Posted on 12/29/2024 7:56:35 PM PST by SeekAndFind
Treasury Secretary Janet Yellen has warned that the United States will hit its statutory debt ceiling around the middle of January, a development she said will prompt the Treasury to resort to “extraordinary measures” to prevent the government from defaulting on its obligations.
Yellen outlined the looming fiscal challenge in a Dec. 27 letter to congressional leaders, urging them to act to protect the nation’s economic credibility and preserve fiscal stability.
She noted that the Fiscal Responsibility Act of 2023 temporarily suspended the debt ceiling through Jan. 1, 2025, enabling lawmakers to avert default during contentious budget negotiations. A day after that deadline—on Jan. 2—a new debt limit will be set based on the total amount of outstanding debt subject to the statutory limit as of the end of Jan. 1. Yellen noted that the debt is projected to temporarily decrease by $54 billion on that date due to scheduled Medicare trust fund redemptions, providing a brief reprieve before extraordinary measures become necessary.
“Treasury currently 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.
Extraordinary measures, often described as accounting maneuvers, allow the Treasury to free up cash and delay default. These measures, however, are a short-term solution. Once exhausted, they leave the government unable to meet its financial obligations without congressional intervention. Yellen emphasized the urgency of action, warning that a failure to address the debt ceiling would severely damage the nation’s economic credibility.
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” she wrote.
Yellen’s warning comes as the national debt has climbed to a staggering $36 trillion, driven by decades of government spending outpacing tax revenue under both Republican and Democratic administrations. High inflation that soared after the pandemic led the Federal Reserve to hike interest rates, increasing borrowing costs and debt service payments.
The Committee for a Responsible Federal Budget (CRFB) recently noted that interest payments on America’s public debt have nearly tripled since 2020 and in 2024 were higher than spending on Medicare and national defense. The nonprofit estimated that interest payments will continue climbing over the next decade and beyond, exceeding Social Security spending by 2051 to become the top expense.
“The alarm bells are clearly ringing when it comes to our unsustainable national debt,” CRFB analysts wrote in the note. “Policymakers should put in place reforms that reduce the growth of debt and stabilize it as a share of the economy before interest and debt spiral further out of control.”
President-elect Donald Trump has proposed eliminating the debt ceiling altogether, or at least extending it through 2029, a move that would give his incoming administration more breathing room by avoiding repeated debt cap standoffs on Capitol Hill.
Congress first established a debt limit of $45 billion in 1939 and has since raised it 103 times as government spending has consistently exceeded tax revenue. As of October 2024, publicly held debt hit 98 percent of the U.S. gross domestic product, according to the Congressional Budget Office (CBO), a sharp increase from 32 percent in October 2001. CBO projects that public debt will rise to 122 percent of gross domestic product in 2034.
Maya MacGuineas, president of CRFB, warned in a recent statement that the risks of rising debt include slower economic growth, higher inflation, and constrained fiscal flexibility that would hamper the government’s ability to respond to economic downturns or global crises.
Le it go. America can last a very long time. You don’t need to do anything before we own the senate, house and presidency. There is no reason to pass anything at all.
Right before the inauguration...
Right before the inauguration...
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Of course. We’re going to see many dirty tricks from the bastards.
They’ll do everything they can to sabotage Trump and prevent him from succeeding. They don’t care one bit about making things better.
There are many fed departments, agencies and budgets which can be eliminated, to help reverse the default. And millions trimmed from the overly-bloated bureaucracy.
That filthy mutant Karen has been trying to aid the Democrats and hurt Trump all along.
Pay the debt.
Take the money from EPA budget. If that ain’t enough take DOEducation budget. Next DOEnergy, etc
Our side can play, too.
awaiting news of the sudden homeless crisis...
RIP, Rush
Here’s an idea: Have Congress quit spending our f*ing money without a specific source for the funds for that program.
They had a chance to balance the budget with the recent CR (then no debt ceiling increase would be needed).but noooooooo...
Unreal that such an unskilled idiotic geriatric troll is in that position.
Janet Louise Yellen (born August 13, 1946)
She is 78. And she is a clueless, mouthpiece.
[Right before the inauguration...]
Yeah, I noticed too
Probably just a coincidence.......
We have had this globalist idiot Yellen around for centuries it seems. And a mainstream media who couldn’t care less if she’s doing a bad job. As long as she’s a woman who can speak her truth there is no accountability.
Pretty ticked off with 47 right now but it will be a pleasure to watch him walk back all the damage people like Yellen have done. Trump will be up at 4am each day hopefully taking a sledgehammer to the swamp until he goes to sleep after midnight.
Janet is Yellen cause she can’t balance her checkbook. Twice now she has directed our economy down the toilet.
perfect timing troll
Mark that...when they try to blame Trump
The CR won’t balance the budget.
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