Last week Treasury Secretary Yellen sent the Congressional leadership a letter advising them that the US will hit the statutory debt ceiling this Thursday, January 19th.  In the letter the Secretary informs Congress that, like her Democratic and Republican predecessors, she will start using the “extraordinary measures” approved by Congress to avoid defaulting. While no “drop dead” date was given, Yellen told Congress that the extraordinary measures should hold off any potential government default until at least June.  Here is a link to the letter.

The Secretary said that US Government cash flows are very difficult to predict and hence she will keep Congress informed as the Department is able to better gauge the eventual date when an increase in the debt ceiling will be needed.

The challenge in the months ahead is that passing a debt ceiling increase is the responsibility of the majority party, placing a substantial burden on Speaker McCarthy.  Over the past several years Congress has followed two different approaches to the debt ceiling: one is to raise it to a specific amount as was done in December of 2021 when the ceiling was increased by $2.5 trillion to $31.381 trillion.  On other occasions, Congress has suspended the ceiling for a specific...

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