Dec 27, 2024 - Politics & Policy

Treasury secretary sends warning urging Congress to act on debt limit

Lauren Floyd

US Treasury Secretary Janet Yellen arrives ahead of US President Joe Biden address to the nation from the Rose Garden of the White House in Washington, DC, November 7, 2024, after Donald Trump won the presidential election. — Treasury Secretary Janet Yellen arrives ahead of President Biden's address to the nation from the Rose Garden of the White House on Nov. 7 after President-elect Trump won the election. Photo: Allison Robbert/ AFP via Getty Images

Treasury Secretary Janet Yellen warned Congress on Friday that "extraordinary measures" will be necessary as early as Jan. 14 unless Congress acts to raise or otherwise suspend the debt ceiling.

Why it matters: President-elect Trump has voiced support to abolish the debt limit despite some of his supporters historically opposing action to raise the debt ceiling during Democratic administrations.

Driving the news: The debt limit, which reflects the amount the U.S. government is allowed to borrow to pay for services including Social Security and Medicare benefits, was suspended through Jan. 1, 2025, when the Fiscal Responsibility Act of 2023 went into effect.

Outstanding debt is set to decrease by approximately $54 billion on Jan. 2 due to "a scheduled redemption of nonmarketable securities held by a federal trust fund related to Medicare payments," Yellen wrote in a letter addressed to House Speaker Mike Johnson (R-La.).

Yes, but: The Treasury "expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures," Yellen wrote.

"I respectfully urge Congress to act to protect the full faith and credit of the United States," Yellen added.

Eliminating the debt limit would likely require Democratic support, Axios earlier reported.

Go deeper: Scoop: Jeffries' plan to kill the debt ceiling forever

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Treasury secretary sends warning urging Congress to act on debt limit

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