In a stunning final move, outgoing Treasury Secretary Janet Yellen announced that the U.S. will reach its debt limit on January 21, just one day after President-elect Donald Trump is sworn in. The revelation forces the incoming administration to immediately address the nation’s ballooning debt crisis.
Yellen informed House Speaker Mike Johnson (R-LA) and other congressional leaders in a formal letter that the Treasury will begin taking “extraordinary measures” to avoid defaulting on federal obligations. These steps include suspending investments in major retirement and healthcare funds.
“The debt limit does not authorize new spending, but it creates a risk that the federal government might not be able to finance its existing legal obligations,” Yellen wrote, urging Congress to take swift action.
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
The timing of Yellen’s announcement has been widely criticized. Many believe the Biden administration deliberately left the issue for President-elect Trump to resolve, igniting outrage among conservative lawmakers and commentators. Some compared the move to leaving a “financial ticking time bomb” for the new administration.
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 currently stands at over $36 trillion, driven by unchecked government spending and rising interest rates. Inflation has further complicated the nation’s financial outlook, increasing borrowing costs for the federal government.
Trump has repeatedly advocated for eliminating the debt ceiling, arguing that it is an outdated obstacle to effective governance. His Treasury Secretary nominee, Scott Bessent, has indicated that he will support Trump’s policy direction if confirmed by the Senate.
Meanwhile, House Republicans are considering how to approach the crisis. The Freedom Caucus has proposed raising the debt ceiling by $4 trillion while pushing for major spending cuts. Trump reportedly prefers a more direct strategy but remains open to negotiations.
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 sudden fiscal challenge will test the Trump administration’s ability to navigate economic pressures while advancing its legislative agenda.
