From a distance, Washington's latest undertaking to save Social Security looks like all of the other budgetary brouhahas that periodically send the Beltway's denizens into a tizzy. There are the earnest policy wonks brandishing ominous-looking charts, the president and elder statesmen in Congress speaking in somber tones about the need for bipartisan cooperation. And so, one might guess, in all likelihood the result will be the same as it has been in most such occurrences: after an extended period of hand-wringing, the wonks and the president and the Congress will have a sit-down and agree on some technical fix that makes the problem go away without unduly bothering the rest of us.

It might look this way, but in fact something altogether different, and far more important, is happening. The ritual deliberation about keeping Social Security in the black has occasioned a larger argument about whether Social Security will continue to be anything like Social Security--that is, not how much of a pension the government should guarantee its citizens, but whether such a guarantee should exist at all. It is ultimately not a technical question but a moral and political one.

This may seem surprising. Social Security, we have been endlessly reminded, is the "third rail" of politics--touch it and you die. This is the most popular federal program, held sacrosanct by millions of politically active beneficiaries and backed by a nearly omnipotent elderly lobby. It is difficult to believe that, under these conditions, elected officials would contemplate changes so dramatic that they would alter the program's very purpose. Yet they are. The ground has shifted rapidly beneath our feet in such a way as to be undetectable to all but the sort of people who pore over actuarial tables and eagerly devour the reports of advisory commissions. It has now reached the point where the notion of preserving Social Security in its current form--even a scaled-back version--has been all but abandoned by the politicians who count.

How has this come about? It begins with the well-known threat of insolvency that has plagued Social Security for years. Social Security benefits are paid mostly by current workers. During the prime working years of the baby-boom generation, this arrangement has meant that every retiree has been supported by a large number of workers. In the past, Congress has taken advantage of this situation by maintaining a surplus (which it uses to help cover the deficit) and dishing out regular benefit increases, usually timed to achieve maximum impact in election years. However, the impending retirement of the baby boomers will turn the worker-retiree ratio around, a prospect that has forced Congress to contemplate the far less gratifying task of taking some of those benefit increases back, which it has generally done with less swiftness and more acrimony.

Hence, Social Security has remained in a constant state of crisis for more than a decade and a half. To the unwashed masses, it remains as popular as ever. But, among policymakers and intellectuals, what was once a shining achievement of progressive governance has lost its luster. Social Security has become slightly disreputable--a big government relic associated with greedy geezers and demagogic liberal politicians who remain willfully blind to demographic and economic imperatives.

Meanwhile, the economic conditions that gave rise to Social Security have grown ever more distant and fuzzy. Americans in the 1930s considered the stock market risky and worried about dying destitute--fears that seem almost quaint today. And, as the growing number of retirees has shrunk the rate of return on Social Security taxes, a booming stock market has made private investment ever more appealing.

In this fertile soil, a radical notion called Social Security privatization has taken root. While the idea has been around for many years, until recently its constituency never reached much beyond right-wing think tanks and Ayn Rand devotees. Now, however, the erosion of Social Security's prestige has given new currency to privatization, on both sides of the partisan divide. Indeed, the idea has progressed through the corridors of power so swiftly that it has become the central criterion of Social Security reform. Newspaper articles and interest groups now judge various proposals not on what they do to save Social Security but on how far they go toward full privatization.

What does this mean, though? The name is slightly misleading. " Privatization" typically means hiring a private company to do the same job government used to do--say, replacing a town's garbage collectors with a private company. Privatizing Social Security, though, does not mean subcontracting the work of running Social Security to a private firm. It means embracing an entirely different philosophy. Under Social Security, the risk and responsibility associated with planning one's retirement are spread across the entire workforce. So currently you pay taxes into a giant single fund, and the government provides you a benefit, which it calculates based on your contributions and need. Under a privatized system, risk would be concentrated on the individual--meaning that your Social Security taxes would go into a personal account and your retirement income would depend on how much salary you earned while working and how shrewdly (or luckily) you invested it.

Privatized Social Security, then, would eschew the defining features of Social Security. Income redistribution--Social Security's great progressive achievement--would not be possible under a privatized system. Currently, the Social Security formula is fixed to give a better deal to the poor than to the rich. For instance, someone who earns $30,000 every year for his entire career pays half as much Social Security tax as someone who earns $60,000 a year for his entire career, but gets just 29 percent less in benefits upon retirement. These sorts of transfers can happen only because everybody's Social Security taxes go into one big pot. If everybody saves for himself, you can't give the poor a better deal.

