Yellen Announces US is Set to Reach Debt Limit by Mid- or Late January
The suspension of the debt limit has been in effect since June 2023.
TroibNews 
Treasury Secretary Janet Yellen indicated on Friday that she anticipates the U.S. will hit its borrowing limit around mid- to late-January, presenting a significant fiscal challenge for President-elect Donald Trump in the early months of his administration.
“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 stated in a letter addressed to congressional leaders.
The debt ceiling has been suspended since June 2023, following a bipartisan agreement between then-House Speaker Kevin McCarthy and President Joe Biden. With the return of the limit on Treasury's debt issuance scheduled for January 2, Yellen noted in her letter that the agency has some leeway until approximately January 14 to January 24. This flexibility is mainly due to the timing of payments related to the Medicare trust fund. When that deadline arrives, Yellen indicated that Treasury would begin employing special accounting methods to prevent a default on the federal debt.
While Yellen did not specify how long the extraordinary measures and Treasury’s cash reserves would delay a potential default, past instances suggest this period could extend for several months. Some analysts have estimated that the so-called X-date — the moment when the government can no longer meet its financial obligations — could be pushed back until the summer.
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen emphasized.
Her letter follows Trump’s recent attempts to prompt Congress to raise the debt ceiling or eliminate it entirely during President Biden’s administration, before taking office next month. Trump encouraged House Republican leaders to include a debt ceiling extension in a stopgap government spending bill. However, this proposal was thwarted when 38 GOP members, primarily hardline fiscal conservatives, collaborated with most Democrats to defeat the spending bill that contained the debt ceiling extension.
Debra A Smith for TROIB News
“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 stated in a letter addressed to congressional leaders.
The debt ceiling has been suspended since June 2023, following a bipartisan agreement between then-House Speaker Kevin McCarthy and President Joe Biden. With the return of the limit on Treasury's debt issuance scheduled for January 2, Yellen noted in her letter that the agency has some leeway until approximately January 14 to January 24. This flexibility is mainly due to the timing of payments related to the Medicare trust fund. When that deadline arrives, Yellen indicated that Treasury would begin employing special accounting methods to prevent a default on the federal debt.
While Yellen did not specify how long the extraordinary measures and Treasury’s cash reserves would delay a potential default, past instances suggest this period could extend for several months. Some analysts have estimated that the so-called X-date — the moment when the government can no longer meet its financial obligations — could be pushed back until the summer.
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen emphasized.
Her letter follows Trump’s recent attempts to prompt Congress to raise the debt ceiling or eliminate it entirely during President Biden’s administration, before taking office next month. Trump encouraged House Republican leaders to include a debt ceiling extension in a stopgap government spending bill. However, this proposal was thwarted when 38 GOP members, primarily hardline fiscal conservatives, collaborated with most Democrats to defeat the spending bill that contained the debt ceiling extension.
Debra A Smith for TROIB News
