onathon Chait gives the game away in his screed in The New Republic against Social Security privatization.

As conservatives well understand, once a group of voters has been given a property right by Washington, they will never allow it to be taken away. The individual rights will be a ratchet, one that can be expanded but never contracted. The pressure for expansion would be especially strong during extended bull market runs, such as during the late '90s, when the public (and even some economists) tends to delude itself into thinking that stocks will rise forever. This is why conservatives are so insistent upon establishing individual accounts. They have uncharacteristically volunteered compromises—even offering to violate their theological opposition to tax hikes—in order to insert their opening wedge. Privatizers understand full well that any concessions they make can be legislated away in the future, while private accounts cannot. 

In light of all this, it should be clear how critical it is to block private accounts. And it's curious, if not outright bizarre, that so many of those who do not share the privatizers' basic hostility to Social Security nonetheless urge the Democrats to compromise with them.

In other words, as soon as you give people the right to control their own accounts, and perceive higher returns from them, the next thing you know, they'll prefer it to traditional Social Security.  Then where'll we be?  Once people own their own retirement savings, they'll want the right to use them as they see fit.

Which, in my mind, is the best reason of all for having private accounts.  Social Security is a Ponzi scheme.  And like any Ponzi scheme, it requires a greater number of new investors every year to keep the money going to the old investors.  There is no trust fund, and no matter how often you talk about putting the "trust fund" in a "lock box", there won't ever be one.

Now, the Left argues that the previous statement isn't really true at all.  There is a trust fund, it just doesn't have any cash in it.  Instead, the trust fund holds US Treasury Bonds, the safest, most secure investments on the planet, and similar to the T-Bonds held by millions of investors.  All the trust fund money has been invested, you see.

hat's a crock for a couple of reasons.  First, it's an investment to buy government bonds when I do it, because I am purchasing a claim on someone else's future income, i.e. the government's future tax revenues.  It's not an investment when the government does it. 

Look at it this way.  Let's say I make $100,000 a year. I spend 97,000 on food, clothing, housing, etc.  With my last $3,000, I decide I want a really cool plasma TV.  And so, I take the last three grand out of the bank, and I replace it with an IOU that says, "I promise to pay myself back 3,000.  Plus interest!" 

Is that an investment in a $3,000 bond?  I don't think so. I may have a nice $3,000 TV, but I don't have an "investment" in jack.

But that's exactly what the government does with Social Security.  Social Security is just another form of tax revenue that the government spends on whatever it wants to spend, but it writes IOUs to itself, to remind it to pay itself back for spending the money in the first place.

Even worse, In the case of my IUO for the TV set, I can just repudiate the debt.  I can decide, hey, I don't want to pay myself back.  I can just stiff me, and there's nothing I can do about it.  Similarly, the government can stiff itself in the repayment of Social Security returns.

The government can raise the retirement age.  It can means-test recipients.  It can reduce benefits.  All it takes is an act of Congress.  In fact, for people in my age cohort, the retirement age has already been raised once.  Participating in Social Security gives you no claim at all on the government. 

Buying a bond, on the other hand, does.  A bond is a legal claim for payment by the government.  Theoretically, the government, being a sovereign entity, could repudiate that debt, but doing so would destroy it's credit, and, hence, severely limit its ability to ever borrow money again.

Changing, reducing, means-testing, or eliminating benefits has no similar legal or financial effect.  You have a legal claim to nothing with Social Security.  Congress can short-change you any time it wants.  The only thing that prevents congress from doing so it the political repercussions. At best, Social Security benefits exist as a moral claim, and nothing else.  Certainly, according to the Supreme Court, nothing enforceable in any legal fashion.

mplicit in Chait's argument is the idea that we can't be trusted to spend our own money wisely.  We need the wise solons of the government to hold that money for us, to spend it approproately, then, generously give it back to us in the future.

If we all get private accounts, that power is stripped away from the government.  Because, as even Mr. Chait admits, the public would love owning their own retirement accounts.  And once we had them we'd not only want to keep them, but to expand them, just like we did with 401(k) plans and IRAs.  So, in order to maintain the liberal goals that Chait desires to accomplish, the puiblic, even if they want them, and would love them, must never be allowed to have them.

Chait, and his fellows on the Left know such much better than we what should be done with our money.  As Bill Clinton once said about income taxes, "I'd love to give you all that money back in a tax cut, if I thought you'd spend it properly."

It's as true with Social Security as it is with income taxation:  If you agree in principle that the government has a right to take some portion of your income, you've just agreed that they have the power to take all of it.

Democrats argue that the end of traditional  social security means that old people will be sleeping in the streets and eating Alpo.  Well, maybe, but that argument leaves out an important point.  If everyone is putting away some portion of their incomes in a private account, then won't they have retirement saving that will prevent that from happening anyway?

So, really, why care if the savings are in private accounts or public accounts—especially if private accounts offer a greater return?  What would be the difference?

One difference immediately occurs to me, though.  Once the money is in private accounts, Social Security can't be raided by the Federal Government to be spent on general budget items. One wonders if that has some bearing on the Left's calculations.