When it comes to Social Security, we’re all privatizers now. From President Clinton to Sen. Daniel Patrick Moynihan (D‑N.Y.) to the Republican leadership in Congress there is a growing consensus that any Social Security reform will include some form of individually owned, privately invested retirement accounts. But, before anyone gets too carried away, we need to recognize that this is just the beginning of the debate, not the end.

Most of the proposals being discussed on Capitol Hill would allow workers to divert a tiny portion of their payroll tax to individual accounts. For example, Sen. Moynihan’s proposal would allow workers to contribute 2 percent (of a 12.4 percent payroll tax) to private accounts. Sen. Phil Gramm (R‑Tex.) would up that to 3 percent. House Speaker Newt Gingrich and Rep. John Kasich (R‑Ohio) wouldn’t touch the payroll tax at all. They would fund individual accounts directly from coming budget surpluses and worry about the actual Social Security program later. President Clinton grudgingly says that he could accept small individual accounts as long as they don’t really change Social Security’s structure.

The reasons for all this dime-store privatization are obvious. Sen. Moynihan and President Clinton desire to save Social Security as we have known it. They recognize the growing public support for privatization. Kicking and screaming the whole way, they will accept just enough privatization to head off real reform. And timidity is typical of the Republicans’ recent drift. They still lack the courage to take a truly principled position in the face of opposition from President Clinton or special-interest groups. Theirs is a search for politically painless leadership.

There is no reason to settle for partial privatization. A fully privatized system can be designed and financed.

But partial privatization makes no more sense than cutting out part of a cancer. The current Social Security system is fundamentally flawed. A combination of political and economic circumstances has given us a unique opportunity to redesign Social Security to produce a better, more secure retirement program for future generations. Partial privatization will fall short in several areas:

Financing: Partial privatization proposals are combined with tax hikes or benefit cuts just large enough to keep Social Security barely in balance, if projections are accurate. By retaining the program’s essential pay-as-you-go nature, the proposal remains vulnerable to future economic or demographic changes. Throw in a recession or a medical breakthrough that extends life and the system is right back in crisis.

Retirement benefits: Partial privatization would probably increase the rate of return that young workers would receive on their Social Security taxes, but by far less than full privatization. After all, would you rather be able to invest 2 percent of your pay at a 7 percent rate of return, and 10 percent at a negative rate of return, or invest all 12 percent at a 7 percent rate of return? Partial privatization is depriving young workers of the difference between those two investment options. In a very real sense, partial privatization is stealing future retirement benefits from those workers.

Economic growth: Harvard professor Martin Feldstein has estimated that privatizing Social Security would have a value to the U.S. economy of from $10 trillion to $20 trillion, permanently increasing our gross domestic product by 5 percent. That would translate into at least a million new jobs and an increase in annual income of $5,000 for an average family of four. But that is for full privatization. Less than full privatization will bring correspondingly less economic growth.

There is no reason to settle for partial privatization. A fully privatized system can be designed and financed. Growing budget surpluses provide the wherewithal to finance the transition. Public opinion has clearly swung behind individual accounts. All that is missing is political leadership.

Half a loaf is better than done. But why settle for half a loaf when there is a whole bakery available?