SYNOPSIS: In light of the recent stock market crunch why is Bush still so adamant about privatizing Social Security?

Since the early months of 2000, the Nasdaq has fallen about 75 percent, the broader S.&P. 500 more than 40 percent. These aren't mere paper losses; they translate into disappointment and even hardship for millions of Americans. Now more than ever we need institutions that provide a safety net for the middle class.

Yet George W. Bush still wants to party like it's 1999. On Wednesday he insisted that he continued to favor partially privatizing Social Security.

Bear in mind that ordinary Americans are already more vulnerable to stock market fluctuations than ever before. Twenty years ago most workers had "defined benefit" pension plans: their employers promised them a certain amount per year. During the long bull market, however, such plans were largely replaced with 401(k)'s — "defined contribution" plans whose payoff depends on the market. This sounded great when stocks were rising. But now many will find either that they can't retire, or that they will have to get by with much less than they expected. For some, Social Security will be all that's left.

Mr. Bush first proposed privatizing Social Security back when people still believed that stocks only go up. Even then his proposal made no sense; as I've explained before, it was based on the claim that 2-1=4, that you can divert the payroll taxes of younger workers into personal accounts and still pay promised benefits to older workers. But now even the nonsensical promise that individual accounts would earn stock market returns looks pretty unappealing. So why does he keep pushing the idea?

One reason is ideology: hard-line conservatives are determined to build a bridge back to the 1920's. Another is Mr. Bush's infallibility complex: to back off on privatization would be to admit, at least implicitly, to a mistake — and this administration never, ever does that.

But there may be a third reason. Ask yourself: Who would benefit directly from the creation of "personal accounts" under Social Security?

Those personal accounts won't be like personal stock portfolios. The Social Security Administration can't and won't become a stockbroker for 130 million clients, most of them with quite small accounts. Instead it's likely that a privatization scheme would require individuals to invest with one of a handful of designated private investment funds.

That would mean enormous commissions for the managers of those funds. And those who would be likely to benefit showed their appreciation, in advance: During the 2000 election, according to opensecrets.org, campaign contributors in the two categories labeled "securities and investment" and "miscellaneous finance" (basically individual wheeler-dealers) gave Mr. Bush almost six times as much as they gave Al Gore.

Here, too, Mr. Bush's past is prologue. I reported in an earlier column the story of Utimco, the University of Texas fund that, while Mr. Bush was governor and the current secretary of commerce, Donald Evans, headed the U.T. regents, placed more than $1 billion with private funds, many with close business or political ties to Mr. Bush himself. Among the beneficiaries were the Wyly brothers, who later financed a crucial smear campaign against John McCain. ("Bush reveals his poisonous colors" was the headline of a piece about that campaign, written by the online pundit Andrew Sullivan.)

Could America's retirement savings really be used to reward the administration's friends? Ask the teachers of Texas. In one of many odd deals during Mr. Bush's time as governor, the Texas teachers' retirement system sold several buildings without open bids, taking a $70 million loss, to a company controlled by Richard Rainwater, a prime mover behind Mr. Bush's rise to wealth.

In an Aug. 16, 1998, article in The Houston Chronicle — which should be required reading for anyone trying to understand the Bush administration — the reporter, R. G. Ratcliffe, matter-of-factly summarized this and many other unusual deals thus: "A pattern emerges: When a Bush is in power, Bush's business associates benefit."

Of course, personal Social Security accounts would have to be managed by nationally reputable institutions. Mr. Bush couldn't give the business to his old Texas cronies — could he?

When a politician won't let go of a proposal that, by any normal calculation, should be completely off the table, you have to wonder.

Originally published in The New York Times, 7.26.02