Janet Yellen, Treasury Secretary, said her agency would need to begin taking “extraordinary measures,” or special accounting maneuvers aimed at preventing the country from reaching the debt ceiling, as early as January 14, in a letter sent to congressional leaders Friday afternoon. .
“Treasury expects to reach the statutory debt ceiling between January 14 and 23,” Yellen wrote in a letter to House and Senate leadership, at which point extraordinary measures will be used to prevent the government from exceeding the nation’s debt ceiling — which has exacerbated the problem. It has been suspended until January 1.
In the past, the Ministry has deployed what are known as exceptional measures, or accounting maneuvers, to maintain the continuity of the government’s work. But once these measures run out, the government risks defaulting on its debt unless lawmakers and the president agree to raise the cap on the U.S. government’s ability to borrow.
“I respectfully urge Congress to act to protect the full confidence and trust of the United States,” she said.
The news comes after Joe Biden signed a bill into law last week that averted a government shutdown but did not include Donald Trump’s primary debt requirement to raise or suspend the country’s debt limit. The bill was approved by Congress only after intense internal debate among Republicans over how to deal with Trump’s request. “Anything else is a betrayal of our country,” Trump said in a statement.
After a lengthy debate in the summer of 2023 about how to finance the government, policymakers drafted the Fiscal Responsibility Act, which included suspending the country’s $31.4 trillion in borrowing authority until January 1.
However, Yellen said the debt is expected to decrease temporarily on January 2 due to the scheduled redemption of non-marketable securities held by a federal trust fund tied to Medicare payments. as a result of, “[the] “The Treasury Department does not anticipate that it will be necessary to initiate extraordinary measures on January 2 to prevent the United States from defaulting on its obligations,” she added.
The federal debt currently stands at nearly $36 trillion – a number that has ballooned through Republican and Democratic administrations. High inflation after the coronavirus pandemic has also led to government borrowing costs rising such that next year’s debt service will exceed national security spending.
Republicans, who will take full control of the White House, House and Senate in the new year, have big plans to extend Trump’s 2017 tax cuts and other priorities, but are debating how to finance them.
