U.S. Treasury Secretary Janet Yellen recently warned that the U.S. public debt ceiling could be reached as early as mid-January 2025. According to her statement, the Treasury expects to reach this new ceiling sometime between January 14 and January 23, at which point special measures will need to be implemented to avoid default.
United States: The public debt ceiling could be reached by mid-January
The public debt ceiling is the legal limit on the total amount of money that the U.S. government is allowed to borrow to finance its current obligations. In the United States, this limit has been suspended until January 1, 2025, but a new limit will be established on January 2, corresponding to the amount of debt issued by the Treasury. If this limit is reached, the Treasury will have to resort to special measures to continue funding government operations without meeting its payment obligations.
The special measures mentioned by Janet Yellen in her letter to Congress include accounting adjustments and delaying certain expenditures to free up cash and avoid an immediate default. These measures buy time, but are not a long-term solution. If Congress does not raise or suspend the debt ceiling once again, the United States risks defaulting, which would have serious consequences for the economy.
Political tensions
Raising the debt ceiling has been a contentious political issue for many years in the United States. Conservatives, in particular, often oppose increasing the national debt, which has now exceeded $36 trillion. Janet Yellen has urged Congress to act quickly to protect the country's creditworthiness and avoid a financial crisis.
In summary, the current situation highlights the economic and political challenges that the United States faces. Congress will need to make important decisions in the coming weeks to prevent a debt crisis that could have serious consequences.