Treasury director warns about US debt
(MENAFN) U.S. Treasury Secretary Janet Yellen warned that the federal government could reach its debt limit as early as January 14 unless congress acts or the Treasury resorts to “extraordinary measures” to avoid default.
The debt ceiling, which had been suspended under a 2023 budget deal, is set to resume on January 1, 2025, and if no further measures are taken, the Treasury will be unable to meet its financial obligations. In a letter to lawmakers on Friday, Yellen stated that the department expects to hit the new debt limit between January 14 and January 23, triggering the need for special accounting maneuvers to keep the government funded.
She also noted that the U.S. national debt, currently around $36 trillion, is set to drop by approximately $54 billion on January 2 due to a scheduled redemption of nonmarketable securities linked to Medicare.
Although the Treasury can use these extraordinary measures to keep operations running for several months, once they are exhausted, the risk of a default looms unless lawmakers and the president agree to raise or suspend the debt ceiling. Yellen urged Congress to act swiftly to protect the U.S.'s credit standing.
Her warning follows the signing of a funding bill by President Joe Biden that avoided a government shutdown and kept federal operations running through March 14. However, the package did not include an extension of the debt limit, a request made by President-elect Donald Trump, who has advocated for eliminating the debt ceiling altogether.
In June 2023, after intense negotiations, Congress temporarily suspended the debt ceiling, preventing what could have been the U.S.'s first-ever default.
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