CNN
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The country will reach its debt limit of about $36 trillion on Tuesday, when the Treasury Department begins taking extraordinary measures to allow the government to pay its bills, outgoing Treasury Secretary Janet Yellen said in a statement Friday. letter to congressional leaders. The notice comes just three days before President-elect Donald Trump takes office.
Reaching that cap increases pressure on congressional Republicans, but lawmakers have some time before they need to act to avoid a first-ever default, which would likely cause global economic upheaval. The extraordinary measures, which are mostly behind-the-scenes accounting maneuvers, will continue until March 14, Yellen wrote.
Although Republicans control Capitol Hill, they remain divided on how to tackle the debt ceiling. They have several major agenda items they want to pass through Congress along party lines, including border security, energy and tax cuts, possibly in one or two packages. Additionally, lawmakers must still pass a government funding bill for fiscal year 2025, which began Oct. 1. (A temporary spending measure expires March 14.)
A bill to raise or suspend the debt ceiling could be included in one of those packages, although the ceiling issue has been a bipartisan effort in recent years.
House Speaker Mike Johnson is already facing resistance from some of his conservative MPs on the budget, who want to reduce the debt, not increase it. His razor-thin majority will make it even harder for him to reach a compromise — and he may need Democratic support to push an increase through to the limit.
This issue has already exposed fissures within the party. In December, Trump demanded that lawmakers address the limit as part of a temporary spending bill. However, the Republican-led plan, which called for suspending the cap until January 2027, failed in the face of opposition that included a significant number of Republicans.
In December, Republican leaders in the House floated the idea of raising the debt ceiling by $1.5 trillion as part of a first reconciliation plan in 2025. The legislation would also include $2.5 trillion reductions in mandatory net spending, aimed at satisfying conservative members. But that would give the caucus only a limited amount of time before finding itself facing the ceiling again, experts said.
The debt ceiling had been suspended until January 2 as part of the bipartisan Fiscal Responsibility Act, which Congress approved in June 2023 after months of contentious debate between the Republican-led House and Democrats. who controlled the Senate and the White House. The cap at the time was $31.4 trillion.
In a technical quirk, the United States did not actually reach the limit on January 2 because the debt level was expected to fall that day due to scheduled redemptions of certain securities, Yellen told Congress in late December. At the time, she predicted the cap would be reached between January 14 and 23.
