Big Beautiful Bill: Ray Dalio sounds alarm on soaring US debt, warns of ‘big, painful disruptions'

Mint

2 days ago

In a stark warning following the passage of President Donald Trump's sweeping tax-and-spending package, billionaire investor Ray Dalio has raised red flags about the long-term sustainability of America's fiscal path, forecasting rising debt burdens and severe economic consequences.
The US House of Representatives has approved what Trump has termed 'One Big Beautiful Bill' — legislation that permanently extends his 2017 tax cuts, introduces new tax breaks, and significantly boosts funding for immigration enforcement. But the bill comes at a heavy cost: it will add about $3.4 trillion to the nation's existing $36.2 trillion debt, according to estimates by the nonpartisan Congressional Budget Office.
Reacting to the development, Dalio, the founder of the world's largest hedge fund, Bridgewater Associates, took to social media to highlight what he described as alarming projections. 'The bill is expected to lead to spending of about $7 trillion a year with inflows of about $5 trillion a year,' he wrote in a detailed post on X (formerly Twitter). 'So the debt… will rise over ten years to about 7.5x the money taken in, 130% of GDP, and $425,000 per family.'
Dalio warned that such a trajectory would push the US further into a debt spiral, with annual debt service costs ballooning from $1 trillion in interest today to $2 trillion within a decade. In total, the country would face $18 trillion in interest and principal repayments — a scale of obligation that could force policymakers into difficult choices.
'Either we face a big squeezing out (and cutting off) of spending and/or unimaginable tax increases,' he wrote, 'or a lot of printing and devaluing of money and pushing interest rates to unattractively low levels.'
Dalio cautioned that such monetary measures — essentially debasing the dollar to manage the debt load — would undermine confidence in US bonds and the broader credit markets. 'What's bad for bonds and US credit markets is bad for everyone,' he said, noting that the US Treasury market underpins the global financial system. 'These markets are the backbone of our economic and social conditions.'
He urged swift action to narrow the federal deficit from the current 7% of GDP to a more manageable 3%, advocating for a mix of spending cuts, tax reforms, and interest rate adjustments. Without decisive steps, he warned, 'big, painful disruptions will likely occur.'
Dalio's sobering analysis adds to a growing chorus of concern among economists and market observers about America's fiscal direction, particularly at a time when interest payments are crowding out investments in infrastructure, defense, and social programs.
As debates continue over debt ceilings, entitlement reform, and the Federal Reserve's monetary stance, Dalio's warning underscores the gravity of the choices facing policymakers — and the risks of delay.
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