Ray Dalio and Scott Bessent Back '3% Solution' to Curb US National Debt

Key Facts

1Ray Dalio, Scott Bessent, and bipartisan House members are supporting a proposal to narrow the gap between revenues and outlays to 3% of GDP.

2The initiative aims to tame the national debt, which is described as being 'out of control'.

Bridgewater Associates founder Ray Dalio and Scott Bessent have joined a bipartisan group of House lawmakers to support a new fiscal proposal aimed at tackling the rising US national debt. The initiative, dubbed the '3% Solution,' seeks to narrow the gap between federal revenues and outlays to a maximum of 3% of the nation's GDP. Proponents of the plan argue that such a cap is essential to tame a debt trajectory that many experts now describe as being 'out of control.' The move aims to establish a structured framework for long-term fiscal sustainability and mitigate inflation risks associated with persistent deficit spending. While fiscal discipline is generally viewed as bullish for long-term Treasury bonds like the US10Y and TLT due to reduced supply, the resulting spending cuts or tax adjustments could create potential headwinds for equity growth in the SPY index.