Ray Dalio and Jamie Dimon Interviews Beg the Question: Where Is the Party for Fiscal Deficit Issues?

Bridgewater founder Ray Dalio and JPMorgan CEO Jamie Dimon gave separate interviews this week eager to speak about America’s deficit problem. In a Presidential election year where this is one of the most important issues facing the United States, no party wants to take on the issue that is incredibly important to the banking industry.

Dimon asked the question as to why wait for a crisis to do something about it. He stated, “The problem will be caused by the market and then you will be forced to deal with it and probably in a far more uncomfortable way than you dealt with it to start.”

In a separate interview with the Financial Times, Dalio stated that eventually international buyers would be “worried about the US debt picture.” Both financial industry leaders were concerned that eventually the US debt could cause a major market correction for equities.

However, at this point the American economy is outpacing Europe and U.S. Treasury holdings from foreign investors are only rising year over year. There is little appetite by Republicans or Democrats to address the fiscal problems despite analysts saying the present trajectory makes the U.S. system unsustainable. Interest rate increases have not helped America’s debt. The country now spends more on its debt interest per year than on its defense budget.

Former President Trump and President Biden cannot run on fiscal responsibility as debt has skyrocketed under both administrations while enjoying low unemployment and record breaking stock market days. Even if President Biden is reelected and he is able to push through his tax increases, it would likely just mean more spending.

The day of reckoning will unlikely be between now and November before the election, but could well come in the next Presidential term. If so, Americans may blame whoever is in office for not speaking about it now… and the answer will be because it is not a winning issue.