Debt Limit To Be Reached One Day After Trump Takes Office, Yellen Warns
Outgoing Treasury Secretary Janet Yellen has informed congressional leaders that the United States will reach its debt ceiling on January 21, the day after President-elect Donald Trump assumes office. This announcement forces the incoming administration to immediately confront the nation’s mounting debt crisis.
In her letter to House Speaker Mike Johnson (R-LA), Yellen outlined that the Treasury will enact “extraordinary measures” to avoid defaulting on financial obligations. These measures will halt investments in federal retirement and health benefit funds until the debt limit is either raised or suspended.
Janet Yellen leaves US Treasury in a huff:
Incompetence, malpractice, and childish spite pervade, Janet Yellen's letter to Congress today on the US approaching the $36 Trillion debt limit.
Aside from the US cutting spending, Yellen has $1 trillion of ceiling room she can… pic.twitter.com/6sji0otO0S
— Robert Bowes (@Robert_B_Bowes) January 18, 2025
“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,” Yellen wrote, calling on Congress to act without delay.
🚨 BREAKING: Treasury Secretary Yellen announces that the US will hit the debt limit on Tuesday, January 21st.
Yellen has advised the US Treasury to start “extraordinary measures.” https://t.co/Zbx7XoCnzr pic.twitter.com/UFNyTfvHHq
— Financelot (@FinanceLancelot) January 17, 2025
The timing of Yellen’s announcement has drawn significant criticism, with many accusing the Biden administration of strategically leaving the problem for President-elect Trump to resolve. Commentators have pointed to the last-minute nature of the announcement as politically motivated.
Yellen borrowed another $28 billion yesterday as federal debt climbs to new record high of $34.998 trillion – oh, so close…
$2 billion is basically a rounding error for the treasury at this point, so we're guaranteed to breach $35 trillion in one of next week's daily reports: pic.twitter.com/FipgFeEL5m— E.J. Antoni, Ph.D. (@RealEJAntoni) July 26, 2024
DEBT: On her final day in office, Secretary Yellen dropped a bombshell: the U.S. government would run out of money on President Trump’s first full day in office. Since 2020, the federal debt has ballooned by an astonishing $13 trillion. The so-called resolution of the debt crisis… pic.twitter.com/q9SdrORBiO
— @amuse (@amuse) January 18, 2025
Trump has argued that the debt ceiling should be abolished altogether, viewing it as an unnecessary obstacle. His Treasury Secretary nominee, Scott Bessent, expressed willingness to pursue that policy if confirmed.
Meanwhile, congressional Republicans are divided over how to proceed. The Freedom Caucus has proposed raising the debt limit by $4 trillion while implementing spending cuts. Trump reportedly prefers addressing the issue with a single comprehensive bill.
The national debt, now exceeding $36 trillion, presents a significant hurdle for the incoming administration. Rising inflation and interest rates have added pressure to the government’s ability to manage its obligations.
When Joe Biden and Janet Yellen arrived in January 2021, they had $1.6 trillion in cash in the US govt bank acct.
They are leaving Trump with only $600 billion and the debt ceiling preventing Trump's administration from borrowing anything.
This was done intentionally. Yellen… pic.twitter.com/vd1yWD4Uod
— Wall Street Mav (@WallStreetMav) January 13, 2025
This looming fiscal showdown will test Trump’s leadership as he begins his second term with a Republican-controlled Congress.