In a letter sent to congressional leaders Friday afternoon, U.S. Treasury Secretary Janet Yellen said that her agency will have to start taking “extraordinary measures,” or special accounting moves, as soon as January 14 to keep the country from going over the debt cap.
In a letter to the leaders of the House and Senate, Yellen said, “Treasury expects to hit the statutory debt ceiling between January 14 and January 23.” At that point, the government would have to take extraordinary steps to keep it from going over the debt ceiling, which has been put on hold until January 1, 2025.
To keep the government running, the department has used what are called “extraordinary measures” or financial tricks in the past. After these measures expire, however, the government could not pay its debts unless lawmakers and the president agree to raise the cap on how much the U.S. government can borrow.
In a polite way, she asked Congress to do something to protect the United States’ full faith and credit.
The news comes after President Joe Biden signed a bill into law last week that kept the government from shutting down. However, the bill did not include President-elect Trump’s main demand to raise or suspend the country’s debt ceiling.
There was a lot of fighting among Republicans in Congress over how to handle Trump’s demand before the bill was passed. In a speech, Trump said, “Anything else is a betrayal of our country.”
After a long debate in the summer of 2023 about how to pay for the government, lawmakers passed the Fiscal Responsibility Act. This law stopped the country from borrowing $31.4 trillion until January 1, 2025.
She did say, though, that on January 2, the debt is expected to temporarily go down because a government trust fund holding securities that can’t be sold will be redeemed. These securities are related to Medicare payments.
Because of this, she said, “Treasury does not expect that it will be necessary to start taking extraordinary measures on January 2 to stop the United States from defaulting on its obligations.”
The total amount of debt in the United States has grown to about $36 trillion, during both Republican and Democratic administrations.
And the rise in inflation after the coronavirus pandemic made it more expensive for the government to borrow money. Next year, the cost of paying off the debt will be higher than the amount spent on national security.
When the new year starts, Republicans will have full control of the White House, the House, and the Senate. They want to extend Trump’s tax cuts from 2017 and do other things, but they can’t agree on how to pay for them.