And, of course, there is more to Social Security than protecting those of relatively modest means. As social insurance, it protects individuals from the misfortunes of brute luck. Under a privatized system, by contrast, individuals would be at the mercy of forces beyond their control, such as the hazards of the market. While it is true that stocks tend to bear high returns over the long run, this fact would not help the unfortunate souls whose portfolios take a dive right before they retire. Gary Burtless of the Brookings Institution conducted a study in which he supposed that workers through the last century had put a portion of their salary into a stock index fund every year until retirement--a reasonable approximation of how a privatized system might function. He found that each worker's ultimate fortune would have depended entirely on what year he or she stopped working. Workers who retired in 1969 would have been able to spend the rest of their lives living on slightly higher incomes than they had enjoyed while they were working. Those who retired six years later would have had to make do on less than 40 percent of their working incomes.

Even people who earned the same amount of money, then, could have radically different retirement incomes from a privatized system. Suppose two workers each earned the same total salary through their working careers, but one earned more at a young age while the other earned more at an old age. The first worker could accumulate far more in his account simply because the compounding of his returns would kick in earlier.

It is not that these kinds of disparities would represent something new in American life. Private pensions work this way--shrewd and fortunate investors end up with enough to buy a powerboat; foolish or unlucky ones wind up gleaning the early-bird special at Denny's. Social Security, however, has always been different from this. It was designed as a buffer against the vagaries of the market--again, it was a form of insurance. Privatizing Social Security would turn it into just another kind of private pension.

Indeed, for conservatives, this is precisely the point. "Under a privatized Social Security system, workers would have full property rights in their retirement accounts," writes Michael Tanner, who has led the privatization crusade from his perch at the libertarian Cato Institute. "They would own the money in them, the same way people own their IRAs or 401(k) plans." Tanner's analogy to IRAs is revealing. These were originally designed solely to provide for retirement, but, in the short time they have existed, Congress and the president have allowed them to be spent on an ever-growing number of needs, like home purchases, medical expenses, and tuition. The same thing would no doubt happen with individual Social Security accounts. And why not? If it's your own account, the government has scant justification to force you to save it if you prefer to spend it. Once Social Security is converted into an individual-account-based system, it is almost inevitable that the individual accounts will become private property. Once you take this final step--and it is the easiest and most logical one--then there is no difference between privatizing Social Security and simply abolishing it.

For these reasons, in part, very few national figures endorse total privatization. Instead most Republicans, and no small number of Democrats, have endorsed "partial privatization." This involves keeping the current system, perhaps in scaled-down form, and creating new individual accounts to go with it. This two-tiered system strikes people as such a reasonable compromise that nearly everyone in the know assumes that some version of it will ultimately be passed into law.

But such a compromise might turn out to be little more than a short-lived transition to full privatization. The reason lies in the fact that your Social Security taxes do not all go toward your own retirement. While future Social Security benefits will have to be cut, today's retirees will continue to enjoy full benefits--meaning that a portion of your payroll taxes will have to support them, no matter what. Another part of your payroll taxes goes toward benefits for disabled workers, who get far more out of the system than they put in because their tax-paying days were cut short by injury. (Of course, if you turn out to be a disabled worker yourself, this part of it is a good deal.) And, if you earn a lot of money, another chunk of your Social Security taxes subsidizes lower-earning workers.

So Social Security has many burdens to bear, and none of the partial privatization schemes would change this. If you add on individual accounts, then each American would have two things: first, a regular Social Security account, parts of which are being siphoned off to current retirees, the disabled, and low earners; and second, an individual account, the benefits of which accrue solely to you. Can there be any doubt as to what would happen next? People would look at their two accounts--one of which was being sucked away to help complete strangers, the other of which was nicely compounding into a nest egg--and demand that Congress reduce the public account and increase the private one. The social insurance component would dwindle away into a withered rump or disappear altogether. Partial privatization is the thin end of a wedge.

