Treasury director warns about US debt
Date
12/30/2024 7:17:10 AM
(MENAFN) US Treasury Secretary Janet Yellen has warned that the federal government could hit its debt ceiling as soon as January 14 unless congress intervenes or the Treasury enacts “extraordinary measures” to prevent a default. The debt ceiling, a cap on how much the government can borrow, was suspended until January 1, 2025, under a 2023 budget agreement. Without further action, the Treasury will be unable to meet all its financial obligations.
In a letter to Congress on Friday, Yellen projected that the US will reach the debt limit between January 14 and 23, at which point special accounting maneuvers will be required to avoid default. She also noted that the US debt, currently around $36 trillion, is expected to decrease by approximately $54 billion on January 2 due to a redemption of securities tied to Medicare payments.
While the Treasury can temporarily operate using these extraordinary measures, the risk of default increases once they are exhausted, unless lawmakers and the president agree to raise the borrowing limit.
Yellen's warning follows the passage of a funding bill last week that prevents a government shutdown through March 14, though it does not include a debt-limit extension that President-elect Donald Trump has advocated for. Trump has expressed support for permanently eliminating the debt ceiling, calling it a "smart" move for Congress.
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