Treasury Secretary Janet Yellen said Friday that the federal government could reach the debt ceiling as early as Jan. 14 unless Congress acts or the Treasury Department takes “extraordinary steps” to avoid default. He then alerted Congressional leaders.
Yellen’s letter comes after President-elect Donald Trump failed to secure provisions to end the debt ceiling increase or repeal, and an impending debt ceiling fight involving Congress and the new administration will take place early next year. This suggests that there is a high possibility that Annual expense bill.
“The Treasury currently expects to reach the new cap between January 14th and January 23rd,” Yellen said in a letter to House Speaker Mike Johnson (R-La.). At that point, the Treasury Department will need to initiate extraordinary measures.”
“I respectfully ask Congress to act to fully protect the trust and confidence of the United States,” Yellen added.
The dates Yellen mentioned could change in the future, pushing the deadline even further to 2025. The federal government can often operate for several months under the “temporary measures” and accounting maneuvers that Yellen referred to in her letter.
Following passage of the Fiscal Responsibility Act of 2023, signed into law by President Joe Biden, the debt ceiling, the amount the government can borrow to meet fiscal obligations, will be suspended until January 1.
When the United States reaches the debt ceiling, the government cannot borrow any more money, effectively defaulting on its debt, and not being able to pay its bills unless the president and Congress negotiate a way to lift the borrowing limit. .
Raising or eliminating the debt ceiling was one of the issues debated in Congress last week as the government faced the prospect of finally averting a shutdown.
Federal debt amounts to approximately $36 trillion.
Democrats have long advocated raising or eliminating the cap, but Republicans have traditionally opposed it, arguing that federal spending is too high and negotiating with Democrats to increase the debt.
But President Trump appeared to take up Democrats’ arguments for the first time this month, telling NBC News that he thinks the debt ceiling should be lifted.
“Democrats say they want to get rid of it. If they want to get rid of it, I’ll lead the charge,” Trump said.
He unsuccessfully pushed Congress to include provisions to extend or eliminate the debt ceiling in the year-end funding bill, leading to a primary challenge to Republicans who voted to fund the government while excluding the debt limit. The challenge was threatened.
In the end, 170 Republicans rebelled against him, adding the fight to raise the debt ceiling to the incoming administration’s ever-growing to-do list.
