In a letter sent to Congressional leaders, Treasury Secretary Janet Yellen said the Treasury Department will issue an “extraordinary measure,” or special account, aimed at preventing the debt ceiling from being reached as early as January 14. He said it was necessary to initiate measures. Friday afternoon.
“Treasury expects to reach the statutory debt ceiling between January 14 and January 23,” Yellen said in a letter to House and Senate leaders, at which point the government The government said it would take extraordinary measures to prevent the country from exceeding its debt ceiling. Activity will be suspended until January 1st.
The ministry has in the past deployed so-called extraordinary measures, or accounting maneuvers, to keep the government running. But once those measures expire, the government risks default unless lawmakers and the president agree to lift restrictions on the U.S. government’s ability to borrow.
“I humbly ask Congress to act to fully protect the trust and confidence of the United States,” she said.
The news comes after Joe Biden signed a bill last week that avoids a government shutdown but does not include President Donald Trump’s core debt demands of raising or suspending the national debt ceiling.
The bill was first approved by Congress after intense debate within Republicans over how to address Trump’s demands. “Any other action would be a betrayal of our country,” President Trump said in a statement.
Hours after Yellen issued her statement, tech entrepreneur Elon Musk, now one of President-elect Trump’s closest allies, announced that he would be creating an unspecified new department, the Office of Government Efficiency ( Mr. Doge) was appointed as the person in charge. Reposting part X of a speech by famous free market economist Milton Friedman.
Musk did not comment directly on Yellen’s remarks, but the repost emphasized that Friedman was discussing the “free lunch myth that the government can provide goods and services at no cost to anyone.” Ta.
“It’s always someone who pays – and it’s usually you,” Friedman said in his speech, referring to the general public. “These are wise words from a true genius,” Musk said.
After a lengthy debate in summer 2023 over how to fund the government, policymakers crafted the Fiscal Responsibility Act, which includes suspending the country’s $31.4 trillion borrowing authority until Jan. 1. .
Notably, however, Yellen said she expected a temporary reduction in debt on January 2 due to scheduled redemptions of non-marketable securities held by federal trust funds related to Medicare payments. That’s what I said it would do.
As a result, “[Treasury]does not believe it is necessary to begin taking special measures starting January 2 to prevent the United States from defaulting on its obligations,” he said.
“Temporary measures” generally refer to government efforts to fund its operations as much as possible by transferring funds and disinvesting in savings schemes for civil servants.
Political debates over the U.S. national debt are a traditional battleground for political parties. Since 1960, politicians have moved to raise, extend, or modify the debt ceiling more than 78 times.
The federal debt now stands at about $36 trillion and has ballooned across Republican and Democratic administrations. And soaring inflation after the coronavirus pandemic will raise borrowing costs for the government, meaning debt service payments next year will exceed national security spending.
Yellen said earlier this month that she was “disappointed” that “more progress” on the national debt had not been achieved during the Biden administration.
“I’m concerned about fiscal sustainability, and I’m disappointed that we’re not seeing more progress,” Yellen said in a panel at the Wall Street Journal’s CEO Summit. “We think we need to reduce the budget deficit, especially now that interest rates are higher.”
Yellen pointed to the interest cost of the national debt, calling it “one of the biggest causes of increased budget deficits.”
Republicans, who will take full control of the White House, House and Senate in the new year, have big plans to extend President Trump’s 2017 tax cuts and other policy priorities, but how they will pay for them remains unclear. We are discussing.
The Associated Press contributed reporting.
