
Outgoing Treasury Secretary Janet Yellen delivered a surprise announcement on her last day in office, revealing that the United States will hit its debt ceiling on January 21, the day after President-elect Donald Trump takes office. This abrupt news places immediate financial pressure on the incoming administration.
In a letter addressed to House Speaker Mike Johnson (R-LA) and other congressional leaders, Yellen confirmed that the Treasury Department will enact “extraordinary measures” to prevent a default. These measures include halting 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, stressing the importance of swift congressional action to protect the nation’s financial standing.
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 of the Biden administration quickly condemned the timing of Yellen’s announcement. Many accused her of intentionally delaying the news to burden President-elect Trump with a financial crisis. Social media erupted with claims that the outgoing administration was leaving behind a fiscal “trap.”
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
The national debt has soared past $36 trillion, exacerbated by years of bipartisan spending and rising inflation. Higher interest rates have also driven up the cost of managing the country’s debt, adding to the economic strain.
President-elect Trump has long criticized the debt ceiling, calling it an unnecessary restriction on government operations. His Treasury Secretary nominee, Scott Bessent, has expressed support for working with Trump to eliminate the borrowing cap if confirmed by the Senate.
Republicans in Congress are already debating how to address the looming debt crisis. The Freedom Caucus has proposed raising the debt ceiling by $4 trillion while demanding significant spending cuts. Trump reportedly favors a more aggressive approach to tackling the issue but is open to different 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
As Trump prepares to begin his second term, the debt ceiling battle will be his first major test, requiring immediate coordination between the White House and Congress.