted the Fiscal Responsibility Act, which, among other things, suspended the nation’s $31.4 trillion borrowing authority until January 1, 2025.
However, Yellen said the debt is expected to temporarily decline on Jan. 2 due to a scheduled redemption of non-marketable securities held by a federal trust fund tied to Medicare payments. As a result, the Treasury Department does not expect it will be necessary to take extraordinary measures on January 2 to prevent the United States from defaulting on its obligations, she said.
The federal debt currently stands at roughly $36 trillion – which has soared under both Republican and Democratic administrations. And the spike in inflation after the coronavirus pandemic has pushed up the government’s borrowing costs so much that debt service will exceed national security spending next year.
Republicans, who will have full control of the White House, House of Representatives and Senate in the new year, have big plans to expand Trump’s 2017 tax cuts and other priorities, but are debating how to do so. have to pay.