In a letter to key congressional officials, Janet Yellen said the debt ceiling, currently slightly above $36 trillion, “does not authorize new spending.”
The US Department of Finance will take “extraordinary measures” starting January 21 in order to continue to meet its debt maturities, announced Friday the outgoing Secretary of State of the Treasury, Janet Yellen.
In a letter to key congressional officials, Janet Yellen said the debt ceiling, currently slightly above $36 trillion, “does not authorize new spending.”
“Extraordinary measures” will therefore be taken starting January 21, the day after the inauguration of President-elect Donald Trump.
These measures concern the cessation of payments to several pension, health or disability funds for public employees – technical adjustments “which are not immediately necessary for the payment of benefits”.
Default risk
“Retirees and public sector employees will not be affected by these actions,” he is assured.
This type of measure makes it possible to freeze expenses and avoid falling behind on the payment of invoices, which would penalize state suppliers and more generally the economy.
They can only be temporary, until Congress raises or suspends the debt ceiling.
-If parliamentarians fail to reach an agreement, the United States could ultimately find itself in default.
Janet Yellen emphasizes that the length of time the extraordinary measures will last is “subject to a lot of uncertainty, particularly due to the difficulty in forecasting government spending and revenue in the months to come.”
Donald Trump wants to cut spending
Before handing over, the outgoing minister “respectfully calls on Congress to act quickly to preserve the full confidence” of creditors in the United States.
“The United States will not default on its debt if I am confirmed” as new Treasury Secretary, Scott Bessent, Donald Trump’s choice for this post, told senators on Thursday.
To rebalance public accounts, while continuing to reduce taxes, the president-elect promises to slash federal government spending and is counting on revenue from the additional customs duties he wants to put in place.
The increase, or suspension, of the debt ceiling is a recurring subject in the United States, with 78 changes since 1960 – 49 times under a Republican president and 29 times under a Democratic president, according to the Treasury Department website.
An official report published Friday anticipates that public debt will represent 118% of United States GDP in 2035, compared to 100% in 2025.
