US federal government nears debt-ceiling limit, Yellen warns

United States Treasury Secretary Janet L. Yellen says the US government has three weeks to raise its debt ceiling.

The United States government has less than three weeks to raise its debt limit before it will need to take “extraordinary measures” to sustain federal operations, Treasury Secretary Janet L. Yellen says

In a letter to members of Congress, Yellen said the government is beginning to run out of money to finance its debt obligations, reflecting one of the challenges facing the incoming Trump administration.

Yellen’s letter stated “extraordinary measures” are expected to be needed starting between January 14-23, which is actually somewhat later than originally anticipated. Those measures would probably give Congress several months to act before hitting the borrowing limit.

“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen wrote.

Congress tells the Treasury Department how much it can borrow, a limit known as the “debt ceiling” Failing to lift the debt limit could have catastrophic consequences for the global economy, as the US government has never before defaulted on its debt obligations.

US President-elect Donald Trump tried to get congressional Republicans to suspend the debt limit for two years – or abolish it altogether – in negotiations over funding the government this month. However, that effort failed, and House Speaker Mike Johnson (R-Louisiana) approved legislation to fund the government without changes to the debt limit.

Incumbent US President Joe Biden and former House Speaker Kevin McCarthy (R-California) agreed to suspend the debt limit for two years in a bipartisan deal in the spring of 2023.

Johnson could face a difficult time retaining his speakership while lifting the debt ceiling. If GOP leaders try to approve an increase without Democratic support, they would have the narrowest of margins in the House to do so without defections among their right flank. But cutting a deal with Democrats to lift or suspend the debt limit could infuriate the right, whose support Johnson needs to remain speaker.