Ray Dalio Warns U.S. $37T Deficit 40% Overspending Risks Systemic Collapse

Billionaire investor Ray Dalio has escalated his warnings about the U.S. fiscal crisis, likening the nation’s $37 trillion deficit to an “economic heart attack” that risks triggering a systemic collapse. In a series of social media posts and interviews, Dalio, founder of Bridgewater Associates, emphasized that the U.S. is approaching a critical juncture where debt service payments could crowd out essential government spending. “We’re spending 40% more than we’re taking in, and this is a chronic problem,” he stated on Fox Business, comparing the situation to arterial plaque that restricts economic vitality [1].

Dalio’s analogy highlights a stark reality: debt service costs now consume a growing share of federal revenue, squeezing funds for priorities like infrastructure, healthcare, and defense. He warns that the U.S. is nearing a tipping point where new debt issuance is needed merely to service existing obligations—a self-perpetuating cycle he argues could culminate in a financial shock and systemic breakdown. “This is like plaque in the arteries squeezing away buying power,” he said, underscoring the urgency of intervention [1].

The investor has proposed a return to the fiscal discipline of the 1990s, a period marked by bipartisan cooperation and deficit reduction. Dalio suggests that trimming the federal deficit to 3% of GDP—levels last seen during the Clinton era—could stabilize markets and curb interest payments. “If we change spending and income by 4% while the economy is still good, interest rates will fall, and we’ll be in a much better situation,” he argued, referencing the 1991–1998 reforms that balanced growth with fiscal restraint [1]. However, he expressed skepticism that current political dynamics will allow such measures. “My fear is that we will probably not make these needed cuts due to political reasons,” he tweeted, noting that partisan gridlock could exacerbate the crisis [1].

Recent legislative developments, including the passage of President Donald Trump’s “One Big Beautiful Bill Act,” have further strained the fiscal outlook. The legislation is projected to add $3.4 trillion to deficits over the next decade, compounding concerns about long-term sustainability [1]. Dalio also pointed to April’s volatility in the 10-year Treasury bond market as an early warning sign, attributing it to foreign investors’ resistance to Trump’s aggressive tariff policies. “A serious supply-demand problem” could emerge if global markets refuse to fund U.S. borrowing at sustainable rates, he warned, a scenario that could spark a crisis with global repercussions [1].

While Dalio’s prescriptions echo past successes, their feasibility remains uncertain in today’s polarized climate. His 50% probability estimate of a financial “trauma” due to delayed action underscores the stakes of inaction [1]. The investor’s broader critique extends to post-2020 fiscal policies, which he argues have eroded economic resilience through inflationary pressures and asset bubbles. “The disease may be worse than the cure,” he noted, criticizing policymakers for addressing inflation only after the dollar’s value has significantly declined [1].

Dalio’s warnings crystallize a central tension in U.S. economic policy: balancing short-term spending with long-term stability. Without bipartisan cooperation, he cautions, the U.S. risks a scenario where fiscal constraints force abrupt, painful adjustments—a trajectory he views as increasingly likely.

Source: [1] [title: Ray Dalio Issues His Most Dire Warning to America Yet - Fortune] [url: https://fortune.com/2025/07/24/ray-dalio-billionaire-economy-national-debt-economic-heart-attack-crisis/]