Treasury Secretary Janet Yellen has warned that the United States could hit the debt ceiling as early as January 14, and action needs to be taken to prevent the nation from defaulting on its financial obligations. In a letter to congressional leaders, Yellen stated that the Treasury Department would need to use “extraordinary measures” to keep the government operating until the debt ceiling can be lifted.
The debt ceiling, which has been suspended until January 1, is the limit on the amount of money the U.S. government can borrow. Once the limit is reached, the government risks defaulting on its debt unless Congress and the President agree to lift it. Yellen urged Congress to act swiftly in order to protect the full faith and credit of the United States.
This news comes on the heels of a recent bill that was signed into law by President Joe Biden, which averted a government shutdown but did not address President-elect Donald Trump’s demand to raise or suspend the debt limit. The bill was only passed after intense debate within the Republican party over how to handle Trump’s demand. In a statement, Trump declared that “anything else is a betrayal of our country.”
This issue has been a source of contention for years, with a prolonged debate in 2023 resulting in the creation of the Fiscal Responsibility Act. This act suspended the nation’s $31.4 trillion borrowing authority until January 1, 2025. However, Yellen noted that the debt is projected to temporarily decrease on January 2 due to a scheduled redemption of nonmarketable securities held by a federal trust fund associated with Medicare payments. This means that the extraordinary measures may not need to be implemented until after January 2.
Currently, the federal debt stands at a staggering $36 trillion, a result of years of borrowing under both Republican and Democratic administrations. The spike in inflation caused by the ongoing coronavirus pandemic has only added to the government’s borrowing costs, with debt service next year projected to exceed spending on national security.
With Republicans set to have full control of the White House, House, and Senate in the new year, there are plans to extend Trump’s 2017 tax cuts and other priorities. However, there is still debate on how to pay for these plans, especially with the looming issue of the debt ceiling.
It is crucial for Congress to come together and find a solution to this pressing issue before the nation’s financial stability is put at risk. Yellen’s call to action should not be taken lightly, as the consequences of defaulting on the debt would be catastrophic. It is time for our leaders to put aside their differences and prioritize the economic well-being of our nation.
As we enter a new year, let us all hope and pray that our leaders will find a way to lift the debt ceiling and prevent any further damage to our already fragile economy. The resilience of the American people has been tested time and again, and with unity and determination, we can overcome this challenge once again. Let us not let politics get in the way of securing a brighter future for our country.
