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Treasury Secretary Yellen warns of debt ceiling crisis as U.S. nears $36 trillion limit

By bellecarter // 2025-01-20

• Treasury Secretary Janet Yellen warned Congress that the federal government could hit its debt limit as early as Jan. 14, 2024, unless action is taken or "extraordinary measures" are implemented to avoid a potential default.
• The federal debt currently stands at roughly $36 trillion, and the debt ceiling, a concept intended to restrict government borrowing, has been repeatedly raised, most recently during Joe Biden's term.
• Debt ceiling crises in the past have led to significant market volatility and economic uncertainty, with the 2011 standoff resulting in a downgrade of the United States' credit rating by Standard & Poor’s.
• President Donald Trump has proposed the abolition of the debt ceiling, arguing it is "pointless," but his efforts to include a provision raising or eliminating the debt ceiling in a spending bill faced significant opposition from fiscal conservatives within his party.

In a letter to Congress, Treasury Secretary Janet Yellen warned that the federal government could hit its debt limit as early as Jan. 14, unless Congress takes action or her department implements "extraordinary measures" to avoid a potential default. Yellen's letter, addressed to House Speaker Mike Johnson (R-LA), outlines a narrow window of opportunity for Congress to prevent a crisis. "Treasury currently expects to reach the new limit between Jan. 14 and Jan. 23, at which time it will be necessary for Treasury to start taking extraordinary measures," Yellen wrote. The urgency of the situation is underscored by the fact that the federal debt stands at roughly $36 trillion. (Related: Unsustainable: Yellen resigns, leaving behind over $36 TRILLION in debt — the highest in U.S. history.) The debt ceiling, a concept introduced in 1917, is intended to restrict government borrowing and control federal spending. However, it has been repeatedly raised, with the most recent increases occurring during former President Joe Biden's term. The limit was suspended until Jan. 1, following the passage of the Fiscal Responsibility Act of 2023, but the deadline is now a source of anxiety for policymakers and economists alike. In the past, debt ceiling crises have led to significant market volatility and economic uncertainty. The last major standoff in 2011 resulted in a downgrade of the United States' credit rating by Standard & Poor’s, a decision that had lasting implications for the country's economic standing. A similar situation today could have far-reaching consequences, particularly given the current economic climate.

Trump has been calling for the abolition of debt ceiling

President Donald Trump has taken an unusual stance on the issue, breaking from his Republican colleagues. He has repeatedly called for the elimination of the debt ceiling, arguing that it is "pointless" and "doesn't mean anything, except psychologically." The 47th president told NBC News last month: "The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge." However, this shift in rhetoric may not be enough to prevent a crisis. Despite Trump's efforts to include a provision raising or eliminating the debt ceiling in an end-of-year spending bill, he faced significant opposition from fiscal conservatives within his party. The provision was ultimately defeated, with 170 Republicans voting against it. As the clock ticks down to the potential debt ceiling deadline, the onus is now on Congress to find a solution. Yellen's warning serves as a stark reminder of the gravity of the situation. The coming months will likely see intense negotiations between the new administration and Congress, with the fate of the nation's economy hanging in the balance. Scott Bessent, Trump's pick to replace Yellen, has signaled a willingness to work with Congress to repeal the debt ceiling if instructed by the president. Such a move would mark a significant shift in fiscal policy, potentially ending the cycle of brinkmanship that has characterized debt ceiling debates in recent years. While Trump's call to abolish the debt ceiling has gained some traction, the reality of the situation is that a compromise will likely be necessary to avert a potential financial crisis. The coming months will be critical in determining how the new administration and Congress navigate this issue, and whether they can find common ground to ensure the continued stability of the U.S. economy. Head over to DebtBomb.news for stories similar to this. Watch the video below where Health Ranger Mike Adams talks about the country's looming collapse due to economic and political instability. This video is from the Health Ranger Report channel on Brighteon.com.

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Sources include:

RT.com NBCNews.com Brighteon.com

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