US Treasury to take ‘extraordinary measures’ to avoid debt default
Donald Trump’s first day as President will be spent grappling the US’s A$58 trillion debt ceiling with the Treasury Department forced to impose ‘extraordinary measures’ to avoid defaulting.
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The US Treasury Department will start taking “extraordinary measures” next week to avoid risking a default on government debt, Secretary Janet Yellen said Friday, days before President-elect Donald Trump takes office.
With the government reaching its borrowing limit, the department would start making the moves on Tuesday, the day after the inauguration, Ms Yellen said in a letter to congressional leaders.
That will mean Trump’s administration has to grapple immediately with the issue of the debt ceiling — the legal limit on government borrowing to pay bills already incurred.
In the past, Congress has routinely voted to lift this bar, but that tool has become a contentious issue, with Republican budget hawks calling for drastic spending reductions instead.
“Extraordinary measures” are a way for the Treasury to ensure that the US government can keep paying its bills and avoid a hugely destabilising debt default.
On Friday, Ms Yellen said: “The period of time that extraordinary measures may last is subject to considerable uncertainty.”
She noted there are challenges to forecasting the government’s payments and revenue months into the future.
“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” Ms Yellen wrote.
For now, she said the Treasury would hold off investments of the Civil Service Retirement and Disability Fund not immediately required to pay beneficiaries.
It would redeem a part of investments held by the fund, and also suspend added investments of amounts credited to the Postal Service Retiree Health Benefits Fund.
The funds will be made whole once the debt limit is raised or suspended.
The limit was reinstated on January 2 and set at $36.1 trillion, matching the total debt outstanding on the previous day.
During December budget negotiations in Congress, Trump insisted the debt ceiling be raised or even eliminated altogether, although he was unsuccessful at the time.
On Thursday, Trump’s Treasury secretary nominee Scott Bessent told politicians at his confirmation hearing that he would work with Trump to remove the limit if the incoming president wanted to do so.
He also vowed that the United States would not default on its debt if he became Treasury chief.
Earlier this month, Fitch Ratings said the United States faces “significant fiscal policy challenges in 2025.” It pointed to the debt limit, appropriations and “tax cuts in the context of already large deficits and an increasing debt burden.”
“We believe it is unlikely that these will be resolved expeditiously because of longstanding weaknesses in the federal government’s budgetary process and a narrow Republican House majority,” Fitch added.
TRUMP REACHES OUT TO CHINA
Donald Trump has extended the hand of friendship to Chinese President Xi Jinping revealing the pair shared an amicable phone call.
Mr Trump took to his social media platform Truth Social to gush over Xi who he also took the unusual step of inviting to his inauguration.
“I just spoke to Chairman Xi Jinping of China. The call was a very good one for both China and the U. S. A,” Mr Trump wrote.
“It is my expectation that we will solve many problems together, and starting immediately.
“We discussed balancing Trade, fentanyl, TikTok, and many other subjects. President Xi and I will do everything possible to make the World more peaceful and safe!”
The friendly exchange comes after Mr Trump declared during his campaign he would impose 60 per cent tariffs on China.
Xi’s ministry also made a public statement on Friday regarding their relationship with America.
“We stand ready to work with the new US government to enhance dialogue and communication, properly manage differences, expand mutually beneficial co-operation, jointly pursue a stable, healthy and sustainable China-US relations and find the right way for the two countries to get along with each other,” the ministry’s spokesman said.
The statement came as Xi sent his regrets for the inauguration, announcing Vice President Han Zheng will go in his stead.
BIDEN BREAKS RECORD COMMUTING 2,500 DRUG SENTENCES
President Joe Biden has commuted the sentences of nearly 2,500 people convicted of nonviolent drug offences in what the White House called the largest single-day act of clemency in US history.
Those whose sentences were commuted were serving “disproportionately long sentences” compared to what they would receive today, Biden said in a statement.
He called the move “an important step toward righting historic wrongs, correcting sentencing disparities, and providing deserving individuals the opportunity to return to their families.” “With this action, I have now issued more individual pardons and commutations than any president in US history,” Biden said, adding that he may issue further commutations or pardons before he hands over power to President-elect Donald Trump on Monday.
