Janet Yellen says Treasury Department will need to take 'extraordinary measures' to avoid debt ceiling next month

[BumRushDaShow]

Source: NBC News

Dec. 27, 2024, 7:52 PM EST


Treasury Secretary Janet Yellen warned congressional leaders Friday that the federal government will hit its debt limit as early as Jan. 14 unless Congress takes action or her department implements “extraordinary measures” to avoid default.

Yellen’s letter indicates that the looming debt ceiling fight involving Congress and the new administration is likely to take place in the early months of next year after President-elect Donald Trump failed to get a provision raising or eliminating the debt ceiling tacked on to an end-of-year spending bill.

“Treasury currently expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures,” Yellen wrote in her letter, addressed to House Speaker Mike Johnson, R-La.

“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen added.

The dates Yellen cited could shift down the line, pushing the deadline further into 2025. The federal government can often operate for months under the “extraordinary measures” or accounting maneuvers Yellen referenced in her letter.

Read more: https://www.nbcnews.com/politics/congress/janet-yellen-warns-extraordinary-measures-needed-avoid-default-january-rcna185613

[C_U_L8R]

1. Cut every inauguration expense

That will keep the lights on for a little bit.

[jimfields33]

2. We just turned down the debt ceiling increase last week!

It would have been perfect timing to know this information ahead of time.

[jvill]

3. Of course we knew this ahead of time...

Trump wanted the ceiling raised to avoid having to negotiate with Dems over the debt limit in 2025. No Dem should go along with that, and they didn’t.

Keep up, bud.

[jimfields33]

4. I understand.

But now she is saying we are in an emergency situation.

[BumRushDaShow]

6. It was known for well over a year

that the "debt ceiling" would (could) be hit as early as January 1, 2025 (which was around how long it was suspended to by law).

But then "the media" started the narrative - "well not until the summer" and ran with that through the fall for some reason.

I expect that was because they do have processes where there may be money set aside (but not yet obligated) that could be reworked, among other things, that lets the government continue until some "drop dead date".

[IbogaProject]

11. Uh they used that up w the last funding bill recently

I think tax receipts have already been slowing down this fall. The economy isn't as strong as claimed. The extra holiday spending was funded by credit cards and may have been from inflation not actual higher consumption. I think a shutdown right around Jan 19th or the 20th sounds perfect. Hem those fools into their own mud pit.

[BumRushDaShow]

12. Uh the government has LOTS of wiggle room

before any "panic" really sets in.

Every "fiscal cliff" gets the identical "wording" (to the media) on behalf of the Executive Branch, regarding where they are.

The last go-around, here is what they indicated would have needed to be done (before this current extension was signed off on) -

DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.

Description of the Extraordinary Measures

May 31, 2023

Secretaries of the Treasury in both Republican and Democratic administrations have
exercised their authority to take certain extraordinary measures in order to prevent the United States
from defaulting on its obligations as Congress deliberated on increasing the debt limit.

The extraordinary measures currently being considered are: (1) redeeming existing, and
suspending new, investments of the Civil Service Retirement and Disability Fund and the Postal
Service Retiree Health Benefits Fund; (2) suspending reinvestment of the Government Securities
Investment Fund; (3) suspending reinvestment of the Exchange Stabilization Fund; (4) suspending
sales of State and Local Government Series Treasury securities; and (5) entering into a debt swap
transaction with the Federal Financing Bank. These measures will continue to be evaluated on an
ongoing basis.

1. Civil Service Retirement and Disability Fund and Postal Service Retiree Health Benefits
Fund

Once the debt limit has been reached, Treasury has authority to take actions regarding
investments under the Civil Service Retirement and Disability Fund (CSRDF) and the Postal
Service Retiree Health Benefits Fund (PSRHBF).

The CSRDF provides defined benefits to retired and disabled Federal employees covered by
the Civil Service Retirement System. The fund is invested in special-issue Treasury securities,
which count against the debt limit.

The PSRHBF provides Postal Service retiree health benefit premium payments. The fund is
invested in special-issue Treasury securities, which count against the debt limit.

a. Declaring a “Debt Issuance Suspension Period”

Congress has given Treasury statutory authority to take certain actions in the event of a debt
limit impasse. Specifically, the statute authorizes the Secretary of the Treasury to determine that
Treasury will be unable to fully invest the CSRDF and the PSRHBF and that a “debt issuance
suspension period” exists. Once the Secretary has done so, Treasury can (1) suspend new
investments and (2) redeem certain existing investments in both the CSRDF and the PSRHBF.
Under the statute that governs the CSRDF and the PSRHBF, the term “debt issuance
suspension period” means a period of time that the Secretary determines that Treasury securities
cannot be issued without exceeding the debt limit. The determination of the length of the period
must be based on the facts as they exist at the time.

Declaring a debt issuance suspension period is a limited measure that relates only to the
CSRDF and PSRHBF; it has no impact on any other investments or any other portion of the debt.
Moreover, it only provides limited additional time. For each month of a declared debt issuance
suspension period, approximately $8 billion in headroom for the CSRDF and $300 million in
headroom for the PSRHBF is freed up through an early redemption of existing investments held by
these funds. Thus, for example, a five-month debt issuance suspension period would free up
approximately $41 billion in headroom at the beginning of the debt issuance suspension period.3
However, because these redemptions would have otherwise occurred over the course of the debt
issuance suspension period, as of the end of the debt issuance suspension period there is no net
increase in headroom created as a result of the early redemption.

After the debt limit impasse has ended, the statute provides that the CSRDF and the PSRHBF
are to be made whole.4 Therefore, employees and retirees would be unaffected by these actions
under the statute.

(snip)

More - https://home.treasury.gov/system/files/136/Description_Extraordinary_Measures-2023_01_19.pdf

Every couple years it's the same song and dance and set of procedures they go through before the next extension is requested.

[Kingofalldems]

9. So we should have done what Trump wanted?

[jimfields33]

10. I don't think she said that. But she is saying we should

take action immediately. She’s the expert!

[intrepidity]

5. Crappy writing

The article fails to either detail or link to what

“extraordinary measures” or accounting maneuvers Yellen referenced in her letter

Grr

[Frasier Balzov]

7. It takes some diplomacy to sound an alarm

without causing a panic.

I think we've all seen that imprecise keeping of options open before.

[JustAnotherGen]

8. Let it burn

It would act as an accelerant to the shit show.

[flamingdem]

13. Don't the republicans want the debt ceiling raised?

Trump wants to dump it altogether.

I could see him pressuring to get that to happen.

But he wants to spend excessively so not sure I get the worries here.