Overview

• He cautions that the federal deficit’s current 6.2% of GDP trajectory puts the nation at risk of a severe fiscal shock without cuts to 3% of GDP.
• Dalio’s proposal calls for a combined 4% change in spending and revenues to reduce the deficit and bring down borrowing costs.
• With the national debt topping $36 trillion, interest payments are rising rapidly and threatening to crowd out funding for defense, Medicare and Social Security.
• The Congressional Budget Office projects that the recently enacted One Big Beautiful Bill Act will add $3.4 trillion to deficits over the next decade.
• He points to 1990s bipartisan fiscal reforms as evidence of what’s possible but says deep political polarization makes similar cooperation unlikely today.