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It ’ s probably altruistic, but I thought for a long time we need presidents who are so devoted to doing the right thing with and for the American people that they ’ re prepared to lose for their values and to hang their values out in public for everyone to see them.

Q: Very few people know as much about budgets as you do.

And as far as your work in the private sector, some said it was miraculous what happened at ALCOA. Do you think that the advice that you gave the administration, if it were a different administration, with different management styles and techniques, that there may have been a different ending to your story at Treasury?

Paul O ’ Neill: There are times when I fi nd I ’ d rather not be right; I wish it were true that we didn ’ t have to fi x Social Security and Medicare, and we didn ’ t need to fi x the structure of the tax system.

However, the issues that I argued for and about over a long time are still there, and they ’ re worse now. The passage of time is not going to fi x these problems. The fact that our 10,000 - page tax system is an abomination and actually lends credence to the idea that we ’ re not an intelligent people hasn ’ t improved with the passage of time. We have several thousand more pages than when I came in 2001, in the federal tax code, and by the best estimates we ’ re undercollecting what people are supposed to pay by $ 300

or $ 400 billion a year. This is all because of complexity and the insanity of this thing that we now call our “ revenue raising system ” in this country.

It ’ s going to take a president with real courage to provide the leadership to make it simple, to make it transparent so that people pay their fair share. If you think about it, right now, the undercollection that ’ s represented by that $ 300 or $ 400 billion is like a 15 percent surcharge on the rest of us. You know, Medicare and Social Security could be fi xed in a really wonderful way c16.indd 215

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Interviews

if we could elect a president who would tell the people some fundamental truths. One fundamental truth is this: The federal government doesn ’ t have any money that it doesn ’ t fi rst take away from the people — pretty straightforward and simple.

Now the other important truth is this: I believe that in a just society, especially one that is as wealthy as we are, when people get to be 65 years old they should have fi nancial security. That means not just the money to pay for your daily bread and your normal living expenses, but for your health and medical care needs as well. The only way to do that is to save, and right now we ’ re living in this condition where we don ’ t really save Social Security tax money, we don ’ t really save Medicare tax money — we ’ re spending it all. And in order to get on top of this notion of fi nancial security for people when they get to be 65, we actually have to save.

I ’ ll give you some numbers to make the point. If we were to say that we want people to have a $ 1 million annuity when they get to be age 65, this is what we would have to do: If we put $ 23,000 in an account on the day of birth for every of one of the 4 million kids born in the United States each year, and we had a 6 percent compound return rate, which is below the norm since 1929, every person would have actually over a million dollars by the time they get to be 65, which would be an annuity for $ 82,000 a year for 20 years, which is longer than the expected life span when you get to be 65.

Now people will say, well we have to take into account infl ation and all that, and that ’ s true. But this notion illustrates the point that if we as a society decided that we were going to save $ 92

billion a year, which is what it would take to put this notion into effect, we could in effect go a long way toward guaranteeing fi nancial security and money to pay for the health and medical care needs when every American gets to be 65, without regard to whatever they did in their lifetime, so that we can make