Yellen: US will hit debt ceiling in mid- or late-January
Treasury Secretary Janet Yellen said Friday she expects the U.S. will officially run up against its borrowing limit in mid- to late-January, starting the clock on a major fiscal challenge facing President-elect Donald Trump in his first months in office.
“Treasury currently expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures,” Yellen wrote in a letter to congressional leadership.
The debt limit has been suspended since June 2023 when Congress passed a bipartisan deal reached between then-House Speaker Kevin McCarthy and President Joe Biden. Under that law, the limit on Treasury’s ability to issue debt to cover the nation’s bills returns on Jan. 2.
But Yellen explained in her letter that Treasury has some extra leeway until sometime between Jan. 14 and Jan. 24, largely due to the timing of debt payments associated with a Medicare trust fund. At that point, Yellen said, Treasury will begin using special accounting procedures to avoid defaulting on the nation’s debt.
Yellen did not say in her letter how long those extraordinary measures and Treasury’s cash reserves would forestall a default. But in the past, it has been at least several months. Some outside estimates have projected that so-called X-date — when the government runs out of cash to cover its obligations — would not occur until sometime in the summer.
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen said.
Yellen’s letter comes after Trump last week sought, unsuccessfully, to get Congress to raise the debt ceiling — or even scrap it entirely — under Biden’s watch before Trump takes office next month.
Trump urged House Republican leaders to add an extension of the debt ceiling to a stopgap government spending bill. But 38 GOP lawmakers, mostly hardline fiscal conservatives, joined with most Democrats to sink a spending bill that included the debt ceiling extension.
Yellen’s letter comes after Trump last week sought, unsuccessfully, to get Congress to raise the debt ceiling — or even scrap it entirely — under Biden’s watch before Trump takes office next month.
Trump urged House Republican leaders to add an extension of the debt ceiling to a stopgap government spending bill. But 38 GOP lawmakers, mostly hardline fiscal conservatives, joined with most Democrats to sink a spending bill that included the debt ceiling extension.