WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said the government will reach the statutory borrowing limit on Tuesday and begin using “extraordinary measures” to avoid breaching the cap and triggering a potential disaster. which is default.

Yellen, in a letter Friday to congressional leaders just three days before the Biden administration hands over control of the U.S. government to President-elect Donald Trump and his team, said the Treasury start using the extraordinary measures on January 21.

“The period of time that the extraordinary measures may last is subject to many uncertainties, including challenges in predicting the payments and receipts of the US Government in the coming months,” Yellen said in the letter.

Yellen said the Treasury will suspend investments in the civil service retirement and disability fund that are not required to immediately pay benefits.

Yellen said in late December that the debt limit would likely be reached between Jan. 14 and 23 after Congress opted not to include an extension or permanent repeal of the limit in a last-minute budget deal near the year ends. Trump himself urged lawmakers to extend or repeal the debt ceiling and later blasted an early failure to do so in 2023 as “one of the dumbest political decisions made in years. “

Under that 2023 budget deal, Congress suspended the debt ceiling until January 1, 2025. The US Treasury will be able to pay its bills for a few more months, but Congress will have to address the issue at some point in next year.

Failure to act could prevent the Treasury from paying its debts. A US debt default would likely have dire economic consequences.

The debt limit is a limit set by Congress on how much money the US government can borrow. Because the government spends more money than it collects in tax revenue, lawmakers must periodically address the issue — a difficult political task, as many are reluctant to vote for more. debt.

The history of the debt ceiling dates back to 1917, when Congress gave the Treasury more flexibility to borrow to finance America’s entry into World War I but with limitations.

Lawmakers approved the first modern limit on the aggregate debt in 1939 at $45 billion, and have since approved 103 increases in spending in excess of tax revenue. Debt held by the public was 98% of US gross domestic product in October, compared to 32% in October 2001.