Yellen: The debt limit will be raised the day after Trump’s inauguration

Treasury Secretary Janet Yellen said Friday that the country will reach its debt ceiling the day after President Trump’s inauguration, and that the agency will begin “extraordinary measures” to stave off the risk of a nationwide default.

Yellen told congressional leadership in a letter that the Treasury Department would begin the action on Tuesday after a previous nearly 20-month suspension of the debt limit ended earlier this month.

The Treasury can use these measures to allow the government to meet its obligations for a period of time once the debt ceiling deadline is reached. It is unclear when such measures will be counterproductive, although there has previously been speculation that lawmakers would have a few months to actually raise the debt ceiling.

Yellen said she “will not be able to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) that is not immediately required to pay beneficiaries.”

It also said that the “debt issuance suspension period” will begin next Tuesday and last until March 14.

“My predecessors declared debt issuance moratoriums under similar circumstances,” she wrote. “With these decisions, the Treasury will suspend additional investments in amounts deposited into the CSRDF, and will recover a portion of the investments held by it, as expressly permitted by law.”

She said investments in the Postal Service Retiree Health Benefits Fund will be made in the same manner as in the CSRDF, but noted that both accounts “will be completed once the debt limit is increased or suspended.”

She added: “Retirees and federal employees will not be affected by these measures.”

The debt ceiling sets the amount of money the Treasury can owe to pay the country’s bills.

Congress last agreed to suspend the debt ceiling for about a year and a half as part of a bipartisan agreement reached between President Biden and House GOP leadership in 2023 that also included limits on spending subject to lawmakers’ annual funding process.

However, the deal has since drawn criticism from Trump, after a debt limit was placed in his lap to deal with upon his return to the White House.

Yellen said on Friday that “the period of time during which extraordinary measures may continue is subject to a great deal of uncertainty,” focusing on “the challenges of forecasting US government payments and receipts months into the future.”

“The debt limit does not allow for new spending, but it does create a risk that the federal government may not be able to finance its existing statutory obligations that Congress and presidents of both parties have made in the past,” she said, urging Congress to “act quickly to protect the full faith and credit.” For the United States.

The national debt currently stands at more than $36 trillion.

With Republicans in control of both houses of Congress and the White House, various corners of the party are considering how best to address the issue of debt control, especially as some fiscal hawks push for sharp spending cuts and debt ceiling action in tandem. .

Updated at 6:06 PM EST.