The appeal of this to conservatives is clear enough. If you believe that individuals should provide for their own retirements and insure themselves against misfortune, then partial privatization is good, and full privatization is even better. But the advocates of privatization have not presented this argument to the public--because, in all likelihood, the public wouldn't buy it. So, rather than promote their plan on ideological grounds, they have made a different claim: privatization is a way to save Social Security. They have turned a moral question into a technical issue. And, since it is indeed true that changes are necessary to save Social Security, this has cast the matter in an exceedingly positive light. The business lobbies and conservative think tanks pushing for privatization, who organized long before their opponents and have lots of money to spend, so far have had their way in framing the issue. Newspaper and magazine reporters, who generally do not have the time to immerse themselves in the policy details, portray privatizers as bold reformers willing to make tough decisions and their opponents as apologists for the status quo.

But all of this obscures a simple fact: privatization has nothing whatsoever to do with saving Social Security. It is possible to save Social Security and to partially privatize it, but it is not possible to save Social Security by partially privatizing it. The two questions are utterly separate.

Privatization advocates have so thoroughly confused the issue that we have forgotten that Social Security's financial problem is extremely simple. The problem with Social Security is that, at some point in the future, projections show it will be paying out more in benefits than it can collect in taxes. Saving the program, then, means either spending less or taking in more--and privatization is not necessarily germane to that fact.

Consider the three known methods of partial privatization. The first would keep the current system and add private accounts on top. House Republicans like Newt Gingrich and John Kasich favor this approach. They would fund the new accounts out of projected budget surpluses, although this could also be done through a tax hike. Regardless of which method they choose, the bottom line is the same: setting up a completely separate new system would not save the current system from insolvency. You'd still have to find another way to spend less or take in more money.

The second scheme would reduce the Social Security tax by some amount and devote that money to private accounts. Senator Daniel Patrick Moynihan has proposed this. The trouble is that, by diverting part of the Social Security tax to private accounts, it would make the problem worse, by denying revenue to regular Social Security. Moynihan's solution is to cut benefits enough to pay for the individual accounts and to keep Social Security solvent. So his plan would save Social Security and partially privatize it, but only by introducing far larger cuts than would be necessary if he didn't privatize it in the first place.

The final proposal is an innovative idea put forth by economist Martin Feldstein, a Harvard professor and former Reagan adviser. Feldstein's plan would use the budget surplus to give each worker a tax-free individual account. Then, for every dollar the account earns, the government would reduce the worker's regular Social Security payments by 75 cents. The individual accounts, in other words, would replace Social Security payments, which would save the government money. The genius of this plan is that nobody would lose a cent of benefits. Even if your individual account went broke, your Social Security checks would stay the same. Unsurprisingly, this same feature has made the Feldstein plan wildly popular on Capitol Hill.

But, like most free-lunch plans, this one has its drawbacks. First of all, even with heroically optimistic assumptions, it wouldn't save enough money to keep Social Security solvent. Second, it would finance the individual accounts with the budget surplus, but those surpluses are predicted to run out in about 20 years. Feldstein says that's not a problem because his plan would massively boost economic growth, thus creating future budget surpluses solving everything. But, if Feldstein's rosy scenario failed to materialize-- and Reaganites have been known to get these things wrong from time to time-- Social Security would have a huge financing gap requiring major tax increases or spending cuts. This isn't a solution to Social Security's problem--it is Social Security's problem.

Faulty though they may be, all the privatization schemes share a common selling point that contains a nugget of truth. In the long run, investing in the stock market offers a high rate of return and the potential for vast wealth. Currently, the government invests the Social Security trust fund in low-yield Treasury bills. The attraction of individual accounts is that they would harness those high rates of return in the private market.

But this still is not a reason to support individual accounts. The government could just as well take part of the trust fund and invest it in private equities in one lump sum. The higher returns would boost the fund's income but would do so more efficiently than a system of individual accounts, on which investment managers would take commissions. (According to some projections, commissions on accounts could eat up 20 percent of their value.) And, of course, such an arrangement would also eliminate the risk of dissolving the Social Security system.

For privatization advocates, of course, that defeats the whole purpose. So naturally they consider investing the trust fund in equities to be anathema. Feldstein, who proposed just such a scheme in 1975, now attacks it as incipient socialism. Congressional Republicans have preemptively ruled it out: giving the federal government a piece of corporate America, they say, could lead to all sorts of political abuses, such as government using its leverage to punish tobacco firms.

