US Treasury Secretary warns of debt ceiling crisis, urges Congress to act

Treasury Secretary Janet Yellen alerted congressional leaders that the US government will reach its debt ceiling as early as January 14, 2025, unless Congress takes action. 

To prevent default, Yellen stated that the Treasury Department will need to implement "extraordinary measures," Caliber.Az reports citing foreign media.

In a letter to House Speaker Mike Johnson, Yellen indicated that the debt ceiling could be breached between January 14 and January 23, requiring the Treasury to begin employing these special accounting maneuvers. "I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen emphasized.

The exact timing of the debt limit breach may shift, potentially pushing the deadline later into 2025, as the Treasury often operates for months using these extraordinary measures. The debt ceiling, which limits the total amount the US government can borrow to meet its obligations, had been suspended under the Fiscal Responsibility Act of 2023, signed by President Joe Biden.

Once the ceiling is reached, the government is unable to borrow additional funds, risking default unless lawmakers negotiate to raise or remove the limit. Recently, amid a narrowly averted government shutdown, there was significant debate in Congress about whether to raise or eliminate the debt ceiling altogether.

Democrats have long pushed for raising or eliminating the debt limit, a stance traditionally opposed by Republicans, who argue that it is necessary to curb federal spending. However, President-elect Donald Trump recently voiced support for abolishing the debt ceiling, aligning with the Democratic viewpoint. Trump, in an NBC News interview, stated, "If they want to get rid of it, I would lead the charge."

Trump had unsuccessfully pressed Congress to include a provision to extend or eliminate the debt ceiling in the year-end funding bill, threatening primary challenges against Republicans who voted to fund the government without addressing the debt limit. Despite his efforts, 170 Republicans opposed him, leaving the debt ceiling issue to the incoming administration.

By Vafa Guliyeva