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Yellen sees U.S. hitting debt limit in early- or late-January

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Treasury Secretary Janet Yellen said Friday she expects the U.S. will officially run up against its borrowing limit in mid- to late-January, starting the clock on a major fiscal challenge facing President-elect Donald Trump in his first months in office.

“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 a letter to congressional leadership.

The debt limit has been suspended since June 2023 when Congress passed a bipartisan deal reached between then-House Speaker Kevin McCarthy and President Joe Biden. Under that law, the limit on Treasury’s ability to issue debt to cover the nation’s bills returns on Jan. 2.

But Yellen explained in her letter that Treasury has some extra leeway until sometime between Jan. 14 and Jan. 24, largely due to the timing of debt payments associated with a Medicare trust fund. At that point, Yellen said, Treasury will begin using special accounting procedures to avoid defaulting on the nation’s debt.

Yellen did not say in her letter how long those extraordinary measures and Treasury’s cash reserves would forestall a default. But in the past, it has been at least several months. Some outside estimates have projected that so-called X-date — when the government runs out of cash to cover its obligations — would not occur until sometime in the summer.

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

Yellen’s letter comes after Trump last week sought, unsuccessfully, to get Congress to raise the debt ceiling — or even scrap it entirely — under Biden’s watch before Trump takes office next month.

Trump urged House Republican leaders to add an extension of the debt ceiling to a stopgap government spending bill. But 38 GOP lawmakers, mostly hardline fiscal conservatives, joined with most Democrats to sink a spending bill that included the debt ceiling extension.

Yellen’s letter comes after Trump last week sought, unsuccessfully, to get Congress to raise the debt ceiling — or even scrap it entirely — under Biden’s watch before Trump takes office next month.

Trump urged House Republican leaders to add an extension of the debt ceiling to a stopgap government spending bill. But 38 GOP lawmakers, mostly hardline fiscal conservatives, joined with most Democrats to sink a spending bill that included the debt ceiling extension.

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Congress

Meet the new members: A Californian returns to Capitol Hill

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The new member: Rep.-elect Gil Cisneros (D-Calif.)

How they got here: Cisneros reclaimed a seat in the House after defeating Republican Daniel Martinez, 57 percent to 43 percent.

Inside the campaign: Cisneros switched districts upon the retirement of longtime 88-year-old Rep. Grace Napolitano (D-Calif.). He emerged first in a crowded all-party primary with 23.6 percent of the vote.

He previously won a swing California House seat in 2018, but lost reelection to Rep. Young Kim (R-Calif.).

The issues he’ll focus on: The former congressman said he’ll focus on “gun safety reform, educational opportunities, climate action, and women’s rights” upon his return to Congress.

He vowed to fight to reduce the cost of living, promote additional housing construction in California and expand access to mental health resources.

Background: Cisneros got his start in electoral politics after becoming a philanthropist following a 2010 Mega Millions jackpot win worth $266 million. He prevailed in the 2018 Democratic wave, besting Young Kim by a narrow margin. He lost a 2020 rematch to Kim, in which she won the House seat she still holds to this day. 

President Joe Biden then tapped Cisneros to be undersecretary of Defense for personnel and readiness, a post he held from 2021 until 2023, when he stepped aside to mount another bid for Congress.

Campaign ad that caught our eye: Cisneros highlighted his lottery win in an ad as motivation to help children attend college — and why he’s not accepting special interest money in his campaign.

Fun fact: Cisneros and his wife put $1 million of their lottery winnings toward helping George Washington University students.

We’re spotlighting new members during the transition. Want more? Meet Sen.-elect Jim Justice (R-W.Va.).

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Congress

Roy hails Musk, Ramaswamy influence on spending as Hill GOP looks toward cuts

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DOGE co-chairs Elon Musk and Vivek Ramaswamy will have significant influence in how Congress slashes spending, Rep. Chip Roy said in an interview on CNBC’s Squawk Box on Friday.

“When the DOGE guys came in, Elon and Vivek, I pointed to my Republican colleagues and I said, ‘You know what the problem is, right here in this room,’” Roy said. “We have Republicans and Democrats who never met a program they didn’t want to promote for some sort of political gain.”

Roy, the Freedom Caucus policy chair, added that Musk and Ramaswamy were working to identify spending waste, and the two businessmen could use their platforms to shine a light on the issue. Roy also floated potential examples of spending cuts, including the restricting the use of food stamps and repealing the Inflation Reduction Act.

The Texas Republican, a member of the important Rules Committee, has vowed to oppose measures that would increase the debt limit without significant spending cuts. He was a staunch opponent of President-elect Donald Trump’s effort to increase or eliminate the debt ceiling before he took office, which earned him the threat of a primary challenge from Trump.

When asked whether he had spoken to Trump since his comments, Roy declined to discuss private conversations but said he had “certainly been in contact with Mar-a-Lago broadly and with Republican leadership.”

“Politics is a rough and tumble business,” he said. “President Trump knows exactly what he wants. He wants the debt ceiling pushed aside.”

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What we’re watching 👀

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Here’s what we’re watching in transition world today:

🗓️ What we’re watching

  • Donald Trump is heading into 2025 with imperialism on the brain, but Republicans are mostly writing the president-elect’s overtures off as saber rattling. It’s an approach that sometimes helped Trump get what he wanted out of allies and adversaries during his first term, Myah Ward reports.
  • A Christmas Day social media brawl between Trump’s backers in Silicon Valley and the MAGA base highlighted the looming battle facing the incoming White House and Congress over high-skilled immigration. But the online blowup suggests immigration hard-liners won’t surrender easily to Trump’s new tech friends, Brendan Bordelon reports.
  • House Freedom Caucus Chair Andy Harris is raising doubts about whether Speaker Mike Johnson can pass Trump’s agenda. “We do need to consider whether — if we’re going to advance Mr. Trump’s agenda — whether the  current leadership is what we need,” Harris told Fox Business

👀 What’s Trump up to?

🚨What’s up with the nominees?

  • William Webster, the only person to lead both the FBI and CIA, wrote in a letter to senators that neither Kash Patel nor Tulsi Gabbard meet the demands of top intelligence jobs. He urged senators to “weigh the critical importance of nonpartisan leadership and experience.”
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