Treasury Secretary Janet Yellen said the U.S. will reach its borrowing limit in mid-January, which will necessitate the use of “extraordinary measures” to keep the federal government from defaulting.
In a letter to Congress on Friday, Yellen said that although the debt ceiling limit will be reached on Jan. 2, the outstanding debt is projected to decrease by roughly $54 billion, which will buy the Treasury a few more weeks.
“Treasury currently expects to reach the new limit between Jan. 14 and Jan. 23, at which time it will be necessary for Treasury to start taking extraordinary measures,” Yellen said. “I respectfully urge Congress to act to protect the full faith and credit of the United States.”
A debt limit deal struck in 2023 suspended the debt ceiling until Jan. 1, 2025, with a new multitrillion-dollar debt-ceiling level being set on Jan. 2.
“Raising the debt limit doesn’t authorize new spending, but it allows the Treasury to issue new debt to cover spending that Congress has already authorized,” the Wall Street Journal reported.
Earlier this month, President-elect Donald Trump urged Congress to suspend the nation’s borrowing limit until January 2027 during negotiations over funding the government this month.
However, that effort failed after House Speaker Mike Johnson (R-Louisiana) approved legislation to fund the government without changes to the debt limit, averting an imminent shutdown.
Yellen is expected to leave office on Jan. 20 and be succeeded by Trump’s pick for Treasury, Scott Bessent, when he is confirmed.