SYNOPSIS: Private accounts are an end, not a means, to the ideology of Bush.

Last week the International Monetary Fund, which has no political stake in the debate over Social Security, told the prosaic truth: "the long-term financing problems of Social Security are not large" and "could be addressed through relatively small adjustments in the program's parameters."

But the Bush administration's hand-picked commission on Social Security reform which will meet behind closed doors tomorrow, violating the spirit if not the letter of the law wants you to believe that we must destroy the program in order to save it. To do this it must fabricate a crisis.

For example, the commission warns ominously about future financial shortfalls. It points out that in the year 2025 Social Security will pay $419 billion more in benefits than it collects in payroll taxes. It would spoil the effect to mention that this will be only 1 percent of G.D.P. A real party-pooper would point out that the provisions of the Bush tax cut which the administration insists is easily affordable will reduce revenue in 2025 by $700 billion.

The commission's analysis also somehow ignores the $6 trillion in surpluses that the Social Security system, which currently collects much more in payroll taxes than it pays in benefits, will run between now and 2025. Where will the money go? Of course, one interpretation of that mysterious disappearance is that the commission believes the surpluses will be used not to pay future benefits to retirees, but to cover the revenue lost because of the tax cut a revenue loss that the I.M.F. says will be almost twice as large as the administration admits.

It's true that the Social Security system will eventually have to change the way it invests its surpluses but only because it will face an embarrassment of riches. At the moment, Social Security surpluses are being used to pay off federal debt, a perfectly sound way to use the money. But because federal debt to the public is only $3 trillion, Social Security will eventually have to start buying private stocks and bonds. That is, unless big deficits reappear a project on which the Bush administration has made a good start.

The commission claims that letting Social Security buy private assets would be a disaster, that unless retirees' money is placed into private accounts it will be squandered to serve political ends. But the I.M.F. argues that "such investments could be managed in a manner that would minimize the risk of political interference." That argument rests on hard evidence. State and local government pension funds own more than $2 trillion in private-sector assets, and after some highly publicized incidents of politicization in the early 1980's the record has been extremely clean. In fact, government- run pension funds have earned the same rate of return as private funds.

Meanwhile, a system of private accounts would create a cash crisis, because baby boomers, whose payroll taxes help pay benefits to today's retirees, couldn't count on younger workers to do the same for them. Private accounts would also expose workers to a lot of risk, and managing millions of small individual accounts would be very expensive.

That last point is important. A forthcoming study from the Congressional Budget Office suggests that as much as 30 percent of the value of private accounts would end up consumed by administrative costs. This compares with costs that are less than 1 percent of benefits in today's Social Security system.

The outlines of a plan that would sustain Social Security without destroying it are clear: Allow the system to invest some of its surplus in private assets, and close the system's modest long-run financial shortfall by making minor adjustments to benefits and rescinding part of the recent tax cut. After all, a recent study by the Center on Budget and Policy Priorities found that the revenue lost because of the Bush tax cut will be more than twice the sum needed to secure Social Security without any reform at all for the next 75 years. The administration tried to refute that calculation, playing its usual game of statistical three-card monte "Look, honey, I just found $4 billion under the cushion, and 60 lines of stem cells too!" but the center's estimate matches those of the I.M.F. and other independent organizations.

The truth is that the only serious threat to Social Security comes from those who want to panic us into junking the system, when all it needs are minor repairs.

Originally published in The New York Times, 8.21.01