I'm confused

President Bush, in making his case for partially privatizing Social Security, says he is battling two myths about the retirement system. One is indeed a falsehood, though I'm not sure how many people actually believe it: That the money a person pays in Social Security taxes is saved for them until such time as they retire. Indeed, Social Security taxes paid by today's workers go to pay the benefits received by today's retirees. That's the reason, of course, why the long term solvency of the system is in jeopardy; longer lifespans and lower birthrates means more money will soon be paid out then collected in taxes--by 2018, according to many estimates.

Which brings us to the other myth the president claims is keeping people from supporting his plan: that there is a surplus of Social Security funds that will last until 2041 or so. (A disputed projection, and one that assumes an anemic level of economic growth.) The president says the surplus is just a cabinet full of IOUs; pieces of paper that are meaningless.

Well, actually, that surplus is held in Treasury bonds, which are used to finance government debt and which generally are a safe if low-yield investment that many people use to balance risk in their portfolios. In fact, the president, during his prime-time news conference Thursday night, sought to reassure the American public that under his plan, risk-averse workers will be able to invest in Treasury bonds.

So do you see why I'm confused? On the one hand, Bush claims the Social Security surplus is a fiction, an argument he is free to make, despite the dangerous signal it sends to anyone who has invested in the federal government's considerable debt. But on the other hand, Bush touts Treasury bonds as a risk-free way for people to benefit from his plan to change Social Security. I would say he can't have it both ways, but given his administration's record to date, I'd probably be wrong.