Ray Dalio warns that politicians can’t solve the ‘debt bomb problem’ without serious voter blowback

Ray Dalio, the founder and former CEO of hedge fund Bridgewater Associates, said on Monday that Republicans and Democrats don’t have the political will to reduce the country’s national debt.

“There is no way that the deficit/debt bomb problem can be sustainably dealt with unless there is a mix of tax revenue increases and spending decreases that are determined in a bipartisan way,” Dalio wrote in an X post on June 30.

Dalio said in his post that both Republicans and Democrats know they have to cut the deficit by raising taxes and cutting spending. This “would lead to a supply/demand balance improvement for US debt which in turn would lower interest rates,” he added.

Dalio said lower interest rates would “reduce the budget deficit” and “help the markets and the economy.”

“But because politics have become so absolutist, they feel they can’t go down this obviously best path because both their constituents and their parties will throw them out of office if they explored this more balanced approach,” Dalio wrote on X.

“To me, that’s a tragedy,” he added.

A representative for Dalio did not respond to a request for comment from Business Insider.

This isn’t the first time Dalio has warned about the ramifications of leaving debt levels unattended. In February, Dalio told attendees at the World Governments Summit in Dubai that the US could suffer the financial equivalent of a “heart attack” if debt continued to soar.

Then, in March, Dalio said he had met House Budget Chair Jodey Arrington and other House Republicans to discuss the national debt. Dalio said after the meeting that there was a “pretty broad recognition” among attendees that the deficit needed to be reduced to around 3% of US GDP.

The federal government spent $6.75 trillion in the 2024 fiscal year but only collected $4.92 trillion in revenue. The resulting deficit of $1.83 trillion was $138 billion higher than the previous fiscal year’s.

Dalio isn’t the only business leader who has sounded the alarm on the US debt problem.

Elon Musk, the CEO of Tesla and SpaceX, has sharply criticized President Donald Trump’s “One Big Beautiful Bill” for worsening the country’s debt situation. Musk was a prominent financial backer of Trump and used to lead the administration’s cost-cutting outfit, the White House DOGE Office.

But Musk broke with Trump just days after he announced his departure from DOGE on May 28. Musk called Trump’s bill a “MOUNTAIN of DISGUSTING PORK” on June 5 before walking back his attacks the following week.

Musk, however, resumed his attacks on the bill over the weekend. The bill is pending a vote in the Senate, and GOP lawmakers hope to send it to Trump’s desk by July 4.

“It is obvious with the insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS that we live in a one-party country — the PORKY PIG PARTY!!” Musk wrote in an X post on Monday.

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