- Treasury Secretary Janet Yellen wrote a letter to Home Speaker Mike Johnson on Friday.
- In it, he warned that the US would breach its debt ceiling on January 14 if Congress didn’t act.
- The Treasury Division will start taking “extraordinary measures” to keep away from debt defaults.
Treasury Secretary Janet Yellen warned in a letter Friday that the U.S. would wish to take “extraordinary steps” to keep away from defaulting on its debt by Jan. 14.
In a letter to Home Speaker Mike Johnson, Yellen wrote that though the excellent debt topic to the ceiling is predicted to fall by about $54 billion when the brand new debt ceiling is ready in place on Jan. 2, it won’t be lengthy earlier than the U.S. Hit the restrict.
He mentioned the Treasury Division would possible have to provoke an accounting maneuver between Jan. 14 and Jan. 23 to stop the U.S. from defaulting.
The debt ceiling is the mechanism that limits the quantity of US debt. Most of that cash goes to packages like Social Safety, Medicare, navy pay, curiosity on the nationwide debt and tax refunds, Yellen mentioned within the letter.
If lawmakers fail to boost the debt ceiling, the federal government might have bother paying these payments.
Yellen’s warning got here days after President-elect Donald Trump pressed Congress to boost or remove the debt ceiling fully. Lawmakers, nonetheless, didn’t approve an extension of the two-year suspension whereas voting on a authorities spending invoice earlier this month.
The Fiscal Duty Act of 2023 suspended the debt ceiling till Jan. 1, 2025, after a contentious political battle. Republicans are set to take management of the federal government in January and should take care of the continuing debt ceiling concern, which might have an effect on monetary markets and borrowing prices.
“I respectfully urge Congress to behave to guard the total belief and credibility of the US,” Yellen wrote.