Social Security Transition Costs, in a Nutshell

Milton Friedman explains it in a few sentences:

Q: If the federal government does move to private accounts, does the $3 trillion that President Bush says he would have to borrow to get that moving cause a greater stress on the American economy?

A: No, because we already have that obligation. What we are talking about is replacing an unfunded debt with funded debt. We already have an obligation to all the people like myself who are currently on Social Security. The difference is it is not written out as funded debt. So when you talk about borrowing, they are not really changing the total government debt, they are only changing how much they recognize, and what is open and above board and how much of it is hidden in other funding.

From an interview with Nobel laureate Milton Friedman in the Jackson (Tennessee) Sun. (Thanks to Donald Luskin for the pointer.) Read the whole interview if you're unfamiliar with Friedman's incisive analysis of matters economic.