Overview

• The U.S. hit its reinstated debt ceiling of $31.4 trillion on January 1, 2025, with current debt exceeding the limit by nearly $4 trillion.
• Treasury Secretary Janet Yellen has implemented 'extraordinary measures' to temporarily manage federal obligations, but these are expected to run out between mid-January and early February.
• Failure to raise the debt ceiling could lead to delayed Social Security payments, halted tax refunds, and a government default, which would disrupt global financial markets.
• Economists warn that recurring debt ceiling standoffs create unnecessary uncertainty, increase borrowing costs, and risk long-term damage to U.S. creditworthiness.
• While some argue the debt ceiling is a necessary check on government spending, others view it as a politically driven mechanism that rarely results in meaningful fiscal reform.