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

Scott Galloway explains why America's $40 trillion debt is different from the panic of the 1990s and what it would actually take to fix it, breaks down how he thinks about key man risk and enterprise value at Prof G, and weighs the trade-offs of living with your parents to save money. Want to be featured in a future episode? Send a voice recording to [email protected], or drop your question in the r/ScottGalloway subreddit. Plus, you can now call or text Scott a question at our new Office Hours hotline: ‪(201) 472-3656‬. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Scott Galloway?

  Support for the show comes from Alumni Ventures. We've said it before, diversification is our Kevlar vest. But do you know how concentrated your public stock fund actually is? A handful of mega-cap stocks with an AI story are doing most of the work. That's not the diversification you think, especially when so much value creation is happening before companies ever go public. Alumni Ventures ranked a top 20 US venture firm by both Time and CB Insights, gives accredited investors a smart, simple way to assemble a blue-chip venture portfolio and participate in the value creation that is occurring in private markets. You can sign up for free, see the weekly deal flow, and decide for yourself. Or write one check into the Alumni Ventures Foundation Fund for a diversified portfolio of about 25 private venture deals.

• 0:42Scott Galloway?

  Go to av.vc-propg.

• 0:46Speaker 01

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• 2:03Scott Galloway?

  Welcome to Office Hours with PropG. 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 officehourswithpropgmedia.com. Again, that's officehourswithpropgmedia.com. Or post your question on the Scott Galloway subreddit, and we just might feature it on our next episode. Question number one comes from OscarGamble'sHair 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.

• 2:47Scott Galloway?

  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, 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 consigliere, Vice President Cheney, saying deficits don't matter.

• 3:28Scott Galloway?

  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 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

• 4:12Scott Galloway?

  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, you know, 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

• 4:57Scott Galloway?

  of money we borrowed because we weren't taxing people enough and we were spending too much. Do we need to cut spending or raise taxes? All roads lead to the same place. The answer is yes. The older record was 18.4% in 1991. The difference in 1991 was that number was starting to fall, and also, much of that was because of much greater interest rates. So we know it's a problem. And what happens is eventually, and we're seeing this now, people go, "You're no longer as safe an investment in America as we thought." There's some risk that you'll either inflate your way out of it with a weaker dollar, or God forbid, at some point, you actually might risk default. Or the economy will slow down because you'll have to make such drastic cuts that you'll have a difficult time paying it back.

• 5:42Scott Galloway?

  So lenders are requiring more money to take the risk of loaning to Americans, or loaning to America to finance this debt, which increases the amount of interest rate, and unfortunately, it could inspire sort of a downward spiral. So what are some solutions? We know this is a problem. According to the IRS, roughly $700 billion a year in taxes that people legally owe simply never gets paid or collected. People often call it, I believe, the tax gap, or is it the budget gap? Anyways, whatever it is, money that should be collected and isn't. And the greatest tax cut in history was not the Trump tax cuts, it was Trump neutering the IRS. Because the incentives are now, especially if a complicated tax filing and you're wealthy,

• 6:26Scott Galloway?

  is to be so aggressive and cheat because the chance of being audited are so low. The audit rate on millionaires fell more than 70% between 2010 and 2019. Yale's Budget Lab found that cutting $20 billion from the IRS budget actually adds about $263 billion to the deficit. So in sum, under the auspices of saving money, we're losing 10 times the amount we're saving. Also, I think we should do away with the tax deduction or lower tax rates for capital gains. I think it's insane that we've decided... Budgets reflect values, and our values right now, or our tax system reflects our values. Our values are that sweat is less noble than money. And that is, the money money makes gets taxed at a lower rate, I think a maximum of 22.8%,

• 7:08Scott Galloway?

  whereas current income or sweat, the money you make from working, gets taxed at 37%. We should go back to the era of Reagan and raise capital gains taxes to what ordinary income is. You could even potentially cut that rate as long as you equalized it. The tax gap, raising taxes, or raising, elevating capital gains, and then we're just going to have to cut spending, folks. My idea is GLP-1 for every household, and go after the $12,000 or $13,500 per capita spending on healthcare, which across 350 million people, basically comes to almost what our deficit is each year. Or if you were to try and get it down to where the rest of the G7 is, at 6,500, you

• 7:52Scott Galloway?

  take $6,000 in healthcare savings times 350 million people, then you have your $2 trillion a year in tax gap. Now, could you do that overnight? Is it realistic? Probably not. But you probably need to free spending, go after healthcare, normalize tax rates, collect the taxes owed, and slowly but surely start to restore fiscal sanity, which should take our interest rates down, which should inspire an upward spiral of fiscal sanity in this country. We have been here before. Our national debt was huge after World War II. As a percentage of GDP, again, it was pretty high in the early 90s. And there's an opportunity here to do what the Clinton administration did, and actually get to a point of breakeven or surplus.

