U.S. May Hit New Debt Limit As Early As January 14: Yellen

The U.S. Treasury Department may need to take "extraordinary measures" as early as January 14 to avoid defaulting on the national debt, Treasury Secretary Janet Yellen warned lawmakers in a letter, Jasper Ward and Kanishka Singh reported for Reuters.

Yellen explained that the U.S. debt is expected to decrease by about $54 billion on January 2 due to the redemption of nonmarketable securities tied to Medicare payments. I Photo: International Monetary Fund Flickr

Yellen explained that the U.S. debt is expected to decrease by about $54 billion on January 2 due to the redemption of nonmarketable securities tied to Medicare payments.

However, the Treasury anticipates reaching the new debt limit between January 14 and January 23, necessitating emergency measures.

Under a 2023 budget agreement, Congress suspended the debt ceiling until January 1, 2025. While the Treasury can temporarily meet its obligations, Congress must address the debt ceiling next year to avoid default.

A U.S. debt default could have catastrophic economic consequences.

The debt ceiling, set by Congress, limits how much the government can borrow to cover expenses that exceed revenue.

Since its inception in 1939, the ceiling has been raised 103 times. Publicly held debt was equivalent to 98% of the U.S. gross domestic product (GDP) in October 2024, compared to just 32% in October 2001.