- Ray Dalio said Republicans and Democrats agree that the budget deficit needs to be addressed, but their political squabbling prevents a solution. Any bipartisan effort to reduce the budget wouldn’t happen until after the 2026 midterms, at which point a commission would be put together to tackle the problem, Dalio predicted.
Lawmakers won’t address the deficit until after the midterm elections in November 2026, according to Ray Dalio.
The legendary investor said on Thursday the problem of lowering America’s growing budget deficit would be put off until after those elections, citing contacts in Washington, D.C. Early that morning, the Republican-led House passed a new budget bill that critics say will expand the country’s budget deficit at a time when government officials should be focused on shrinking it.
According to Dalio, Democrats and Republicans both agree on the gravity on the issues, but their political rivalry prevents them from finding a workable solution, he said.
“It’s like being on a boat that’s headed for rocks, and they agree that they should turn, but they can’t agree on how to turn,” Dalio said during an event for the Paley Media Council in New York.
That’s why, he said, no serious attempts to reduce the deficit will happen until the 2026 midterms.
“So I’m told the way that this is going to go down is that we’ll pass this [budget bill],” Dalio said. “There won’t be any important changes until after the 2026 elections.”
After those midterms elections lawmakers plan to convene a special committee to address the deficit, according to Dalio.
“After 2026 the aspiration is to try to put together a bipartisan commission to try to be able to deal with this,” Dalio said. “So there’s no prospect of this being materially dealt with until after the 2026 election.”
Dalio added that he was lukewarm on the outcomes of such a group, despite calling the need for “bipartisanship and getting over political hurdles” the “essence of the challenge of our country.”
When asked about the prospects of finding a solution, Dalio said: “I cannot be optimistic about it.”
Thursday’s budget bill passed the House of Representatives in a 215 to 214 vote, with no Democrats in favor of the legislation. Two Republican representatives—Thomas Massie of Kentucky and Warren Davidson of Ohio—joined the Democratic caucus in voting against the bill.
In the past, Dalio has advocated for reducing the budget deficit with what he calls the 3% solution. The proposal would aim to lower the U.S. National debt to 3% of GDP from its current levels between 6.5% and 7%. The current bill puts that target even further out of reach, according to a report from the nonpartisan Committee for a Responsible Federal Budget.
