The founder of Bridgewater Associates, Ray Dalio, has long been vocal about his concerns regarding America’s fiscal trajectory. With a staggering $37.5 trillion national debt and projected interest payments amounting to $1.13 trillion for the fiscal year 2025, Dalio emphasizes that the U.S. is on a perilous path. Speaking at the Future China Global Forum in Singapore this week, Dalio expressed skepticism about the country's ability to reduce its spending anytime soon.
Economists are increasingly focusing on the debt-to-GDP ratio rather than the absolute amount of national debt. A country that borrows at a rate that exceeds its economic growth can raise red flags for investors regarding the security of their debt. If this trend continues, investors may either shy away from purchasing the debt or demand higher interest rates to compensate for perceived risks. In such scenarios, a nation’s central bank might implement quantitative easing, effectively printing more money to lessen the real burden of debt.
Governments facing significant debt have two primary options to rebalance their debt-to-GDP ratio: either cut spending or stimulate economic growth. However, Dalio, now 76, believes that cutting spending is not a viable option for the U.S. government. He stated during the panel discussion that the government “cannot cut back on its spending for various reasons,” as reported by Bloomberg.
It is crucial to note that America’s national debt burden is not the result of a singular political party; it has been compounded by administrations from both sides of the aisle. Specifically, former President Trump’s One Big Beautiful Bill Act has garnered attention, even among his supporters. The Congressional Budget Office (CBO) estimates that this act could add approximately $3.4 trillion to the national debt, although it is expected that tariffs will offset about $3.3 trillion of that figure between 2025 and 2035.
CBO forecasts for 2025 indicate that the U.S. will spend around $7 trillion this year while only generating $5 trillion in revenues. This growing gap poses a significant challenge; projections suggest spending could escalate to $10.7 trillion by 2035, with revenues only reaching $8.03 trillion. Dalio pointed out that the global market currently lacks adequate demand for U.S. debt, leading to a supply-demand imbalance.
Despite concerns regarding the Trump administration’s fiscal policies, the White House has started to acknowledge the national debt issue and is exploring revenue-generating strategies to ameliorate it. Tariffs have been proposed as one solution, alongside Trump’s controversial “Gold Cards” visa initiative. This policy would charge wealthy immigrants $5 million each for green card benefits and a pathway to citizenship. Trump suggested selling millions of these cards, projecting that selling 10 million could potentially generate $50 trillion, significantly alleviating the national debt.
While the feasibility of Trump's Gold Card scheme raises questions—given that most millionaires already reside in the U.S.—economists express cautious optimism about the administration's intent to enhance government revenue. Professor Joao Gomes from Wharton described Trump’s revenue methods as “peculiar,” yet acknowledged their potential to reshape the debt landscape. Furthermore, Dalio noted a shift towards more sincere fiscal planning within the White House, highlighting discussions with Secretary Bessent and other administration officials as indicative of a greater awareness of these pressing economic challenges.
As America navigates its complex fiscal landscape, the dialogue surrounding its national debt, spending habits, and potential policy solutions will remain critical. With voices like Ray Dalio's underscoring the urgency of these issues, it is imperative for policymakers to take proactive measures to ensure long-term fiscal sustainability.