• 8:37Scott Galloway?

  You wouldn't even need to get back to a surplus. You would just need to make sure that the growth in the deficit is lower or growing slower than the growth in the economy. Anyways, thanks for the question.

• 8:49Scott Galloway?

  Question number two.

• 8:51Speaker 05

  Scott, my name is Ollie, a big fan of the podcast. I'd love to know how you think about the tension between key man risk and equity value in your media company. You obviously have co-hosts on the podcast, but you are also, you know, central to the value proposition as from my perspective. So is it your view that you will eventually be able to sell the company and not stay on yourself? Would the equity value hold up if you were not there and you were replaced entirely by others? I would love to hear your strategic thinking behind this. Thank you very much.

• 9:28Scott Galloway?

  Thanks for the question. I think about this a lot. I'm constantly thinking about enterprise value. I think that money and profits and enterprise value are fantastically misstuffed for the value out of a company. It also has the benefit that if you think about it well and execute against it, you can get economic security. And I'm just, I, that's just how I think. I don't, I'm finally at a stage in my life where if I don't have another liquidity event or an exit, I'm still fine. Greatness in the agency of others. People think I'm doing all this shit on my own. I'm not. We have 27 people at Prop G and the reason why we have almost 100% retention is that I will sit them down and outline to them the strategy to create enterprise value. And then I give them equity such that they participate in that equity value.

• 10:12Scott Galloway?

  When I talk to small business people who say they can't scale, it's almost always, I say, show me your cap table and what you find is one or two founders who want to capture 100% of the upside for themselves and think that, oh, young people should be just excited to work with me because I'm such a baller. No, young people want to have their home in a Hampton someday. They want to have the same economic security the founders have. And if you want people to act like owners, you got to make them owners and then you got to convince them that there's real enterprise value here. Now, what is a threat to enterprise value? What you're talking about, key man risk. So at L2, when we were in diligence to be acquired, the biggest question was, well, Scott, how central are you to this company? What happens if you get hit by a bus or get sick of us and decide to leave? And the most exciting or the best statistic that I would roll out is that two thirds

• 10:55Scott Galloway?

  of our clients I had never met with in person. And so if I were to get hit by a bus, would it hurt the company? Yeah, but the company would still be a company. Now, Prop G Media, about 40% of our content or podcasts I touch. The newsletters and the books I'm involved in, but now have a lot of people working on them. You know, we have an enterprise. Is there still key man risk? Absolutely. But now it's sort of going to key men and women risk. Ed Elson, our fastest growing property is Prop G Markets. Ed has become central to that. Raging Moderates gets the most video views of any of our property and that's just Tarlov.

• 11:36Scott Galloway?

  So the only way to ensure they're going to stick around is to give them equity and a vision for how we add enterprise value. I'm constantly thinking about how we diversify away from yours truly. Now, what probably happens if we're ever to sell Prop G to a larger agency or a larger entity is that I will have to sign up as well as some of the other employees for what is a fairly onerous employment agreement that says, say they buy us for, I'll call it, you know, a hundred dollars, that some money upfront, but the rest is on not an earnout based on EBITDA, but an earnout based on tenure. And that is you're not going anywhere. When Gartner bought L2 for 100, I think they bought it for 158 million.

• 12:19Scott Galloway?

  We got, I think, 40 or 50% of it upfront and then the other 50% over three years. By the way, I decided to leave after a year as I just couldn't handle working for a larger organization. I just, I just, I'm just not cut out for it. Not because I'm such a baller, but I just couldn't stand not understanding where the decision to close our website came from. Anyways, but any, any agreement that we would sign to be acquired would involve fairly onerous employment lockups. If you're thinking about enterprise value, it really comes down to diversity of capital and income streams, diversity of human capital, no one person. Goldman Sachs always has, always has co-presidents and co-heads.

• 13:02Scott Galloway?

  They never want the head of investment banking to walk in and go, I own 40% of the revenue here, pay me, pay me a hundred million dollars or I'm going, you know, I'm going to JP Morgan. So they have co-heads and if someone walks in and threatens them, they can stand up and say, congratulations, enjoy Lazar Frere or, you know, Lion Tree or, or Mullis or wherever you're going, right? Evercore. So they diversify away from human capital risk constantly by having co-heads of their departments. Networks, you know, Fox has demonstrated they don't have key. Tucker Carlson was the biggest person in media and when he got too big for his purchase, they said, fuck you, it's the platform, not you. We've diversified away from key man risk. So I'm constantly thinking about, one, how you diversify your revenue stream.

• 13:46Scott Galloway?

