Treasury secretary warns another crisis is coming unless 'extraordinary measures' taken

Outgoing Treasury Secretary Janet Yellen issued a dire warning that "extraordinary measures" will need to be taken to avoid a default on U.S. debt if Congress does not act to raise the debt ceiling soon, The New York Times reported Friday.

Yellen's warning, notes the report, comes "at a fractious political moment. Republicans are set to take control of Washington next month ... The debt limit was suspended in June 2023 after a contentious negotiation over federal spending, work requirements for receiving government benefits and funding for the Internal Revenue Service. That suspension is scheduled to expire on Jan. 2, forcing Treasury to begin using so-called extraordinary measures to allow the federal government to keep paying its bills."

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Trump, who is hoping to push through an extension of the income tax provisions of his sweeping tax cut legislation from 2017, has called on Congress to abolish the debt ceiling altogether, complaining that the new deadline is a "nasty trap" set by Democrats.

Such a move could benefit both parties in the long run — but for the time being, Democrats appear adamantly opposed to this, at least as long as it is perceived as funding Trump's policy agenda. In reality, the debt ceiling is a limit on servicing debt that has already been incurred by past spending, not new spending.

Another issue for Trump is that several far-right House Republicans are adamantly opposed, on principle, to any increase in the debt ceiling, one of the most prominent in this group being Rep. Chip Roy (R-TX).

Trump has responded to Roy's obstinacy with threats to back a primary challenge against him.