As the US teeters on the brink of a debt crisis, Treasury Secretary Janet Yellen has issued a stark warning to Congress: avoid default at all costs. The nation’s $36 trillion debt is set to decrease temporarily due to a scheduled redemption, but experts warn that extraordinary measures may be needed as early as January 14.
Warning from US Treasury Secretary Janet Yellen: Avoiding Default at the Debt Limit
The United States is approaching its debt limit, and Treasury Secretary Janet Yellen has issued a warning to Congress. In a letter sent on Friday afternoon, Yellen stated that her agency will need to start taking “extraordinary measures” as early as January 14 to prevent the nation from hitting the debt ceiling.
The Threat of Default
The US government’s current debt stands at approximately $36 trillion, which is expected to temporarily decrease due to a scheduled redemption of non-marketable securities held by a federal trust fund associated with Medicare payments. However, Yellen warned that this reduction does not guarantee that extraordinary measures will be necessary on January 2.
Background and Context
The nation’s debt ceiling has been suspended until January 1. The Federal Reserve deployed “extraordinary measures” in the past to keep the government operating. However, once those measures run out, the government risks defaulting on its debt unless lawmakers and the president agree to lift the limit on the US government’s ability to borrow.
In a recent bill signed into law by President Joe Biden, Donald Trump‘s core debt demand to raise or suspend the nation’s debt limit was not included. The bill only suspended the borrowing authority until January 1. This move has sparked debate among Republicans over how to handle the debt limit in the new year.
Yellen’s Urgent Call to Action
Yellen urged Congress to act to protect the full faith and credit of the United States, stating that “Anything else is a betrayal of our country.” The Treasury Department will need to take extraordinary measures to prevent default, which could have severe economic consequences for the nation.
As Republicans prepare to take control of the White House, House, and Senate in the new year, debate over how to pay for their priorities is ongoing. With the debt limit looming, lawmakers must navigate this complex issue to avoid a potential default on US obligations.
- theguardian.com | Janet Yellen issues warning to Congress as US nears debt limit
