Bridgewater Associates founder Ray Dalio warned House Republicans of the dangers of rising US deficits and urged them to cut the budget deficit to just 3% of gross domestic product or risk debt service costs squeezing government spending.   Dalio’s message of austerity comes as House and Senat e Republicans battle over the size of spending cuts to be paired with a giant tax cut coming later this year. The US budget deficit was 6.6% of GDP in 2024, according to the Congressional Budget Office.  “There was a good understanding of the choices and the possibilities to manage this dire situation over time,” Dalio said in a statement after the meeting. “I look forward to staying in touch about these issues and having similar discussions with others so that there are realistic assessments of the issues and what might be done to deal with them.” The House has drafted a $4.5 trillion tax cut blueprint paired with $2 trillion in spending cuts over ten years, which would add about $3 trillion to deficits over the decade. Senate Republicans want to deploy a budget gimmick to allow them to add trillions more in tax cuts without more spending cuts. House and Senate GOP leaders will work to resolve their differences in a meeting with Treasury Secretary Scott Bessent later Tuesday.  After the Dalio meeting, House Budget Chairman Jodey Arrington said he’s resolved to block any Senate tax plan that lacks sufficient spending cuts, saying it would be dead on arrival in the House. But Arrington also acknowledged that the House’s own budget blueprint fails to meet Dalio’s 3% GDP target.   “This is not something you accomplish in one bill,” he said. “We need to begin exercising the spending cut muscles.” Representative David Schweikert, an Arizona Republican, said Dalio’s message means Congress must pass spending cuts to pay for their plans to make President Donald Trump’s expiring 2017 tax cuts permanent as well as any new tax cuts. Dalio has been warning for some time that the US’s growing debt burden threatens the country’s financial stability, an argument he advances in a forthcoming book: How Countries Go Broke: The Big Cycle. “We are at a precarious time in what I call the Big Cycle, where there is a confluence of major forces playing out in a way that is similar to many times in history,” Dalio said in a statement released in advance of the meeting.  Dalio, 75, stepped down as co-CEO of Bridgewater in 2017 and retired from the hedge fund in 2022. He has a net worth of more than $16 billion, ranking 132nd in the Bloomberg Billionaires Index. This story was originally featured on Fortune.com ...read more read less