Privatizing Social Security, or part of it, is a great idea for a lot of reasons – not least that it would be a much better deal for future generations, as Federal Reserve chairman Alan Greenspan said last week. But much will depend on the price President Bush is forced to pay for achieving his goal – and, if I’m not mistaken, he just blinked.

Maybe it was just a teenie-weenie blink, but there it was on the front pages late last week. In an interview with some regional newspapers, the president “left the door open” – in the all-too-happy words of the liberal New York Times – to raising the cap on earnings subject to the Social Security tax. That could be only the beginning.

Mr. Bush rushed to add that he was dead-set against raising the Social Security tax rate itself, but that’s a distinction without much difference. If wages subject to the tax are raised from the current $90,000 to, say, $100,000 or $120,000, it would entail a higher out-of-pocket cost to many working families. Read my lips: That’s a tax increase.

This George Bush is clearly made of sterner stuff than the father, to be sure. And no doubt he means it when he says, in essence, “this far and no further” on tinkering with the revenue side. If it takes a minor adjustment on the revenue side to wangle a significant concession from Democrats on long-term benefits, it might even be worth it.

But offering up concessions even before he has unveiled the specifics of his plan is dubious strategy. It places the president in the position of negotiating with himself. There are lots of other, even more important, issues swirling around the concept of Social Security reform, including the nature of the personal accounts themselves. Will they be truly private? Or will they be vessels for ever deeper intrusion by government into the mighty American capital markets?

Democrats, after pocketing Mr. Bush’s preemptive suggestion on Social Security taxes, will now be looking for more. While they may not be happy that Mr. Greenspan supported the concept behind the president’s reform, the Fed chairman handed them a valuable poker chip in the form of Mr. Greenspan’s caution about creating “large” new debts to finance the reforms.

Mr. Bush himself also has volunteered that holders of the personal accounts won’t be permitted to invest the money in just any securities. The holders of personal retirement accounts will be limited to certain funds pre-approved by government and closely regulated by Washington – as if that’s any guarantee of good performance. And when, inevitably, one of those funds goes belly-up or is caught in scandal anyway, there will be demands for even more government regulation.

Democrats also can be expected to push for what they like to call socially responsible investment. State pension funds were among the leaders in the South Africa “disinvestment” campaign, for example. In Michigan and many other states, a certain share of the pension funds must be invested in local job development, whether or not it provides the best possible return for retirees.

And California’s $182 billion state employees pension fund has established itself as an aggressive arbiter of corporate performance – most recently pressuring automakers to produce vehicles that meet California’s fuel efficiency standards, whether or not they make sense.

In other words, proponents of privatization – Mr. Bush’s preference for the term “personal accounts” is telling in itself – should be careful what they wish for. They might get it, but only at the price of bells, whistles, and taxes that over time produce the very socialization of capital markets that they have been worrying about. And the partial privatization that Mr. Bush is advocating could lead to the worst of both worlds – personal accounts that are so heavily regulated that they offer little return, while the doddering old Social Security system continues on permanent life support.

The Democratic leadership is claiming there is no Social Security crisis and that it would be wrong to expose individuals to the vagaries of the marketplace. Those are nonsense arguments, as even many Democrats have conceded. But such arguments are mainly aimed at giving the left more leverage over the reform process – which in term is aimed at preserving the welfare state on which Democratic politicians thrive. Privatization of Social Security? By all means, but not at any price.

Mr. Bray is a Detroit News columnist.