Ray Dalio: How DOGE and Trump Can Solve America's Debt Crisis

I just want to highlight the CBO projection right so this is the US government's debt as a percent of the US government's Revenue which you you indicate in your book is more important than debt to GDP you've got to look at the actual Revenue being generated by the government and how much debt they have and the CBO highlights this expansion to 700% meaning the government is going to have a debt level that's seven times the income it's making every year over the next uh I believe this is a 10-year chart and you propose a bunch of actions that can keep it flat over the next 10 years so number one is I call it my 3% solution the solution is you must cut the deficit which is the

equivalent of bonds selling down to 3% of GDP and it's 7 a half% expected that's about 900 billion a year yeah roughly and that means cutting it as you point out by cutting the deficit by more than half from where it sits yeah well it's yes because it with the continuing the uh the tax cuts strum tax cuts that's that'll be 7 a half% and you want to get it down to three it sounds Draconian but we did that kind of change from 1990 1 till 1997 and there are three keys to this do it soon fast when the time is good when the economy is good in other words do it

now now the Temptation is going to say well we're going to ease into this and we're going to be there and we're going to do it in three years from now but if you have a bad economy you you cannot do it okay and that's the that's the worst so we have the best economy and the sooner you do it the more you're going to do it so 3% solution do it now and recognize that you have to De deliver it so if you're having let's say Cost Cuts in government you have to own the number so everybody's got to pledge 3% now the the the argument say now to get there but you have to own the number um so much so that you'd say if

it's not 3% throw me out of office and you can't make it any one thing right but you also have to realize like if you did it spread out nothing's going to be insurmountable but the main thing is you take the things you can cut from or build from so what can you cut from and you look at government expenditures roughly 70% of government expenditures are you can't cut cut so so it comes down to a small percentage that you can cut but you you find out how much can you cut so the important thing is 3% the other thing about it is to realize that if you make those moves the bond market will benefit you see this and so interest interest rates

will go down right and interest rates going down interest rate expense is most important if the federal government were to cut spending significantly and quickly the market would naturally react to lower rates that's right I think that is so important for everyone to hear if you look at my calculations if you get 100 basis points cut in rates that's equivalent to significant cutting in spending so he's right but you but if you do that without the other parts you're going to make it less desirable to own these things these bonds and because that's that's going to be a problem where if you do these things together they can support each other so

in other words fine cut it from spending and by the way Ray the longer we wait the more interest accumulates because it's at a higher rate the more the debt accumulates and ultimately this is the arithmetic death spiral that you get into the longer we wait the more you have to cut in the future to get out of the hole it's not linear it's a nonlinear cutting that's needed So the faster you do it the less you have to cut I think that is so important let me just say that again for any person in government listening the faster you cut the less you have to cut yes and you can do it in a manageable way you know a bit here a bit there these bits add up and if you don't you're going to have this

Arc of compounding so let's talk let's talk politics for a second is Doge and the concept of Doge enough or do we need legislative action here there's a combination of a question it's not just Doge it's a matter of less regulation productivity changes that might come from AI which then have translate to profits that might be capital gains profits they might be profits and all of that and so but it really you know when I look at it it looks it looks very tough and and but there's also you know Revenue also tariffs produce Revenue so but yeah people think um on the on the tariffs

people don't think of taxes as inflation but taxes are inflation right because you it costs you more so the real question as you play with the numbers is it's very very difficult to know and be precise about how much is going to come from uh productivity and profit increases from the efficiencies gained by Ai and new technologies how much going to come from this and that we don't honestly know but the important thing is we're at the edge and not to make it a crapshoot so and to get the if the number must be 3% and so you should have a clear passage to that 3% number