'America's tipping point near': Ray Dalio warns US debt burden is 'six times income'

Billionaire hedge fund manager Ray Dalio has sounded an urgent alarm on America’s ballooning debt, warning that the U.S. is approaching a financial “edge” where the supply of debt could overwhelm demand and spiral into an unfixable crisis.

Speaking on a podcast with Scott Galloway, Dalio outlined the stark math: “This year the government will spend about $7 trillion and it will take in about $5 trillion. So it will spend 40% more than it's taking in… the debt is now about six times the amount of money it takes in.”

According to Dalio, the U.S. must raise or roll over $12 trillion in debt next year alone — roughly $9 trillion in maturing obligations plus another $2 trillion in new issuance for the deficit. A further $1 trillion will go just to interest payments, half the size of the budget deficit. “You have to sell a lot of debt. We’re now at a point where there will be an adding to a lot of debt at a point that’s close to the edge,” he warned.

The billionaire stressed that the problem is not a mystery among policymakers or economists. “Everybody I spoke to agreed with the numbers and the mechanics,” he said, noting conversations with former Fed chairs, central bank heads, and treasury officials. Yet, he called it a “political problem.” Lawmakers admit privately that while stabilizing the deficit requires tax hikes and spending cuts, electoral promises of “not raising your taxes” and “not cutting your benefits” block action.

Dalio suggested a “3% solution”: bringing the deficit down to about 3% of GDP, from the current 6–7%. That would mean a 4% increase in taxes and a 4% cut in spending. “It wouldn’t quite get you there, but it would improve the supply-demand picture of the debt so that interest rates would come down,” he said. Lower rates would ease debt servicing, but artificially pushing them lower would risk scaring off bond buyers.

On tariffs, Dalio was analytical. He said the administration views them as a revenue source and a way to protect American businesses while encouraging foreign capital into U.S. debt. But he cautioned that tariffs are unlikely to resolve the structural imbalance. “As we add to that debt then those numbers and that supply demand picture worsen past the point really of being able to rectify it.”

Dalio’s bottom line was stark: without politically painful reforms, America risks hitting a tipping point where the world loses confidence in its ability to manage debt.