Treasury Secretary Janet Yellen said in a letter to congressional leaders Friday afternoon that her agency will have to start implementing extraordinary measures, or unusual accounting techniques, to keep the nation from going over its debt ceiling as early as January 14.
In a letter to House and Senate leadership, Yellen stated that Treasury anticipates reaching the statutory debt ceiling between January 14 and January 23. If this happens, extraordinary measures will be implemented to prevent the government from surpassing the national debt ceiling, which has been put on hold until January 1, 2025.
To keep the government functioning, the department has previously employed drastic measures or accounting tricks. However, unless parliament and the president agree to expand the borrowing ceiling, the government runs the risk of defaulting on its debt after these safeguards expire.
She told reporters, “I respectfully urge Congress to act to protect the full faith and credit of the United States.”
President-elect Donald Trump’s main debt demand, to raise or suspend the nation’s debt limit, was not included in the package that President Joe Biden signed into law last week, preventing a government shutdown.
Only after a contentious internal Republican discussion about how to respond to Trump’s request did Congress adopt the package. Trump said in a statement that doing anything other would be a betrayal of our nation.
The Fiscal Responsibility Act, passed by lawmakers in the summer of 2023 after a lengthy discussion on how to finance the government, halted the nation’s $31.4 trillion borrowing ability until January 1, 2025.
Notably, Yellen said that the redemption of nonmarketable securities held by a federal trust fund related to Medicare payments is anticipated to temporarily reduce the debt on January 2.
In response, she stated that Treasury does not anticipate the need to begin implementing exceptional measures on January 2 in order to keep the United States from going into default on its debt.
Both Republican and Democratic administrations have seen the US debt skyrocket to around $36 trillion today. The cost of borrowing for the government has gone up due to inflationary pressures after the coronavirus outbreak, and next year, debt payment will surpass national security spending.
Republicans have big plans to extend Trump’s 2017 tax cuts and other initiatives, but they can’t agree on how to finance them. In the coming year, Republicans will have total control of the White House, House, and Senate.
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates, feel free to reach out to us via email. We appreciate your trust and support!
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.