US begins 'extraordinary measures'
US Treasury Secretary Janet Yellen announced that extraordinary measures to prevent reaching the debt limit will begin to be implemented as of January 21.
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Yellen sent a new letter to US House Speaker Mike Johnson regarding the debt limit.
Providing information on the steps the department is taking regarding the debt limit, Yellen emphasized that the Treasury will begin implementing extraordinary measures on January 21.
Yellen stated that within this scope, full investments cannot be made into the Civil Service Retirement and Disability Fund and that a "debt issuance suspension period" will begin, lasting until March 14, adding that investments in the Postal Service Retiree Health Benefits Fund will similarly be suspended.
Noting that investments made into these funds will be restored once the debt limit is increased or suspended, Yellen explained that federal retirees and employees will not be affected by this situation.
Pointing out that it is highly uncertain how long the extraordinary measures might last, Yellen stated, "The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and administrations of both parties have made in the past. I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."
US Treasury Secretary Yellen had also reported in a letter sent last month that the debt limit was projected to be reached between January 14 and 23.
DEBT LIMIT
In the US, the debt limit refers to the "total amount of money that the US government is authorized to borrow to meet its existing legal obligations."
The US Treasury has the authority to borrow until it reaches the limit set by Congress through legislation.
If the debt limit is reached, the federal government cannot increase the amount of debt and can only spend the cash it has on hand and incoming revenues. To increase the limit, permission must be obtained by passing a law through Congress.
The US federal government last reached its $31.4 trillion debt limit in early 2023. The debt limit was suspended until January 1, 2025, in June 2023, following months of negotiations in the US Congress.
The debt limit went back into effect as of January 1 with the expiration of the period determined in that regulation.
The US currently has a debt level of $36.1 trillion.