Biden commuted the sentences of nearly 1,500 people and pardoned 39 others last month.
Among those pardoned in December was Biden’s son Hunter, who was facing a possible prison sentence after being convicted of gun and tax crimes.
Biden has meanwhile reportedly been debating whether to issue blanket pardons for some allies and former officials amid fears they could be targeted for what Trump has previously called “retribution.” In December, Biden also commuted the death sentences of 37 of the 40 inmates on federal death row.
TRUMP CHANNELS MUG SHOT FOR INAUGURATION SNAP
Donald Trump unveiled his official photo as the 47th US president — an image that bears a striking resemblance to his viral 2023 mug shot.
In the new photo, the soon-to-be commander-in-chief is leaning slightly forward and looking defiantly at the camera, an eyebrow furrowed and lips sealed — a pose which drew comparisons with the picture taken of him in an Atlanta prison as he was facing charges of trying to overturn the 2020 election.
Unlike the mug shot, where Trump is wearing his trademark red tie, this time around the tie is blue, and there is an American flag pin on the lapel of his navy blue jacket.
A year and a half ago, after being released from jail on a $200,000 bond, Trump posted his mug shot on X with the caption “NEVER SURRENDER!” The post marked the Republican billionaire’s return to the social media platform formerly known as Twitter, where his membership was suspended following the violent assault on the Capitol on January 6, 2021, by his supporters.
He was reinstated on the platform shortly after Elon Musk, world’s richest man and now Trump’s political ally, acquired the company.
Trump, who called the election interference case a “witch hunt,” used the mug shot to raise funds for his election campaign.
T-shirts, mugs, stickers and beverage coolers bearing the image — arguably now the most famous photo of a US president in the country’s history — brought in millions of dollars.
Trump returns to the White House on Monday stronger than ever, despite his status as the first felon to be elected US president after being convicted in a separate case of covering up hush money payments to a porn star.
The new portrait comes after the President-elect tapped three of his celebrity supporters – Mel Gibson, Jon Voight and Sylvester Stallone – to make Hollywood “stronger than ever before” as “Special Ambassadors”.
He revealed the news on Truth Social by saying: “It is my honour to announce Jon Voight, Mel Gibson, and Sylvester Stallone, to be Special Ambassadors to a great but very troubled place, Hollywood, California.
“They will serve as Special Envoys to me for the purpose of bringing Hollywood, which has lost much business over the last four years to Foreign Countries, BACK — BIGGER, BETTER, AND STRONGER THAN EVER BEFORE! These three very talented people will be my eyes and ears, and I will get done what they suggest. It will again be, like The United States of America itself, The Golden Age of Hollywood!”
Trump’s announcement comes as the LA wildfires have destroyed a significant part of southern California and disrupt the film and television industry.
TRUMP THREATENS TO BLACKLIST FORMER STAFF, CRITICS
Former US National Security Adviser John Bolton has responded to Donald Trump’s Truth Social post suggesting he will blacklist people who previously worked for “dumb as a rock” Mr Bolton, and others who have criticised the president-elect.
Mr Trump posted overnight: “In order to save time, money, and effort, it would be helpful if you would not send, or recommend to us, people who worked with, or are endorsed by, Americans for No Prosperity (headed by Charles Koch), “Dumb as a Rock” John Bolton, “Birdbrain” Nikki Haley, Mike Pence, disloyal Warmongers Dick Cheney, and his Psycho daughter, Liz, Mitt Romney, Paul Ryan, General(?) Mark Milley, James Mattis, Mark Yesper, or any of the other people suffering from Trump Derangement Syndrome, more commonly known as TDS. Thank you for your attention to this matter!”
“It’s very typical of Trump to open his mouth without knowing what he’s talking about,” Mr Bolton said on CNN This Morning.
“And I bear no ill-will to the people who once worked for me who have already been announced for jobs in the Trump administration.”
“I’m not going to name them and get them into trouble. … I think that list he has put out there is pretty good company to be in.”
