Ray Dalio, Scott Bessent, and bipartisan House members are uniting behind a ‘3% solution’ to rein in the out-of-control national debt

Nowadays, Republicans and Democrats can barely agree on anything at all. But suddenly, a bipartisan consensus is emerging in support of new legislation that would set deficits on a steady path toward a specific goal: cutting them by roughly half to 3% of GDP. This groundswell gained real momentum on January 9, when members of the Bipartisan Fiscal Forum—a House group focused on addressing growing fiscal challenges—introduced a resolution I’ll call “The 3% Solution.” The proposal is more aspirational than detailed; for example, it doesn’t lay out line-by-line steps to reach its target. Still, the fact that so many representatives from both sides of the aisle are rallying behind this idea—something that seemed unthinkable just a year ago—marks an extraordinary shift in the national debate.

Even before the House resolution, influential think tanks were championing the 3% target, most notably the Commission for a Responsible Federal Budget. But in recent weeks, the movement has picked up speed. In February, hedge fund titan Ray Dalio posted online, stating he “loves and endorses” the idea and adding that “while the most responsible members of both parties don’t agree on much, they agree on this.” The editorial boards of the Washington Post and Bloomberg ran opinion pieces backing the goal. These high-profile endorsements sparked a wave of stories revisiting past calls from politicians and economists for deficit caps, including Warren Buffett’s view that 3% is indeed the right number.

Perhaps surprisingly, another key supporter is Scott Bessent, Trump’s top economic policy advisor. The Treasury Secretary has consistently pushed for a “3-3-3” plan: achieving 3% GDP growth, increasing oil production by 3 million barrels a day, and reducing the deficit to 3% of national income—all by 2028. Of course, the Trump administration’s plan has made little progress so far, and the president appears to have largely ignored Bessent’s appeal. In his State of the Union address, he declared America has entered an economic golden age—sans any mention of the need for fiscal discipline.

Bringing the deficit down to 3% will be a Herculean task

America’s spending spree, especially the post-pandemic blowout, has dug a hole so deep it will take years to climb out of—even if Congress passed and the president signed draconian spending restraints today. For FY 2026, the CBO projects the U.S. will spend $7.449 trillion and collect $5.596 trillion, meaning outlays will exceed revenues by a staggering 33%, resulting in a $1.853 trillion deficit (5.8% of GDP). By 2036, the agency forecasts the gap will reach 6.7% of GDP, and according to the CRFB, this estimate is likely far too low—since the CBO assumes 0% growth in discretionary spending for areas like defense and education. Additionally, the U.S. faces a drop in tariff revenue due to the Supreme Court’s ruling that most current border duties are illegal. The scariest part of this scenario: Interest on the federal debt will more than double from $1.039 trillion in 2026 to $2.144 trillion in 2036, growing at an 8% rate that makes debt service the fastest-growing budget item. A decade from now, interest expenses will surpass Medicare outlays to become America’s second-largest expense after Social Security.

How tough would it be to shrink deficits by half (as many experts want) by 2036? It would mean cutting the gap from this year’s $2.144 trillion to $1.40 trillion—roughly a one-third reduction. For example, we could get there by raising income and payroll taxes by 12% above current forecasts, or by reining in entitlement spending to 12% below its projected 10-year level. Here’s a snapshot of the challenge: If revenues grow per the CBO’s baseline (without new taxes), expenses would need to stay exactly at 2026 levels—flat for 10 years, not even keeping up with CPI—to hit the $1.4 trillion deficit required for the 3% target.

The U.S. already has a blueprint for a workable plan

Remember the brief era of balanced budgets? We had them from 1998 to 2001, largely thanks to the Budget Enforcement Act, which introduced “pay-as-you-go” (PAYGO) rules. The BEA stipulated that any increases in mandatory spending or tax cuts must be offset by revenue increases or cuts to other expenditures. If not, across-the-board spending curbs would kick in for most of the budget, keeping deficits in check. Unfortunately, subsequent Congresses used gimmicks to skirt PAYGO—like labeling routine spending as “emergency” outlays. PAYGO rules also expired multiple times, and when renewed, they tended to be weaker.

Still, the program provides a strong template for what works. The big risk is inaction while the economy booms (as it does today), leading to an unsustainable situation where foreign investors dump U.S. debt. This would force the Treasury to pay higher rates to refinance maturing bonds, accelerating the already rapid rise in debt service costs. In that case, the U.S. might avoid disaster by enacting an emergency national sales or value-added tax (VAT) like those in Europe. In fact, the U.S. is the only major nation without a VAT or similar national sales levy.

An unlikely pair—former House Speaker Paul Ryan and liberal economist Paul Krugman—both told this writer a decade ago that an emergency VAT was a strong possibility; Krugman even argued it was inevitable. A VAT would be bad news for America’s future: It would mean permanently increasing the government’s share of GDP and paying for it with far higher taxes. Put simply, instead of taming deficits through a balance of revenue increases and spending cuts, we’d abandon spending discipline—a curse that still afflicts Europe today.

President Trump should take Scott Bessent’s advice. In 1992, Ross Perot ran as a maverick presidential candidate focused on one major issue: the peril of massive debts, deficits, and especially interest payments that were devouring the budget and leaving less money for retirees, healthcare, and defense. Perot’s campaign helped Bill Clinton defeat President George H.W. Bush. In his State of the Union address, Trump ignored not only a critical threat to the economy but also one that could harm his party. His speech was designed to boost Republican prospects in the midterms. If the deficit issue’s current momentum rallies voters as it did in 1992, Trump’s omission may prove a major mistake.