Yet, while such fears have an intuitive appeal, it's possible to invest a portion of the trust fund in such a way as to assuage the fears of even the most fretful market purist. As Brookings scholars Henry Aaron and Robert Reischauer have proposed in their outstanding new book on Social Security, the government could establish an independent board, modeled after the Federal Reserve, to handle the investing. To ensure its political autonomy, the board would appoint governors who would serve long, staggered terms. They would hire private equity managers on a competitive basis, and they would invest only in passive index funds and forfeit all voting rights on their shares. If future Congresses wanted to meddle with private enterprise, there's no reason why they'd try to do it by penetrating all those safeguards when they have at their disposal the far more powerful levers of taxes and regulation.

If these multiple firewalls appear inadequate, think about how the Federal Reserve works. With its vast power over the fortunes of presidents and corporations, its potential for corruption and political influence dwarfs that of a board charged with investing part of Social Security's reserves. Yet, despite the temptations, the Fed has remained free of any whiff of financial chicanery. Privatizers have no answer to Aaron and Reischauer's plan beyond the inchoate suspicion that it must somehow fail. And in fact they want it to fail. If there is another, more efficient way to capture the stock market's high returns for Social Security without private accounts, then privatization advocates will have lost their best argument and will be forced to make their case on explicitly ideological--that is, libertarian-- grounds.

As things stand now, though, they won't have to make that argument, because President Clinton won't force the issue. This is an unusual circumstance, since Democrats have--as a birthright of sorts--an automatic advantage in any dispute over Social Security. This time Republicans hold the cards. Clinton has yearned openly to make Social Security reform the signature issue of his legacy. In order to entice distrustful Republicans to make a deal, he has gone to elaborate lengths in avoiding any criticism of their proposals. Even Clinton's economic advisers studiously avoid betraying any hint of what variety of outcome they might prefer.

Clinton has even declared that he would rather use market returns to shore up Social Security than to cut benefits. That is, he endorsed either some version of the Aaron-Reischauer plan or individual accounts. Clinton said he didn't care which--an odd subject on which to have no opinion, since it is the essential determinant of Social Security's fate. Since the Republicans do have a preference, this means that, before negotiations have even begun, the White House has tacitly acceded to partial privatization.

That is a remarkable philosophical concession, even for Clinton. But what does this mean? The outlines of the conventional interpretation have already begun to take shape. It will go something like this: Clinton can either demagogue the Republicans and refuse to allow individual accounts, or he can cast aside his party's hidebound liberal wing and make the bold, tough choices necessary to save Social Security.

At first blush, this analysis seems to make sense because, for most of recent history, liberal Democrats were indeed reluctant to confront Social Security's impending solvency problem. Knowing that the program is popular, liberal Democrats have been slow to acknowledge that it needs reform in order to survive--and they have been quick to attack Republicans who have recognized this reality, even those who did so in the hopes of fixing the system without destroying it. This dynamic dominated the issue for so long that it has been burned into the Beltway's consciousness.

Yet now we have something that is almost the complete opposite. Privatization--with its promise of untold riches for all--has made conventional Social Security reform seem drab and depressing. Privatization advocates have discovered that their most effective political argument is to promise that nobody will be hurt at all. When a coalition of liberal groups criticized individual accounts, the Cato Institute issued a statement saying, "The most appropriate name for this group would be 'The Castor Oil Coalition. '" Now that the right has turned to selling snake oil, it has turned around and accused the left of pushing castor oil.

Meanwhile, the traditional center-right position of shoring up the trust fund by trimming benefits without raising taxes finds itself well to the left of center. The plan Aaron and Reischauer champion, which just five years ago would have been far too conservative to pass Congress, is now probably too liberal for the Democratic White House. The most sensible solution has gone from unthinkably drastic to unthinkably tepid.

When President Roosevelt first introduced Social Security, conservatives assailed it as errant Bolshevism. And, at the time, there was indeed something radical about the idea that the federal government would take responsibility for keeping the old and the disabled out of poverty, spreading risk across the income spectrum and across generations. Soon, however, the notion gained widespread acceptance, as society came to believe that the best free market system has enclaves here and there in which fortune, skill, and inherited advantage play no part. What was at stake in 1935 is the same idea that is at stake again now, only, instead of contesting it, its opponents are simply assuming it away.