
Outgoing Treasury Secretary Janet Yellen delivered a major blow to the incoming Trump administration by announcing that the United States will hit its debt ceiling on January 21, just one day after President-elect Donald Trump is sworn into office. The unexpected announcement sets the stage for an immediate fiscal showdown in Washington.
In a letter sent to House Speaker Mike Johnson (R-LA) and other congressional leaders, Yellen explained that the Treasury Department will implement “extraordinary measures” to prevent the U.S. government from defaulting. These measures include suspending investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund.
“The period of time that extraordinary measures may last is subject to considerable uncertainty,” Yellen wrote, urging Congress to act swiftly to avoid economic fallout.
Janet Yellen leaves US Treasury in a huff:
Incompetence, malpractice, and childish spite pervade, Janet Yellen's letter to Congress today on the US approaching the $36 Trillion debt limit.
Aside from the US cutting spending, Yellen has $1 trillion of ceiling room she can… pic.twitter.com/6sji0otO0S
— Robert Bowes (@Robert_B_Bowes) January 18, 2025
🚨 BREAKING: Treasury Secretary Yellen announces that the US will hit the debt limit on Tuesday, January 21st.
Yellen has advised the US Treasury to start “extraordinary measures.” https://t.co/Zbx7XoCnzr pic.twitter.com/UFNyTfvHHq
— Financelot (@FinanceLancelot) January 17, 2025
Critics have blasted Yellen’s timing, accusing the Biden administration of intentionally delaying this announcement to saddle Trump with a financial crisis. Some have likened her exit to leaving behind a fiscal “landmine” for the new administration.
Yellen borrowed another $28 billion yesterday as federal debt climbs to new record high of $34.998 trillion – oh, so close…
$2 billion is basically a rounding error for the treasury at this point, so we're guaranteed to breach $35 trillion in one of next week's daily reports: pic.twitter.com/FipgFeEL5m— E.J. Antoni, Ph.D. (@RealEJAntoni) July 26, 2024
DEBT: On her final day in office, Secretary Yellen dropped a bombshell: the U.S. government would run out of money on President Trump’s first full day in office. Since 2020, the federal debt has ballooned by an astonishing $13 trillion. The so-called resolution of the debt crisis… pic.twitter.com/q9SdrORBiO
— @amuse (@amuse) January 18, 2025
With the national debt now exceeding $36 trillion, the financial burden on the federal government continues to grow. Inflation and rising interest rates have only worsened the situation, pushing borrowing costs even higher.
President-elect Trump has long criticized the debt ceiling, calling it an unnecessary limit that hampers government operations. His pick for Treasury Secretary, Scott Bessent, has signaled his willingness to work with Trump to eliminate the borrowing cap if confirmed.
House Republicans are exploring different strategies to address the crisis. The Freedom Caucus has proposed raising the debt ceiling by $4 trillion alongside significant spending cuts. Trump reportedly favors a more streamlined approach but remains open to various solutions.
When Joe Biden and Janet Yellen arrived in January 2021, they had $1.6 trillion in cash in the US govt bank acct.
They are leaving Trump with only $600 billion and the debt ceiling preventing Trump's administration from borrowing anything.
This was done intentionally. Yellen… pic.twitter.com/vd1yWD4Uod
— Wall Street Mav (@WallStreetMav) January 13, 2025
This unexpected fiscal challenge puts Trump and the GOP-led Congress under immediate pressure to act as they prepare to implement their legislative agenda.