Yellen: Debt limit will be hit day after Trump's inauguration

Treasury Secretary Janet Yellen said Friday the nation will hit its debt ceiling the day after President Trump is inaugurated and that the agency will begin “extraordinary measures” to stave off the threat of a national default.

Yellen told congressional leadership in a letter that the Treasury Department will begin the measures Tuesday after a previous roughly 20-month suspension of the debt limit expired earlier this month.

The Treasury Department can use the measures to allow the government to meet its obligations for a period of time once the debt ceiling deadline has been hit. It's unclear when the use of the measures will be fruitless, though there had previously been speculation that lawmakers would have a matter of months to actually raise the debt ceiling.

Yellen said she will be “unable to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) not immediately required to pay beneficiaries.”

She also said a “debt issuance suspension period” will begin on next Tuesday and last through March 14.

“My predecessors have declared debt issuance suspension periods under similar circumstances,” she wrote. “With these determinations, the Treasury Department will suspend additional investments of amounts credited to, and redeem a portion of the investments held by, the CSRDF, as expressly authorized by law.”

She said the investments in the Postal Service Retiree Health Benefits Fund will be made in the same manner as those for the CSRDF, but noted that both accounts will be “made whole once the debt limit is increased or suspended.”

“Federal retirees and employees will be unaffected by these actions,” she added.

The debt ceiling caps how much money the Treasury Department can owe to pay the country’s bills.

Congress last agreed to suspend the debt ceiling for roughly a year and a half as part of a bipartisan deal struck between President Biden and House GOP leadership in 2023 that also included limits on the spending subject to lawmakers’ annual funding process.

That deal has since drawn criticism from Trump, however, now that the debt limit has been placed in his lap to handle as he returns to the White House.

Yellen said Friday that the “period of time that extraordinary measures may last is subject to considerable uncertainty,” while underlining the “challenges of forecasting the payments and receipts of the U.S. Government months into the future.”

“The debt limit does not authorize new spending, but it creates a risk that the federal government might not be able to finance its existing legal obligations that Congresses and Presidents of both parties have made in the past,” she said, urging Congress “to act promptly to protect the full faith and credit of the United States.”

The national debt currently stands at more than $36 trillion.

With Republicans in control of both chambers of Congress and the White House, various corners of the party are weighing how best to tackle the debt limit, particularly as some fiscal hawks press for steep spending cuts and action on the debt ceiling to go hand in hand.

Updated at 6:06 p.m. EST.

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