Books in Brief: Social Security: Universal or Selective?

Social Security: Universal or Selective? by Wilbur J. Cohen and Milton Friedman (American Enterprise Institute, 114 pp., $5.75). Mr. Cohen, the witty former secretary of HEW, is clearly on the defensive during this lively debate. When questioned about the deceptive packaging of Social Security (taxes called “contributions,” the minuscule “trust fund,” the employer supposedly “paying half”), Cohen replies, “Well, lots of things in life are illogical,” and “I believe in rhetoric because it makes a lot of things palatable that might be unpalatable to economists.” Professor Friedman argues that the Social Security tax is a disincentive to work because it falls most heavily on the poor, while the benefits are only vaguely related to need or prior contributions. The only assurance that benefits will continue to be paid, says Friedman, is the willingness of future taxpayers to tax themselves at increasing rates (the tax rose twice as fast as benefits in the last generation). Friedman would substitute a negative income tax for all indirect or categorical income supplement schemes, and either phase out Social Security or allow individuals to make private pension arrangements. The sacred cow that once gored Goldwater comes out of this match exhausted and mortally wounded.