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Janet Yellen has told Congress that her department will pause retirement payments in a bid to avoid default
US Treasury Secretary Janet Yellen has said her department will take “extraordinary measures” to prevent the US from hitting the national debt limit on Tuesday, one day after President-elect Donald Trump takes office.
In a letter to Congress on Friday, Yellen explained that the US will hit its roughly $36 trillion debt limit between January 14 and January 23, potentially leading to a default.
To avoid this possibility, Yellen said the Treasury Department will use a number of accounting tricks, including pausing payments into civil service retirement accounts until Congress and the president agree to raise the debt ceiling again. Yellen did not say for how long her measures will forestall a default.
The US debt ceiling was raised three times during President Joe Biden’s term in the White House. Last month, Trump pressed House Republicans to include another raise in a stopgap spending bill, but the proposal was ultimately defeated by dozens of fiscal conservatives in the GOP.
Trump has repeatedly said that the debt ceiling should be abolished altogether to avoid such near-yearly showdowns, arguing that the limit – which is intended to restrict government borrowing – is pointless when it is repeatedly raised.
”It doesn’t mean anything, except psychologically,” he told NBC News last month. “The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge.”
Scott Bessent, Trump’s pick to replace Yellen, has said he would work with Congress to repeal the debt ceiling if instructed by Trump.
