The investor cites interest payments and refinancing among pressures on the federal budget
On 6 October, Ray Dalio, founder of Bridgewater Associates, told Bloomberg that the United States could face a debt crisis within three years. According to Dalio, interest payments reduce the resources available for other items in the federal budget.
Dalio cited annual revenue of about $5.5 trillion and spending of about $7.5 trillion, for a deficit close to $2 trillion. He estimated annual interest payments at about $1 trillion on approximately $32 trillion in federal debt held outside the government.
The investor drew attention to maturing securities, which must be refinanced at current rates. He had previously said that the timeline could vary by two years if the deficit path continued. His proposal seeks to reduce the deficit from about 6% of GDP to 3% through spending cuts, higher tax revenues and lower interest rates.
Japan, identified by the US Treasury as the largest foreign holder of Treasuries, held about $1.1 trillion in US securities in July, compared with $1.24 trillion in February.
