economy and politics

US will reach debt limit on Tuesday, Yellen says in letter to Congress

US will reach debt limit on Tuesday, Yellen says in letter to Congress

U.S. Treasury Secretary Janet Yellen said the government would reach its legal borrowing limit on Tuesday and would begin employing “extraordinary measures” to avoid exceeding the limit and triggering a possible catastrophic default.

Yellen, in a letter sent to congressional leaders on Friday, just three days before President Joe Biden hands control of the US government to President-elect Donald Trump and his team, said the Treasury will begin taking extraordinary measures on the 21st. of January.

“The length of time extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting US government payments and revenues months into the future,” Yellen said in the letter.

The official indicated that the Treasury will suspend investments in the retirement and disability fund of officials who are not obliged to immediately pay benefits.

The Treasury secretary had said in late December that the debt limit would likely be reached between January 14 and 23, after Congress opted not to include an extension or permanent repeal of the limit in a last-minute budget deal. time near the end of the year.

Trump himself had urged lawmakers to expand or repeal the debt ceiling and later criticized an earlier failure to do so in 2023 as “one of the dumbest political decisions made in years.”

Under that 2023 budget deal, Congress suspended the debt ceiling until Jan. 1, 2025. The U.S. Treasury will be able to pay its bills for several more months, but Congress will have to address the issue sometime next year. .

Inaction could prevent the Treasury from paying its debts. A default on US debt would likely have serious economic consequences.

A debt limit is a limit set by Congress on the amount of money the United States government can borrow.

Because the government spends more money than it collects in taxes, lawmakers have to periodically address the issue, a politically difficult task since many are reluctant to vote for more debt.

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