
In a stunning development, outgoing Treasury Secretary Janet Yellen announced that the United States will hit its debt ceiling on January 21, just one day after President-elect Donald Trump assumes office. The announcement leaves the incoming administration facing a massive fiscal challenge from day one.
Yellen notified House Speaker Mike Johnson (R-LA) and other congressional leaders in a formal letter that the Treasury will begin “extraordinary measures” to prevent the U.S. government from defaulting on its financial obligations. These steps include halting investments in key federal 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 stated, calling for immediate congressional 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 sparked outrage among critics, who accuse the Biden administration of deliberately leaving the Trump administration with an economic crisis. Social media erupted with accusations that the move was a political stunt.
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, now over $36 trillion, has ballooned due to years of unchecked government spending. Soaring inflation and higher interest rates have made the situation even more precarious, increasing the cost of borrowing.
Trump has previously advocated for abolishing the debt ceiling, arguing that it serves no useful purpose. His Treasury Secretary nominee, Scott Bessent, expressed support for working with Trump to eliminate the debt cap if confirmed.
Congressional Republicans are split on how to proceed. The Freedom Caucus has proposed raising the debt ceiling while pushing for aggressive spending cuts. Trump, however, is reportedly leaning toward a single, decisive solution.
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 financial crisis is the first major test for Trump’s second term, challenging the new administration to take swift and effective action.