Ray Dalio Warns US Debt Crisis Needs Bipartisan Tax Hike, Spending Cuts

Billionaire investor Ray Dalio has issued a strong warning about the United States' escalating debt crisis, emphasizing that the problem cannot be sustainably resolved without bipartisan cooperation on a mix of tax increases and spending cuts. Dalio highlighted that both Republicans and Democrats recognize the necessity of reducing the deficit, but political absolutism and fear of voter backlash prevent them from pursuing this balanced approach. He explained that a combination of roughly 4% tax revenue increases and 4% spending cuts could improve the supply-demand balance of U.S. debt, lowering interest rates and easing the budget deficit, ultimately benefiting the economy and markets. Dalio criticized political promises that contradict the needed deficit reduction, arguing that failure to act could lead to a fiscal crisis or a significant debt or dollar crisis. His warnings come amid President Donald Trump's proposed ‘One Big Beautiful Bill Act,’ which includes sweeping tax cuts expected to increase government debt by trillions over the next decade, raising concerns among analysts about fiscal sustainability. Dalio's call for urgent fiscal discipline and bipartisan solutions underscores the urgent need to address the debt problem before it worsens.