FRIEDMAN There is no relationship whatsoever. We
have a system under which you have a set of taxes
for Social Security-- named for Social Security,
but it doesn't matter, they're payroll taxes,
terrible taxes, regressive taxes. Nobody... you
could not get a legislature to vote such a tax
on its own. Can you imagine proposing a tax
that would impose -- let's say sixteen percent
tax-- on all wages from the first dollar up to
the maximum and nothing beyond that. Can you
imagine voting that? Similarly, the other side
of the picture is that we have made a series of
commitments to people like me-- I receive Social
Security payments...

ROBINSON Oh so, it's my payroll tax that goes
to...

FRIEDMAN Absolutely. Absolutely. It's not
only your payroll tax, it's your income tax,
it's whatever taxes you pay. I get them. And
if you think you're going to get 'em, you're
kidding yourself.

ROBINSON It is a fundamental deceit hoisted upon
the American people and sustained for lo these
six decades.

FRIEDMAN Absolutely. If you read the Social
Security brochures, they say this is a system
under which you are putting aside money now for
your retirement.

ROBINSON And that's nonsense.

FRIEDMAN That is utterly fake. But let's suppose
it were true...

ROBINSON All-right.

FRIEDMAN ...for a moment. Why is it that it's
appropriate for government to come and tell me
what fraction of my income I should save for my
old age? If that's okay, why can't it come in and
tell me exactly what fraction of my income I have
to spend for food, what fraction for housing,
what fraction for clothing. Let me show you the
absurdity of this.

ROBINSON All-right.

FRIEDMAN Consider a young man of thirty-five who
has AIDS for whom the expected length of life
is ten years at the most maybe. Maybe there'll
be a cure. But his expected length of life is
not very long. Is it really intelligent for him
to put aside fifteen percent of his income for
retirement at age sixty-five?

ROBINSON It's outrageous.

FRIEDMAN It's outrageous.

ROBINSON Outrageous.

FRIEDMAN Exactly. The only word you can give to
it. And in my opinion, the whole Social Security
system is an outrage.

ROBINSON If Social Security is `an outrage,'
what would Milton Friedman do about it? A
Bonding Experience

ROBINSON How would you get rid of it?

FRIEDMAN Very simply. Here I am, I'm entire to a
certain number of payments in the future. Have
the government give me a bond equal to the
current present value of-- expected value of what
I'm entitled to.  You have already accumulated
some rights. And so have the government give you
a bond which will be due when you're sixty-five
which will be the present value of what you've
already accumulated under the law.  And then
close the whole thing up.

ROBINSON And just close the books.

FRIEDMAN Everybody gets what he's entitled to--
what he's been promised. The unfunded debt
under Social Security is funded, it's made
open and above-board. There's not a penny of
transition cost, and everybody is... In my world,
the payroll tax would be abolished, would be
eliminated. It's the worst tax we have on the
books. And everybody would be free to do what
he wanted about his own retirement.

ROBINSON Okay.

FRIEDMAN And on the whole he would do very
well. Now undoubtedly, people who argue
against that say, well what are you going to do
about these people who are so careless and so
unprudent that they don't accumulate anything for
retirement. That's a general problem. What do you
do about people who are poor, whether for their
own fault or not for their own fault? You and
I and society in general is not willing to see
'em starve to death.

ROBINSON Correct.

FRIEDMAN Well, I have always been in favor of
having a program under which (a negative income
tax) under which you will have some income
minimum you will provide for people whether they
are indigent because they're wastrels or whether
they're indigent because they're in bad health...

ROBINSON Even if it's their own fault, they
don't starve.

FRIEDMAN The problem is, it's always seemed to
me absurd that you make a hundred percent of
the people do something in order to make sure
that one or two percent of the people don't
behave badly.