
In a stunning farewell move, outgoing Treasury Secretary Janet Yellen announced that the United States will reach its debt ceiling on January 21, just one day after President-elect Donald Trump is sworn into office. This revelation has sparked immediate debate over how the incoming administration and GOP-controlled Congress will handle the looming fiscal crisis.
In a letter to House Speaker Mike Johnson (R-LA) and other congressional leaders, Yellen detailed that the Treasury Department would begin implementing “extraordinary measures” to prevent the U.S. from defaulting on its obligations. 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 that Congress must act quickly to maintain the full faith and credit of the United States.
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 slammed Yellen’s timing, accusing the Biden administration of intentionally leaving the incoming Trump administration with a fiscal disaster. Commentators on social media called her move a “parting bombshell,” questioning why this announcement was delayed until the final hours of Biden’s presidency.
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 ballooned to over $36 trillion, a figure that has grown under both Democratic and Republican administrations. Inflation and rising interest rates have further increased borrowing costs, putting more strain on the federal budget.
Trump has previously advocated for eliminating the debt ceiling altogether, calling it a “dangerous and unnecessary limit” on the government’s ability to operate. His nominee for Treasury Secretary, investor Scott Bessent, has signaled that he will support Trump’s push to end the borrowing cap if confirmed.
Meanwhile, House Republicans have proposed various strategies to tackle the debt ceiling. The Freedom Caucus has suggested a two-bill solution: one to raise the ceiling by $4 trillion and another to cut spending. Trump reportedly favors a more streamlined approach but remains open to negotiation.
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 financial showdown will be the first major test for Trump’s second term as he confronts both a massive national debt and a divided Congress.