Treasury Secretary Janet Yellen is sounding the alarm about the looming US debt ceiling. She’s urging Congress to act quickly before the government hits its borrowing limit, which could happen sometime between January 14th and 23rd.
The Debt Ceiling Crunch
The US national debt is a staggering $36.28 trillion. Reaching the debt ceiling means the government won’t be able to borrow any more money to cover its expenses. To avoid a default, Yellen says the Treasury will have to resort to “extraordinary measures.” These measures could include things like temporarily suspending investments in certain programs and using accounting tricks to keep the government operating. However, these are temporary fixes and not a long-term solution.
Yellen’s Concerns
Yellen expressed concern about the country’s fiscal situation in a recent interview. She noted that servicing the national debt alone cost nearly $1 trillion in the last fiscal year. The rising interest rates are making the debt even more expensive, significantly increasing the budget deficit. She emphasized the need to reduce the deficit, highlighting that even excluding interest payments, the deficit is still over 3% of GDP and needs to be lowered.
Call to Action
Yellen’s letter to House Speaker Mike Johnson is a direct plea for Congress to raise the debt ceiling and prevent a potential financial crisis. She stressed the importance of protecting the “full faith and credit of the United States.” Failure to act could have severe consequences for the US economy.
