Yellen: Treasury 'extraordinary measures' on debt limit start Jan. 21
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Treasury Secretary Janet Yellen testifies before Congress. Photo: Alex Wong/Getty Images
Treasury secretary Janet Yellen, in one of her final major acts in office, warned Congress late Friday that the Treasury will need to begin "extraordinary measures" on Tuesday to avoid hitting the debt limit.
Why it matters: The first full day of the Trump 2.0 presidency will see the government scrambling to move money around, increasing the urgency of the problem he's demanded Congress address.
Driving the news: Yellen warned Congress about three weeks ago that measures would be necessary sometime this month unless they acted to raise or suspend the debt ceiling.
- On Friday, she indicated those measures were now necessary as of Jan. 21.
- The debt limit was suspended by legislation in 2023, but went back into effect on Jan. 1 of this year.
- President-elect Trump wants the debt limit abolished entirely, but equally wanted that done before he took office.
Zoom in: Yellen outlined a variety of steps the Treasury would take, including freezing certain investment activities for civil service and postal retiree benefits and suspending debt issuance.
What she's saying: "The debt limit does not authorize new spending, but it creates a risk that the federal government might not be able to finance its existing legal obligations that Congresses and Presidents of both parties have made in the past," she wrote.
- "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."
Between the lines: The Treasury deploying a toolkit of extraordinary measures to avoid the debt ceiling is nothing new.
- But every time it happens, it amplifies the long-running debate and raises the pressure on Congress to act.
The intrigue: House Speaker Mike Johnson (R-La.) said this week he wants to raise the limit through the end of Trump's presidency, floating the prospect of tying it to LA wildfire aid.
- Because so many House Republicans are fundamentally opposed to raising or eliminating the debt limit, that may require Johnson to make a deal with Democrats to get it passed - and they are vehemently opposed to conditioning fire aid.
