Today, Secretary of the Treasury Janet L. Yellen sent a letter to Congressional leadership about the debt limit. The letter outlines upcoming events and actions related to the statutory debt limit.
The letter was addressed to Speaker Mike Johnson of the U.S. House of Representatives. Yellen explained, “the debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.” She noted that in June 2023, the Fiscal Responsibility Act suspended the debt limit through January 1, 2025.
On January 2, 2025, a new debt limit will be set based on outstanding debt at the end of January 1. Yellen stated that on this date “the outstanding debt subject to the limit is projected to decrease by approximately $54 billion,” mainly due to a scheduled redemption of nonmarketable securities held by a federal trust fund linked with Medicare payments. Consequently, she indicated that it would not be necessary for Treasury to take extraordinary measures immediately after January 2 but expects these measures might be needed between January 14 and January 23.
Yellen concluded her letter with an appeal: “I respectfully urge Congress to act to protect the full faith and credit of the United States.”
Identical letters were sent to several key figures in Congress: House Democratic Leader Hakeem Jeffries; Senate Majority Leader Charles E. Schumer; Senate Republican Leader Mitch McConnell; as well as others involved in financial committees.
