
Treasury Secretary Janet Yellen delivered a surprise warning on her final day in office, revealing that the United States will reach its debt limit on January 21, only one day after President-elect Donald Trump assumes office. This looming fiscal crisis forces Trump and a Republican-led Congress to act swiftly.
In a letter to House Speaker Mike Johnson (R-LA) and other congressional leaders, Yellen outlined that the Treasury would begin “extraordinary measures” to avoid default. These measures include suspending contributions to federal retirement and health benefit 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, calling on Congress to act urgently.
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 the announcement has drawn sharp criticism. Many see it as a deliberate attempt by the outgoing Biden administration to burden Trump with an immediate economic dilemma. Critics on social media accused Yellen of leaving a “fiscal time bomb” for the incoming president.
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
Trump has long advocated for eliminating the debt ceiling altogether, arguing that it needlessly hampers government operations. His Treasury Secretary pick, Scott Bessent, confirmed during his confirmation hearing that he would support Trump’s proposal if asked to pursue it.
Meanwhile, congressional Republicans are divided on how to address the debt ceiling. The Freedom Caucus suggested a two-part plan: raising the ceiling by $4 trillion while pushing for spending reductions. Trump reportedly favors consolidating action into a single, decisive bill.
The national debt now stands at over $36 trillion, worsened by inflation and surging interest rates. This challenge will be one of the first and most significant hurdles for the Trump administration as it takes control of the federal government.
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