  We have 50 advertisers, not one. That was the biggest problem at L2 is at one point in the early years, I think P and G, Nike and LVMH were 40% of our revenues. That's, acquirers don't like to see that. They want to see diversity of revenue streams and a diversity of geography and also a diversity away from human capital risk. Have we managed to do that at Prop G? Probably not, but you can still create enterprise value with employment agreements and showing that you have a platform to diversify away. I have been trying to do this for two or three years now. I recognize that two or three years ago, there was real enterprise value here that we could grow. And one of the, one of the keys was to launch new podcasts and create different voices. So I'm on one or two out of the five days a week on Prop G Markets.

• 14:30Scott Galloway?

  I'm on one or two of the four days a week or five days a week at Raging Moderates. And that way we have a diversity of voices. Now, can I cash out and leave? Absolutely not. I don't think any acquirer is going to do that. But diversity of capital inflows from clients and advertisers and diversity of human capital is how you create enterprise value. And also acquirers aren't stupid. If in fact there is key man risk, they will essentially bolt our needs to the floor in terms of what would be post-acquisition employment agreements. But absolutely diversity, revenue streams that come from multiple hosts or multiple advertisers create two to three X the enterprise value as opposed to if you just had one big

• 15:14Scott Galloway?

  client and one big show. And we have at Prop G Media, three or four different verticals where we have a top 20 or a top 50 podcasts, which I believe makes us worth double or triple what would be worth, what we, we would be worth with the same revenue stream that was just one podcast. But you're thinking the right way. Diversification not only makes sense in terms of an investment strategy, but in terms of building enterprise value, you have to constantly be thinking about diversity again of cash flows and human capital driving the business. I appreciate the question. We'll be right back after a quick break.

• 15:58Scott Galloway?

  Support for the show comes from IM8. I don't know what it is, but it seems these days as soon as you turn 30, the urge to incorporate supplements into your daily routine takes over. It's a good instinct by IM8 wants you to know you can do better. The problem with supplements is you think you need a cabinet full of them to feel your best, but you don't. IM8's daily ultimate essentials has 16 supplements in one drink. Our co-host, our own co-host, Ed Elson, who is not yet 30, has been giving IM8 a try. Ed, give us your personal experience here.

• 16:26Speaker 03

  It's very good. I take it in the morning. I take it before I work out. It's hydrating. It makes me feel fresh, makes me feel alert. And then I go out and I have a cracking day and I take on the podcast. So a big fan.

• 16:37Scott Galloway?

  Fresh and alert. Go to im8health.com/profg right now and use code PROP G for a free welcome kit. Five free travel sachets plus 10% off your order. That's code PROP G at im8health.com/profg. Code PROP G at im8health.com/profg. These statements have not been evaluated with the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.

• 17:05Scott Galloway?

  Support for the show comes from Upwork. In a world where AI is changing every role in every industry, knowing who actually has deep expertise matters more than ever. That's why Upwork connects you with highly skilled freelance professionals with proven track record so you can hire with confidence. Upwork is a one-stop platform to find, hire, and pay expert freelancers across more than 125 categories. That means you can find talent and start filling those skill gaps, launch projects faster and scale support up or down without committing to full-time headcount. You can also browse profiles, review people's past work and get help scoping the role. It's time to hire confidently while sticking to your timeline. Upwork also has Business Plus, which lets you access the top 1% of talent on Upwork. With AI-powered shortlisting, you'll get matched to the right freelancer in under six hours.

• 17:50Scott Galloway?

  Upwork can also take care of operational stuff, including contracts and payments, so you don't have to worry about it. Visit upwork.com right now and post your job for free. That's upwork.com to connect with top talent ready to help your business grow. That's U P W O R K dot com. Upwork.com.

• 18:10Scott Galloway?

  Support for the show comes from Pipe Drive. Sales teams spend up to 50% of their time on admin work rather than selling, building relationships and closing deals. You know, the work that's actually doing sales. Well, what if there was a tool that gave them that time back? That's where Pipe Drive comes in. It's an intelligent AI-powered sales CRM loved by growing sales teams. Pipe Drive automatically pulls deal history, emails, records, and previous conversations. You can walk into a call already briefed. During the meeting, Pipe Drive's AI note taker records and takes notes so you can stay in the conversation. Then it turns those notes into accurate, auto-drafted CRM updates ready for you to review and approve. The end result, less admin, more selling. Switch to a CRM built by salespeople for salespeople and join the over 100,000 companies

• 18:54Scott Galloway?

  already using Pipe Drive. Our link gets you an exclusive 30 days instead of the usual 14-day trial. No credit card or payment needed. Just head to pipedrive.com/profg to get started. That's pipedrive.com/profg and you can be up and running in minutes.

• 19:18Scott Galloway?

