SYNOPSIS: The Republican Social Security plan doesn't even have enough smoke to hide the mirrors.

Sometimes you just have to concede defeat. I read the Republican platform carefully, hoping to find some substance -- say, in the section on retirement security. But there is no there there.

So I turned instead to a working paper released in June by Martin Feldstein -- the eminent Harvard economist, former chairman of the Council of Economic Advisers and adviser to George W. Bush -- and Andrew Samwick. The paper is a detailed discussion of how Mr. Bush's proposal to allow individuals to divert part of their Social Security contributions into personal retirement accounts might work.

I say "might," because Mr. Bush has not been forthcoming on specifics. Indeed, the paper contains a disclaimer: "although the plan described here resembles the proposal of Governor Bush . . . our analysis is not of the 'Bush plan' since Governor Bush did not provide enough information with which to specify a 'Bush plan.' " Whew! I was wondering why I didn't understand the Bush plan, so it's a relief to know that it's not my fault: there isn't any plan.

The working paper, however, does contain a plan, and it makes interesting reading. Actually, that's a lie -- the paper is quite dull, even for economics. But the dullness is probably intentional, because what it says might otherwise seem explosive.

The big question about Bush-like plans is this: If Social Security contributions go into personal accounts instead of the trust fund, where does the Social Security system get the money to pay benefits? The Feldstein-Samwick paper offers two answers. First, according to their plan, any money people make on their personal retirement accounts will in effect be taxed at a 75 percent rate -- that is, every dollar you receive from your own investments will be offset by a 75-cent reduction in your other benefits. Since the authors assume that the high rates of return earned by stock in the postwar years will continue forever -- an assumption that has been refuted in recent papers by leading experts on financial markets, but never mind -- they believe that this will eventually save the system a lot of money.

However, this is still not enough. To balance the books the authors go on to offer an elaborate and implausible explanation of how the personal retirement accounts will increase government revenue: removing money from the Social Security system "reduces the likelihood that future Congresses or administrations would use those funds to finance additional spending or additional tax cuts" (gotta block those tax cuts!), which means more investment, which means more corporate profits, which means more corporate profit tax revenue, all of which will be used by future politicians -- the same sort of people we can't trust to handle Social Security revenues today -- to top up that trust fund 50-plus years from now. Oh, never mind.

What is really interesting, you see, is the timing. Even under the peculiar assumptions of the Feldstein-Samwick paper, the stuff that is supposed to save Social Security -- higher revenue, redemptions of personal accounts that cut the system's outlays -- comes far in the future. Meanwhile the system is paying out more, and taking in less. So what happens to the trust fund? Quite soon -- before 2010 -- it starts shrinking instead of growing. And the system completely runs out of money -- the Social Security trust fund disappears -- by about 2030. But don't worry, say the authors: the system will just go into debt until the good stuff puts it back into the black, sometime after 2050.

So here's the plan: if you are 35 years old, and you wonder where your benefits will come from when you are in your 70's, the answer is that although the Social Security trust fund will have disappeared by then, the retirement system will support you with borrowed money -- which it will have no trouble doing, because bond markets in 2040 will trust in the kindness of future politicians, who will beef up the Social Security balance sheet by turning over a large share of the corporate profits tax. Got it?

Now let's be clear here: I'm not describing Governor Bush's actual plan. I'm only describing something that is the best indication available about what his plan might look like if he did have a plan, which he doesn't.

Doesn't that make you feel secure?

Originally published in The New York Times, 8.2.00