US Treasury Secretary Janet Yellen said her department would have to begin taking so-called “extraordinary measures” before January 14 to prevent the country from reaching the debt limit.
If the US reaches the debt limit, the Treasury Department, responsible for ensuring financial security, will not have enough cash to repay the debt.
That’s because the Treasury has to borrow to make sure it has enough money to pay its bills – ranging from paying for Social Security programs to paying interest to investors who buy government bonds. Could.
Once the US reaches the debt ceiling, the Treasury is unable to borrow more money, which could force the country to default on its debt payments. America has never paid its debt before.
What did Janet Yellen say?
“Treasury is expected to reach the statutory debt limit between January 14 and January 23,” Yellen wrote in a letter addressed to House and Senate leadership.
The US debt ceiling was suspended through 2023 after a bipartisan agreement between Democrats and House Republicans.
But the suspension is set to expire on January 2, 2025, forcing the Treasury to start using so-called extraordinary measures to allow the government to continue paying its bills.
Yellen said there would be a slight decline in debt on January 2 so the new limit would be reached again at the end of the month.
“Treasury does not expect that it will be necessary to begin taking extraordinary measures on January 2 to prevent the United States from defaulting on its obligations,” he said.
“I respectfully urge Congress to act to protect the full faith and credibility of the United States,” she said.
Congress passed a temporary government spending plan last week that funds the government until March 14, but does not address the debt ceiling. The new Congress will have to negotiate the agreement once again at that time.
rm/jsi (AP, Reuters)
