Ray Dalio: U.S. Could Face a Debt "Heart Attack" Within About Three Years Without Deficit Cuts

Ray Dalio, founder of Bridgewater Associates, warned that the United States could be headed for a serious debt crisis in roughly three years unless Washington brings the federal deficit under control. In a recent LinkedIn post, Dalio said the outlook has not materially changed, likening the risk to an economic "heart attack" as debt-service costs take up a growing share of government outlays and force the Treasury to sell ever larger volumes of debt into the market. He argued the danger rises sharply if the deficit is not reduced toward 3% of GDP. The warning comes with U.S. federal debt already above $40 trillion, while long-term borrowing costs climb to levels not seen in decades. About $32 trillion of the total is held by the public. Dalio's focus is the widening gap between federal revenue and spending. The Congressional Budget Office projects a $1.9 trillion deficit in fiscal 2026, about 5.8% of GDP, and expects deficits to remain well above their historical average over the next decade. Dalio said moving the deficit toward 3% would require a mix of spending restraint, higher revenue and lower interest costs, rather than relying on monetary policy alone. Rising rates are intensifying the strain beyond the government's balance sheet. The 10-year Treasury yield has moved above 5.3%, pushing up borrowing costs across mortgages, corporate debt and broader financial markets. Higher yields also make refinancing more expensive as older, low-rate government debt matures. Markets have tied the jump in yields to heavier debt supply, inflation dynamics and shifting investor demand. Reuters reported that money-market fund inflows have slowed this year even as Treasury issuance remains elevated, a backdrop that could further weaken demand for government debt.