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Treasury Secretary Janet Yellen implored Congress to "protect the full faith and credit of the United States" or face imposition of "extraordinary measures."
U.S. Treasury Secretary Janet Yellen warned Congress on Friday that—absent imminent action to raise or suspend the nation's debt limit—her agency would likely have to take "extraordinary measures" as soon as January 14 to avert hitting the debt ceiling.
"As you know, the debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments," Yellen wrote in a letter sent to congressional leaders. "In June 2023, the Fiscal Responsibility Act of 2023 was enacted, suspending the debt limit through January 1, 2025."
DEBT LIMIT: New letter this afternoon from Treasury Secretary Janet Yellen projects debt limit will be reached a bit later than the earlier projection of Jan. 1; new limit to be reached between Jan 14-23 at which point Treasury will have to take extraordinary measures
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— Jane Norman (@janenorman.bsky.social) December 27, 2024 at 1:53 PM
Yellen continued:
On January 2, 2025, the new debt limit will be established at the amount of outstanding debt subject to the statutory limit at the end of the previous day. However, on January 2, the outstanding debt subject to the limit is projected to decrease by approximately $54 billion, mostly due to a scheduled redemption of nonmarketable securities held by a federal trust fund associated with Medicare payments. As a result, the debt is currently projected to temporarily decrease, and accordingly, Treasury does not expect that it will be necessary to start taking extraordinary measures on January 2 to prevent the United States from defaulting on its obligations. 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.
"I respectfully urge Congress to act to protect the full faith and credit of the United States," Yellen added.
Recent past extraordinary measures—which are invoked by the U.S. Treasury Department to prevent a binding debt limit—have included the declaration of a debt issuance suspension period, suspension of new investments, and suspension of reinvestment of certain securities.
Yellen's admonition comes less than one month before Republican President-elect Donald Trump takes office. Both Trump and Yellen have called for the elimination of the debt ceiling. The end-of-year spending bill signed into law last week by U.S. President Joe Biden did not include Trump's demand to raise or suspend the debt ceiling.
According to USDebtClock.org, the nation is currently more than $36.2 trillion in debt—or more than $107,000 for each of the country's more 346.3 million people.
"For all his talk of looking out for working class Americans, President-elect Trump's choice of a billionaire hedge fund manager to lead the Treasury Department shows he just wants to keep a rigged system," said one critic.
With the stock market surging Monday morning after U.S. President-elect Donald Trump's nomination of hedge fund manager Scott Bessent to be treasury secretary, some Wall Street executives said they were celebrating a "reasonable" pick who would moderate some of Trump's most extreme proposals.
But economic justice advocates and experts said the jubilation was likely over expectations that Bessent will deliver "trillions in tax cuts to the ultra-wealthy."
Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Institute, toldCNN that the billionaire Key Square Group executive is a "pragmatic" choice who supports only "selective tariffs" and could dial back Trump's plan to introduce across-the-board tariffs of up to 20% on imported goods—a plan that economists say would raise prices for U.S. households.
But Bessent himself told radio host Larry Kudlow on Saturday that tariffs "can't be inflationary."
David Kass, executive director of the economic justice group Americans for Fair Taxation (ATF), said that during Bessent's confirmation process, the organization will work to ensure lawmakers get answers to questions about whether the Wall Street billionaire plans to use tariffs to fund another Trump plan Bessent has endorsed: the renewal of the 2017 tax cuts.
"As income inequality is soaring and Americans are being crushed by the rising costs of living, we have to ask why billionaire Scott Bessent supports renewing the Trump tax bill, which gives trillions in tax cuts to the ultra-wealthy and mega-corporations," Kass said. "Moreover, we also need to know how Mr. Bessent would fund this massive tax giveaway. Will he make working and middle-class Americans foot the bill by enacting wide-ranging cuts to vital government programs like Social Security and Medicare? Will he squeeze Main Street by raising prices on essential goods through tariffs?"
The government watchdog Accountable.US noted that Bessent has defended Trump's tariff plan, which analysts found would raise annual household costs by an average of $3,900, while backing the extension of Trump's tax plan, which overwhelmingly benefited the wealthy and corporations.
"For all his talk of looking out for working-class Americans, President-elect Trump's choice of a billionaire hedge fund manager to lead the Treasury Department shows he just wants to keep a rigged system that only works for big corporations and the very wealthy," said Accountable.US executive director Tony Carrk. "If confirmed, Scott Bessent's first order of business will be to push trillions of dollars in more tax giveaways to the very well-off and at the same time essentially enact a $3,900 tax increase for the typical American family."
"This is yet another disastrous cabinet nomination by Donald Trump, and a further indication of the administration's plans for massive giveaways to the superrich and slashing of regulatory safeguards that guarantee the well-being of the American people."
As the Dow Jones Industrial Average surged by 500 points on Monday, National Association of Manufacturers CEO Jay Timmons told CNN that Bessent is likely to try to rein in what he called President Joe Biden's "out-of-control government spending." Republican leaders have signaled that with the GOP set to control both chambers of Congress as well as the White House starting in January, the party is likely to try to make cuts to Medicare and Social Security—long derided by the right as too expensive and wasteful.
"Wall Street may be breathing a sigh of relief at Scott Bessent's nomination, but working people see no help coming their way," Sen. Elizabeth Warren (D-Mass.), who is set to be the highest-ranking Democrat on the Senate Banking Committee, said Monday. "Mr. Bessent's expertise is helping rich investors make more money, not cutting costs for families squeezed by corporate profiteering."
