United States Treasury Secretary Janet Yellen recently warned that the US debt ceiling could be reached as early as mid-January 2025. According to her statements, the Treasury expects to reach this new limit between the 14th and on January 23, when extraordinary measures will have to be taken to avoid a payment default.
United States: Debt ceiling could reach mid-January
The government debt ceiling is a legal limit on the total amount the U.S. government is allowed to borrow to finance its existing obligations. In the United States, this limit has been suspended until January 1, 2025, but a new limit will be set from January 2, corresponding to the amount of debt issued by the Treasury Department. If this limit is reached, the Treasury will have to resort to extraordinary measures to continue financing government activities without defaulting on its payment obligations.
Extraordinary measures mentioned by Janet Yellen in her letter to Congressinclude accounting adjustments and deferrals of certain expenses to free up funds and avoid immediate default. These measures save time, but they are not a long-term solution. If Congress fails to raise or suspend the debt ceiling again, the United States risks defaulting on its debt, which would have serious consequences for the economy.
Political tensions
Raising the debt ceiling has been a point of political contention for years in the United States. Conservatives, in particular, are often opposed to the growing national debt, which currently exceeds $36 trillion. Janet Yellen urged Congress to act quickly to protect confidence in the nation's credit and avoid a financial crisis.
In short, the current situation highlights the economic and political challenges facing the United States. Congress will need to make crucial decisions in the coming weeks to avoid a debt crisis that could have serious repercussions. Could bitcoin be the long-awaited solution?
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
