In a letter sent to congressional leaders Friday afternoon, Treasury Secretary Janet Yellen said her agency would need to initiate “extraordinary measures,” or special accounting maneuvers, to prevent the country from reaching the debt ceiling Jan. 14. Before. ,
“Treasury is expected to reach the statutory debt limit between January 14 and January 23, at which point extraordinary measures will be taken to prevent the government from breaching the nation’s debt ceiling,” Yellen wrote in a letter addressed to House and Senate leadership. Will be used – which has been suspended until January 1.
The department has in the past implemented extraordinary measures or accounting tricks to keep the government running. But once those measures expire, the government risks defaulting on its debt, unless lawmakers and the President agree to lift limits on the U.S. government’s ability to borrow.
“I respectfully urge Congress to act to protect the full faith and credibility of the United States,” she said.
The news comes as Joe Biden signed a bill into law last week that averted a government shutdown but did not include Donald Trump’s main debt demand of raising or suspending the nation’s debt ceiling. The bill was approved by Congress only after fierce internal debate among Republicans over how to handle Trump’s demand. “Anything other than that is a betrayal of our country,” Trump said in a statement.
After a lengthy debate over how to fund the government through the summer of 2023, policymakers drafted the Fiscal Responsibility Act, which included suspending the country’s authority to borrow $31.4tn until January 1.
However, in particular, Yellen said, the debt is projected to be temporarily lower due to the scheduled redemption on January 2 of non-marketable securities held by a federal trust fund linked to Medicare payments. As a result, “[the] Treasury does not expect that it will be necessary to begin taking extraordinary measures on January 2 to prevent the United States from defaulting on its obligations”, he said.
The federal debt currently stands at approximately $36 trillion – which has increased significantly under Republican and Democratic administrations. And a surge in inflation following the coronavirus pandemic has pushed up government borrowing costs so much that debt payments next year will exceed spending on national security.
Republicans, who will have full control of the White House, House and Senate in the new year, have big plans to extend Trump’s 2017 tax cuts and other priorities, but debate is ongoing over how to pay for them. .