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Investing.com-- Billionaire investor Ray Dalio on Monday called for a bipartisan solution to preventing a U.S. debt and deficit crisis, while also calling for meaningful tax revenue increases and lower government spending.
“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 said in a post on X.
Dalio said that both Republicans and Democrats likely understood this, but lamented that politics had become “so absolutist” that policymakers could not take a balanced path without losing support from their constituents and parties.
Dalio, who founded hedge fund Bridgewater Associates, said that an increase in tax revenue and a government spending cut will lead to a “supply/demand balance improvement for U.S. debt,” which could in turn help lower interest rates.
“Lower interest rates would help reduce the budget deficit as well as help the markets and the economy,” Dalio said.
Dalio’s comments came as a sweeping tax cut and spending bill backed by President Donald Trump made its way through Congress. The Senate is expected to vote on passing the bill this week.
But the bill, called the “One Big Beautiful Bill Act,” has been a major point of contention, especially as analysts said it could increase government debt levels by $3.3 trillion over the next decade.
The bill outlines sweeping tax cuts, which Trump claims will be funded by spending cuts in social welfare and from increased trade revenues through Trump’s trade tariffs.
But non-partisan analysts have warned that such a scenario appears unlikely, and that the bill was likely to increase the fiscal deficit.