
In a stunning announcement, outgoing Treasury Secretary Janet Yellen revealed that the United States will hit its debt limit on January 21, just one day after President-elect Donald Trump is sworn into office. This abrupt revelation puts the incoming administration in a position where it must quickly address a looming fiscal crisis.
Yellen outlined the situation in a letter to House Speaker Mike Johnson (R-LA) and other congressional leaders, stating that the Treasury Department would begin implementing “extraordinary measures” to prevent a default. 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, emphasizing the urgency for Congress to act to maintain the government’s creditworthiness.
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 swiftly condemned the timing of Yellen’s announcement. Many argue that the Biden administration intentionally delayed sharing this information to corner Trump with an unavoidable financial crisis on his first full day in office. This has led to widespread frustration among conservatives who see the move as politically motivated.
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, now surpassing $36 trillion, has become a growing concern amid rising inflation and increasing interest rates. The cost of servicing this debt has spiked, putting additional pressure on federal finances.
Trump has consistently advocated for abolishing the debt ceiling altogether, calling it a needless barrier to the federal government’s operations. His Treasury Secretary nominee, Scott Bessent, has pledged to work with Trump to eliminate the borrowing cap if confirmed.
House Republicans have proposed several approaches to address the debt ceiling. The Freedom Caucus suggested a two-step plan to raise the ceiling by $4 trillion while enacting major spending cuts. Trump reportedly leans toward a simpler, more aggressive approach to resolve the issue.
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
With the debt ceiling crisis now front and center, Trump and the GOP-controlled Congress are under immediate pressure to respond and implement a solution.