But Mr Bolton said that the post in which Mr Trump denigrates previous associates shows that he hasn’t “changed at all” from his first term ahead of his second inauguration as President of the United States.
In the first part of his post, Mr Trump bragged: “As of today, the incoming Trump Administration has hired over 1,000 people for The United States Government. They are outstanding in every way, and you will see the fruits of their labour over the coming years. We will MAKE AMERICA GREAT AGAIN, and it will happen very quickly!”
‘MAKE AMERICA SAFE AGAIN’: ASPIRING US ATTORNEY-GENERAL
The Senate Judiciary Committee will hear testimony from a panel of Pam Bondi’s supporters on Thursday.
Ms Bondi, Trump’s lawyer general pick, previously answered questions from senators on whether
she believed the 2020 election was stolen from fellow Republican Donald Trump.
Ms Bondi was questioned by Senator Dick Durbin about her thoughts on the 2020 results which Mr Trump has long claimed were fraudulent.
“I accept, of course, that Joe Biden is President of the United States,” Ms Bondi said.
However Ms Bondi alluded to potential discrepancies which she saw on election day.
“I was on the ground in Pennsylvania, and I saw many things there. But do I accept the results? Of course,” she said.
She also said there will “never be an enemies list” at the Department of Justice if she is confirmed, and she will “Make America safe again”.
Her performance on the stand was praised by incoming Vice President JD Vance who tweeted: “Pam Bondi is crushing it.”
PETE HEGSETH SAYS HE ‘RESPECTS’ SERVICEWOMEN
Confirmation hearings for Donald Trump’s cabinet nominees have kicked off with a combative session for controversial Pentagon pick Pete Hegseth, a former Fox News host dogged by allegations of sexual misconduct and who lacks experience leading large organisations.
US Senate Republicans are keen for Mr Trump’s national security nominees to be confirmed quickly and Democrats may agree to fast track some.
But they are also determined to throw up roadblocks in front of candidates they see as unfit.
Mr Hegseth, a former Army National Guard officer, was grilled by Democratic members of the Senate Armed Services Committee over his opposition to efforts to promote diversity in the military and to women serving in combat, but he was largely defended by Republicans.
Democratic Senator Kirsten Gillibrand slammed Mr Hegseth’s past comments as “so hurtful to the men and women who are currently serving in the US military, harmful to morale, harmful to good order and discipline.”
Mr Hegseth stuck to his opposition to diversity, equity and inclusion policies, saying they are “dividing troops inside formations, causing commanders to walk on eggshells, not putting meritocracy first.”
But he sought to soften past remarks on women serving in combat – something he stated as recently as November 2024 that he opposed.
“I respect every single female service member that has put on the uniform past and present. My critiques … recently and in the past, and from personal experience, have been instances where I’ve seen standards lowered,” Mr Hegseth told politicians.
“Women will have access to ground combat roles … given the standards remain high,” the 44-year-old said.
He has also come under fire for concerns about his past personal conduct, as well as his ability to lead the Pentagon – a massive bureaucracy that employs more than three million people.
Senator Jack Reed, the committee’s ranking Democrat, put it bluntly: “Mr Hegseth, I do not believe that you are qualified to meet the overwhelming demands of this job.” “We must acknowledge the concerning public reports against you. A variety of sources – including your own writings – implicate you with disregarding the laws of war, financial mismanagement, racist and sexist remarks about men and women in uniform, alcohol abuse, sexual assault, sexual harassment, and other troubling issues,” Mr Reed said.
Asked by Republican Senator Roger Wicker, the committee chair, about allegations Mr Hegseth has faced, the nominee claimed there was a “co-ordinated smear campaign” against him.
“I’m not a perfect person, but redemption is real,” Mr Hegseth said, later asserting he was “falsely accused” of sexual assault.
He can only afford three Republican rejections and still be confirmed, should every Democrat and independent vote against him.
But he has maintained Mr Trump’s support while the excoriating headlines have multiplied, and Senate Republicans appear open to hearing him out.
Mr Trump posted to Truth Social on Tuesday: “Pete Hegseth will make a GREAT Secretary of Defense. He has my Complete and Total support. Good luck today, Pete!”
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