Janet Yellen has announced that the Treasury Department will need to implement "extraordinary measures" to prevent reaching the debt ceiling next month.

The Treasury Secretary's notification to Congress is the most definitive indication that the struggle to prevent default will likely occur in the initial months of the new Trump administration.

Treasury Secretary Janet Yellen urged Congress to take action regarding the debt ceiling. Graeme Sloan / Sipa USA / Reuters

Treasury Secretary Janet Yellen warned congressional leaders on Friday that the federal government will reach its debt limit as early as January 14 unless Congress acts or her department employs “extraordinary measures” to prevent a default.

Yellen’s letter suggests that the impending debt ceiling battle between Congress and the new administration is likely to unfold in the early months of the upcoming year. This comes after President-elect Donald Trump was unable to attach a provision to raise or eliminate the debt ceiling to an end-of-year spending bill.

“Treasury currently expects to reach the new limit between January 14 and January 23, at which point 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,” she added.

The dates mentioned by Yellen may change, potentially extending the deadline further into 2025. The federal government can often continue operating for months under the “extraordinary measures” or accounting tactics referenced in her letter.

The debt ceiling, which is the total amount the government can borrow to meet its financial obligations, is suspended until January 1, following the passage of the Fiscal Responsibility Act of 2023, signed into law by President Joe Biden.

Once the U.S. reaches the debt ceiling, the government is unable to borrow more money, leading to a technical default and leaving it unable to pay its bills unless the president and Congress negotiate to lift the borrowing limit.

During the recent debates in Congress, one of the issues discussed was the potential increase or elimination of the debt ceiling, particularly as the government faced a shutdown that was ultimately averted last week.

Democrats have long advocated for raising or eliminating the debt ceiling, a stance traditionally opposed by Republicans, who argue that the growing national debt necessitates cautious federal spending.

However, this month, Trump appeared to align with the Democrats' position for the first time, stating in an NBC News interview that he believes the debt ceiling should be abolished.

“The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge,” Trump remarked.

He unsuccessfully pushed Congress to include a provision to extend or eliminate the debt ceiling in its end-of-year funding bill, even threatening electoral primary challenges against Republicans who supported funding the government without addressing the debt limit.

In the end, 170 Republicans broke ranks with him, adding the debt ceiling debate to the growing to-do list for the incoming administration.