Yellen Warns US Will Hit Debt Limit Day After Trump Takes Office

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.

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.

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.

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.