CNN
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Outgoing Treasury Secretary Janet Yellen said in a letter to Congressional leaders Friday that the U.S. will reach the debt ceiling of about $36 trillion on Tuesday, at which time the Treasury Department will be able to help the government make payments. He announced that he would begin taking unprecedented measures. The notification came just three days before President-elect Donald Trump was inaugurated.
Reaching the cap will increase pressure on Republicans in Congress, but lawmakers have little time before they must act to avoid the first-ever debt default that is likely to cause global economic havoc. There is. Yellen wrote that the unusual measures, which are largely behind-the-scenes accounting manipulation, will continue until March 14.
Although Republicans control Capitol Hill, they remain divided over how to deal with the debt ceiling. They have several major issues they want to pass through Congress along party lines, including border security, energy and tax cuts, likely wrapped up in one or two packages. Additionally, lawmakers must pass a government funding bill for fiscal year 2025, which begins Oct. 1 (temporary spending measures expire March 14).
A bill to raise or suspend the debt ceiling could be included in one of these packages, but addressing the ceiling has become a bipartisan effort in recent years.
House Speaker Mike Johnson is already facing resistance from some fiscal conservatives who want to cut the debt rather than increase it. His razor-thin majority will make it more difficult to find a compromise, and he may need support from Democrats to pass increases to the cap.
The issue has already highlighted rifts within the party. In December, President Trump asked lawmakers to address the restrictions as part of an extraordinary spending bill. But the Republican-led package, which included suspending the cap until January 2027, failed amid opposition, including from many Republicans.
In December, House Republican leaders floated a proposal to raise the debt ceiling by $1.5 trillion as part of the first round of reconciliation in 2025. The bill also includes $2.5 trillion in cuts to net mandatory spending aimed at appeasing conservative lawmakers. But experts say that only leaves a limited amount of time before the caucus faces the cap again.
The debt ceiling had been suspended until January 2 as part of the bipartisan Fiscal Responsibility Act, but the bill followed months of wrangling between the Republican-led House and Senate and Democrats who control the White House. It was approved by Congress in June 2023. At the time, the cap was $31.4 trillion.
Technically, Yellen told Congress in late December that the U.S. did not actually hit the cap on January 2 because debt levels were expected to fall on that date due to scheduled redemptions of certain securities. He said that. At the time, he expected the cap to be reached between January 14 and January 23.
