Yellen Calls on Congress to Take Quick Action in the Face of the US Debt Limit Crisis

According to the Treasury Secretary, "extraordinary measures" are required to prevent default, and lawmakers are urged to increase the borrowing limit.

In a letter to congressional leaders Friday afternoon, Treasury Secretary Janet Yellen stated that her department will have to begin implementing "extraordinary measures," or unique accounting techniques, as early as 14 January to keep the country from reaching the debt ceiling.

In a letter to Senate and House leadership, Yellen stated that Treasury anticipates reaching the statutory debt ceiling between January 14 and January 23. The government would then be prevented from exceeding the country's debt ceiling, which has been suspended until January 1st, by the employment of exceptional measures.

To keep the government running, the department has previously used what are referred to as exceptional measures, or accounting tricks. However, unless Congress and the president agree to remove the cap on the US government's borrowing capacity, the US faces default danger when those provisions expire.

She stated that she sincerely requests that Congress take action to safeguard the United States' full faith and credit.

The announcement follows Joe Biden's signing of a package last week that prevented a government shutdown but excluded Donald Trump's main debt demand to increase or suspend the country's debt ceiling. Congress only passed the package after a heated internal Republican discussion about how to respond to Trump's demand. "Anything else is a betrayal of our country," Trump added in a statement.

Following a lengthy discussion over how to finance the government in the summer of 2023, lawmakers drafted the Fiscal Responsibility Act, which included delaying the country's $31.4 trillion borrowing ability until January 1.

However, Yellen noted that a scheduled redemption of non-marketable assets held by a government trust fund related to Medicare payments is expected to temporarily reduce the debt on January 2. The Treasury does not anticipate that it will be required to begin taking exceptional steps on January 2 in order to keep the United States from defaulting on its commitments, she added.