"In an interview with One America News on Thursday, Trump pointed to his "One Big Beautiful Bill Act" that locks in and expands tax cuts from his first term while adding new deductions on tips, overtime pay, and Social Security income for seniors. Combined with his latest round of tariffs, Trump argued, the package will deliver both "record growth" and an unprecedented fiscal windfall."
"Dalio, who has studied dozens of major debt cycles, wrote in his 2018 book Principles for Navigating Big Debt Crises that during booms, "lending supports spending and investment, which in turn supports incomes and asset prices," temporarily pushing growth "above the consistent productivity growth of the economy." But that can't last, he warned-"eventually income will fall below the cost of the loans." Elsewhere, he added, debt burdens only ease when "nominal income growth"
"Real GDP rose at a solid 3.8% annualized pace in Q2 2025, but the debt picture isn't "very low." Gross federal debt still sits at around $37.4 trillion, and the debt-to-GDP ratio is about 100% for 2025, according to Treasury- and CBO-linked dashboards. Tariff receipts are up sharply this year, but estimates show roughly $165 billion by August and about $300 billion on an annualized basis, far short of the trillion needed for paying down the debt."
The "One Big Beautiful Bill Act" locks in and expands previous tax cuts and adds deductions on tips, overtime pay, and Social Security income for seniors. Real GDP rose 3.8% annualized in Q2 2025, while gross federal debt remains around $37.4 trillion and the debt-to-GDP ratio is about 100% for 2025. Tariff receipts are estimated at roughly $165 billion through August and about $300 billion annualized, far below the trillion dollars needed to pay down debt. Proposals to use tariff revenue for $2,000 distributions would put money into consumer pockets rather than reducing budget deficits. During booms, lending can temporarily push growth above productivity, but debt burdens only ease when nominal income growth outpaces debt costs.
Read at Fortune
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