Earlier this year, Bessent told his clients at Key Square Group that a second Trump turn would mean an "economic lollapalooza" for them, with the Republican lowering taxes for his wealthy investors and bringing about an era of deregulation.
The Republican megadonor has proposed a "3-3-3" policy approach to Trump, which would include cutting the budget deficit by 3% by 2028, boosting GDP growth by 3%, and urging Big Oil to produce another 3 million barrels of crude oil per day.
Bessent has also expressed support for Trump's embrace of the cryptocurrency industry, which poured more than $110 million into federal election spending this year and spent an all-time high of $24.7 million on anti-regulatory lobbying in 2023.
Brad Garlinghouse, CEO of financial tech firm Ripple, said Friday that he expects Bessent to be "the most pro-innovation, pro-crypto treasury secretary we've ever seen." Critics have warned that the unregulated and highly speculative crypto industry has little to offer working people.
"America doesn't need a hedge fund executive to lead its economic policymaking, least of all one under the delusion that tax cuts for the rich, rollbacks of public regulatory protections, and an increase in oil drilling is somehow the way to strengthen the nation's economy," said Robert Weissman, co-president of consumer advocacy group Public Citizen. "This is yet another disastrous cabinet nomination by Donald Trump, and a further indication of the administration's plans for massive giveaways to the superrich and slashing of regulatory safeguards that guarantee the well-being of the American people."
Despite some proponents' claims that Bessent is a more mainstream pick than some other names that were floated for treasury secretary, Carrk said the nomination is from "the same old playbook, and it will have the same results of an economy that only works for a select few, not everyone."
"The science is clearer than ever: LNG exports and natural gas-sourced hydrogen pose grave risks to our planet and will undermine President Biden's own climate goals," said one campaigner.
More than 125 climate, environmental, and health scientists and researchers on Thursday implored the Biden administration to "follow legitimate science and reject the expansion of fossil fuel programs," pointing to a new study showing liquefied natural gas has a 33% greater greenhouse gas footprint than coal.
"As U.S. scientists and researchers we are closely following efforts by the U.S. Department of Energy and the U.S. Department of Treasury to develop greenhouse gas analyses of liquefied natural gas (LNG) and hydrogen, and implore you to use the best available science when conducting this analysis," the scientists wrote in a letter to Energy Secretary Jennifer Granholm and Treasury Secretary Janet Yellen.
"The stakes could not be higher," the letter asserts. "The choices that you make relating to modeling assumptions for the heat-trapping potential of natural gas will determine if the federal government will make decisions based on climate science or wishful thinking."
The scientists continued:
The main constituent in natural gas is methane, a powerful climate-disrupting pollutant that traps more than 80 times more heat in the atmosphere than carbon dioxide over 20 years, the relevant timeframe in which we must act. We agree with President [Joe] Biden's declaration to world leaders that this is the decisive decade. As the climate crisis becomes more urgent, we are rapidly approaching planetary thresholds that, once breached, cannot be reversed.
The fossil fuel industry wants you to distort the scientific evidence and asserts, falsely, that decisions to expand natural gas production and consumption are consistent with U.S. and global climate goals. They are advocating for flawed modeling assumptions that would hide the true climate impact of gas. It is imperative that the Departments of Energy and Treasury reject these efforts.
The letter's signers cite a study published this month by Cornell University climate scientist Robert Howarth which—when properly accounting for LNG's full life cycle, including extraction, liquefaction, transportation, and end-source combustion—found that the fracked gas has a 33% greater greenhouse emissions impact than coal.
"An abundance of scientific evidence now shows that natural gas is at least as damaging to the climate as coal and may be worse due to inevitable leaks and disproves the claim that natural gas can serve as a 'bridge fuel' while renewable energy sources ramp up," the scientists wrote.
Jim Walsh, policy director at Food & Water Watch, said in a statement that "the science is clearer than ever: LNG exports and natural gas-sourced hydrogen pose grave risks to our planet and will undermine President Biden's own climate goals."
"This administration must ignore industry propaganda, follow legitimate science, and reject the expansion of fossil fuel programs like LNG exports and gas-sourced hydrogen," Walsh added.
Noting that "over 20 years, methane is a far more powerful climate villain than ever previously appreciated," Science & Environmental Health Network senior scientist Sandra Steingraber said that "methane is the Houdini of greenhouse gasses, escaping into the atmosphere from all parts of the natural gas system at a pace that far exceeds earlier estimates."
"Taken together, these findings mean that the stakes for the modeling assumptions chosen for estimating the climate impacts of LNG and hydrogen fuels could not be higher," Steingraber stressed. "It's imperative that our Departments of Energy and Treasury base their climate modeling assumptions on the abundance of scientific evidence and not the distorted claims and wishful thinking of the fossil fuel industry."
Despite campaign pledges to center climate action—including by banning new fossil fuel drilling on public lands—Biden oversaw the approval of more new permits for drilling on public land during his first two years in office than former President Donald Trump, the 2024 Republican nominee, did in 2017 and 2018.
The Biden administration has also held fossil fuel lease sales in the Gulf of Mexico and has approved the highly controversial Willow project and Mountain Valley Pipeline. Biden also increased liquefied natural gas production and export before pausing LNG exports earlier this year.
Despite the pause—which activists are calling on the Biden administration to make permanent—the president has also overseen what climate defenders have called a "staggering" LNG expansion, including Venture Global's Calcasieu Pass 2 export terminal in Cameron Parish, Louisiana and more than a dozen other projects that, if all completed, would make U.S. exported LNG emissions higher than the European Union's combined greenhouse gas footprint.