The U.S. Treasury Department expects the United States to hit its debt ceiling as early as mid-January 2025 and may need to take 'extraordinary measures' to avoid a federal government debt default.
U.S. Treasury Secretary Yellen sent a letter to congressional leaders on Friday, urging Congress to act swiftly to safeguard America's credit and fiscal stability.
She stated that the Treasury Department anticipates the U.S. will hit the debt ceiling as early as between January 14 to 23.
She noted that although the Fiscal Responsibility Act passed in 2023 has suspended the debt ceiling until January 1 of next year, the total U.S. federal debt has reached $36 trillion (approximately 160.98 trillion MYR), with borrowing costs rising significantly due to post-pandemic inflationary pressures. It is expected that next year's interest payments on the debt will exceed the defense budget.
It is understood that the 'extraordinary measures' referred to by Yellen are temporary accounting operations used by the Treasury to ensure government operations continue in the event Congress fails to raise or suspend the debt ceiling in a timely manner. If the extraordinary measures are exhausted and Congress still hasn't raised or suspended the debt ceiling, the Treasury will be unable to make payments, resulting in a government debt default.
President-elect Trump originally planned to push Congress to implement an increase in the debt ceiling, or even completely remove the ceiling, before his inauguration on January 20 of next year.