The $40 Trillion National Debt, and the Trade-Offs of Living With Your Parents

Scott Galloway (0:00)

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Ed Elson (0:47)

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Scott Galloway (0:48)

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Scott Galloway (1:48)

Welcome to Office Hours with Prop G. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to officehoursatprofgmedia.com. Again, that's officehoursatprofgmedia.com. Or post your question on the Scott Galloway sub-Reddit, and we just might feature it on our next episode. Question number one comes from Oscar Gambles Hair on Reddit. When I was in business school, the primary concern was the size of the national debt. The year was 1993 and the debt was $4.3 trillion. We were freaking out. Now as we reach $40 trillion in debt, how serious is it and why is it different from 1993?

Okay, so first off, some data. Last month, on August 18th, 2026, the national debt passed $40 trillion for the first time. To put that into perspective, when this listener was in business school, the debt was $4.3 trillion, so it's grown almost 10-fold since then. And the economy has grown less than five times over in the same period. So even on an inflation or economic growth adjusted basis, the deficit has exploded. I think it was $4 trillion. I think George Washington and George Bush was $4 trillion. Now it's $40. And I would argue it was kicked off by George Bush and his kind of key consigliari, Vice President Cheney saying, deficits don't matter. And W convinced the American public that we could cut taxes and go to war and that everything would still be fine. And since Bush, Bush to Trump, we've added another 36 or 37 trillion. The 40 trillion is the gross number, the part we owe to outside investors, banks, pension funds, foreign investments, foreign governments who agreed to loan us money to fund our deficits. And about 32 trillion or what is it? 40 trillion, that's about, I don't know, 120 or 130% ratio to our economy. So we're getting to sort of Japan and Italy-like levels. And worse, we're adding 2 trillion a year. If America was a household, the household makes around 50,000, brings in 5 trillion in receipts from taxes, and it spends 70,000. It spends 7 trillion on social programs, the military, et cetera. And we owe, we have household debt of 400,000. Now, the bad news is when the parents die, the kids can't escape that debt, they inherit the debt. And it's just at some point, at this point, we're borrowing money to pay for the interest on the debt of money we borrowed previously.

And it gets even worse. Interest payments now eat up a record 18.5% of everything the federal government collects. In sum, almost $1 in $5 that you're paying in taxes goes to paying interest on the debt of money we borrowed because we weren't taxing people enough when we were spending too much. Do we need to cut spending or raise taxes?