  Welcome back. Question number three comes from Joe from Toronto who texted us. "Hi, Prop G. How would you weigh the financial benefits of living with your parents against the independence and lifestyle benefits of moving out? I'm starting a well-paying job at a niche consulting firm in Toronto and only need to be in the office twice a week. I could live with my parents about an hour away and save aggressively to invest and build a strong nest egg. Alternatively, I could move downtown and gain more independence, but save significantly less over the next several years. How would you think about that trade-off?" Ugh, that's a good one. Okay, so just a little bit of data here. According to the Fed, nearly half of American adults under 30 live with a parent. That's-- Jesus Christ, can you get over that?

• 20:01Scott Galloway?

  That's 49% last year, up from 37% in 2019. And most of them have jobs. Seven in 10 Americans aged 25 to 34 living at home are employed. So is it worth it? A Fed study found that young adults living at home actually don't offset the housing savings by spending more elsewhere. They actually spend less than peers who moved out in categories including clothing and recreation. But the long-run data cuts the other way. Urban Institute found young adults who lived with parents between 25 and 34 were significantly less likely to be homeowners or even heads of their own household 10 years later. And when they did buy, they didn't buy more expensive homes or carry smaller mortgages, so there's no visible trace of savings ever showing up. The key appears to be how long you stay at home.

• 20:44Scott Galloway?

  Research cited by the Institute for Fiscal Studies found that US men who lived at home for a single year in their late 20s had better labor market outcomes than those who didn't. However, staying four to six years was associated with a reduced likelihood of holding full-time employment. So it's situational. The reality is if you're a responsible young man or woman who's looking to save a home and has a job-- the way I would phrase it is the following. Living at home when you're just sleeping there. You're out of the house, you're with friends, you're working hard. You're out of the house 14 to 16 hours a day. I would argue being at home and saving the money as long as you're disciplined around saving and investing that money, I think it's a great thing.

• 21:27Scott Galloway?

  And so I moved home after I started my job at Morgan Stanley, and then I moved home for a year because, one, my mom was sick, but, two, I liked living at home and it just made things easier for me. I think, like a lot of young men, I like the idea of simplifying my life, saving some money so I could just focus on work. I would argue that that's healthy. What isn't healthy? You're spending 20 hours a day at home, playing video games. You know, you come out of your basement to ask your mom, "Where's the meatloaf?" But you're not out. You're not working, you're not exploring, you're not finding friends, mentors, and mates. That is unhealthy. And unfortunately, it begins to be kind of an enablement. And these kids don't develop the skills.

• 22:12Scott Galloway?

  The real world is a fantastic training ground for making money, making relationships, developing social skills. And you are not playing, you are not practicing or on the field learning those skills when you're at home. So living at home, I think it's great as long as you are taking the money you'd be spending on rent and saving or investing. And specifically, you are just sleeping at home and nothing more. You're not in your basement, you're not hanging out, you're not using it as an excuse to not have the economic pressure or relationship pressure. So it comes down to this. If it's a bed, then stay at home and save the money. If it's a real home and you are not developing the skills

• 22:56Scott Galloway?

  or the economic warrior mentality to build your own life, then it's a problem. And it's-- a lot of my friends talk such a big game. Once my parents, once my kids are done with college, they're out, they're on their own. And then this is what happens. Your kids are good kids. They're working hard, they're trying hard. They can't afford to live in New York and pursue their dream of fashion or whatever it is, and so they continue to support them. Or the real fear is what I call a failure to launch. And that is the kid doesn't finish college, can't find a career, doesn't feel real economic pressure and incentive. I had economic pressure at some point. You know, I had, my mom wasn't just going to let me stay at home. If she'd come home when I was an adult and I was just sitting watching TV,

• 23:41Scott Galloway?

  that would have been a very ugly conversation, and I think she would have kicked me out. But I was getting home at midnight, going to sleep, and I was up at 7:00 AM again. So I think she was fine to, you know, like seeing me and was happy to support me in my younger years. So again, I think it comes down to the following litmus test. You shouldn't live at home. If you're sleeping at home, that's fine. But you shouldn't be living at home other than very short periods of time post-college or post-graduation from high school. So in your instance, the only thing that scares me is that hour commute. I would suggest saving some money and then finding a shitty apartment really close-- a shitty but clean apartment really close to your work

• 24:25Scott Galloway?

  and then reinvesting those additional two hours in your social and your professional life. That's a lot of time. That's 10 hours a week in commuting time. So if you were to, say, add another five or six hours to work and another four hours to just trying to meet people, I would argue over the medium and the long term, you're going to be economically better off. But again, it comes down to, are you living at home or is it just a room there? If it's just a bed, more power to you. Be disciplined, save the money. But if your parents' home is your home, move out. That's all for this episode. If you'd like to submit a question, please email a voice recording to [email protected]. That's [email protected]. Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit,

• 25:10Scott Galloway?

  and we might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Janer. Kami Rik is our social producer. Brad Williams is our editor. And Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from Prop G Media.