WASHINGTON (AP) — In one of her final acts as Treasury secretary, Janet Yellen said in a letter that her agency will begin taking “extraordinary measures,” or special accounting maneuvers, on Jan. 21 to prevent the country from reaching the debt ceiling to congressional leaders Friday afternoon.
She sent a letter to lawmakers in slow December saying the Treasury expected to hit the legal debt limit between Jan. 14 and Jan. 23. And now the agency will stop payments to certain accounts, including the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, which is expected to make up the shortfall starting Tuesday.
The move comes amid the transition of administration, with President-elect Donald Trump taking control of the White House and federal agencies from President Joe Biden on Monday. Yellen will no longer be in office when the extraordinary measures take effect.
The ministry has a history of taking what it calls “extraordinary measures,” or accounting maneuvers, to maintain government operations. However, once these measures expire, the government risks defaulting on its debts unless lawmakers and the president agree to lift the cap on the U.S. government’s borrowing capacity.
“The period of time for which extraordinary measures may last is subject to significant uncertainty, including the challenge of predicting U.S. government payments and revenues months in the future,” Yellen wrote in a letter to House and Senate leadership.
“I respectfully call on Congress to act immediately to protect the full faith and credit of the United States,” she said.
If the debt limit is raised or suspended, these funds will be repaid and federal retirees and workers will not be affected by the measures.
Outgoing President Joe Biden signed a bill in December that averted a government shutdown but did not include President-elect Donald Trump’s call to raise or suspend the country’s debt ceiling.
Trump has called for the abolition of the legal debt ceiling. In December, he told NBC News that eliminating the debt ceiling entirely was the “smartest thing” Congress could do.
The federal debt currently stands at about $36 trillion — an augment that rose sharply under both Republican and Democratic administrations. And the rise in inflation following the coronavirus pandemic has pushed up the government’s borrowing costs, causing debt service to exceed national security spending next year.
Republicans, who will have full control of the White House, House and Senate in the modern year, have large plans to extend Trump’s 2017 tax cuts and other priorities but are debating how to pay for them.
Trump has appointed South (*21*) investor Scott Bessent to head the Treasury Department. During his confirmation hearing on Thursday, Bessent was questioned by Sen. Elizabeth Warren (D-Mass.), who asked whether Bessent believed the federal debt limit should be repealed.
Bessent responded that if Trump wants to abolish the debt limit, “I will work with him.”
“The U.S. will not default if I am confirmed,” he said.
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