Ray Dalio stated that addressing America's national debt necessitates a bipartisan approach involving both tax increases and spending cuts. He emphasized that both parties recognize the need for these measures to improve the supply-demand balance for US debt and lower interest rates. Lower interest rates can subsequently reduce the budget deficit, benefiting the economy. However, Dalio expressed concern that political absolutism hinders elected officials from pursuing this balanced solution, fearing backlash from their constituents and parties. He views this situation as a tragedy.
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.
This would lead to a supply/demand balance improvement for US debt which in turn would lower interest rates.
Lower interest rates would reduce the budget deficit and help the markets and the economy.
Because politics have become so absolutist, they feel they can't go down this obviously best path.
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