One good spin-off from the debate over President Bush’s Social Security reform is that everyone is finally discussing the program’s “solvency.” It’s about time. Countless people still think there is a “trust fund” with real assets in it that is being held for them until they’re old enough to collect retirement payments. It’s time they learn the truth. As Harvard economist Martin Feldstein has noted, the system’s solvency “is based on a complex accounting sham so duplicitous that it is hard to believe.”

When Social Security runs a surplus, the money is taken to pay today’s general budget bills, and Treasury securities are deposited into a filing cabinet in a federal building in Parkersburg, W. Va. All those securities do is represent the government’s promise to someday repay the money. That, of course, can only be done by raising taxes, printing money, or borrowing money from the public, exactly the same alternatives the feds would have if there were no “trust fund.”

As an exasperated David Walker, the U.S. comptroller general, explained to the House Ways and Means Committee last Wednesday, the trust fund is really “pieces of paper” that have no real estate, bonds, or cash behind them. He quickly added he couldn’t imagine the federal government repudiating its obligations to future generations of the elderly. Future recipients of Social Security had better hope he’s right.

The late economist F.A. Hayek once called the decision by the founders of Social Security to co-opt words such as contributions and insurance from the private sector a “stroke of promotional genius” to cover up the shortcomings of its pay-as-you-go financing system. As economist Paul Samuelson, an original New Deal supporter, enthused back in 1967, “the beauty of social insurance is that it is actuarially unsound. … Always there are more youths than old folks in a growing population” (emphasis his). He concluded that “a growing nation is the greatest Ponzi game ever contrived. And that is a fact, not a paradox.”

Unfortunately for Mr. Samuelson’s predictive abilities, since then, population growth has slowed at the same time that benefit levels have been indexed and increased. The “Ponzi game” Mr. Samuelson hailed will collide with reality when only two working Americans are available to support each retiree – and probably well before that.

One would hope that supporters of Social Security would acknowledge the faulty data and erroneous assumptions that led to the creation of the program in 1935, even as they continue to oppose allowing young people to create private accounts with some of their own payroll taxes. After all, Franklin D. Roosevelt himself was fully aware of some of the likely problems. In reply to charges that payroll taxes would prolong the high unemployment rates of the Depression, New Deal author Patrick O’Brien’s 1936 book “Forward With Roosevelt” quoted the president as saying, “I guess you’re right on the economics, but those taxes were never a problem of economics. They were politics all the way through.”

The politics that Roosevelt faced were a challenge. Populist demagogues such as Louisiana’s Senator Long and Francis Townsend were calling for massive income redistribution schemes. The Townsend Plan, first proposed in 1933, would have imposed a national sales tax and used the revenue to give every retired American over 60 a $200 monthly pension – the equivalent of more than $2,800 in today’s dollars.

FDR’s response was to craft a less ambitious Social Security system that would be protected from political attack because its (at first) small payroll taxes and the front-loaded benefits would be tied together in the public’s mind. “With those taxes in there, no damn politician can ever scrap my Social Security program,” he said.

Today’s supporters of Social Security reform recognize Roosevelt’s achievement and are merely hoping to update it using the miracle of compound interest and today’s far more sophisticated private investment vehicles. Conservative commentators, including me, have suggested that Roosevelt himself recognized the importance of private-sector retirement plans. This has prompted a flurry of outraged attacks from liberals who accused us of lying about Roosevelt’s record. They should calm down, as we look at the facts.

The controversy started last month, when Brit Hume of Fox News Channel noted “that FDR himself planned to include private investment accounts in the Social Security program when he proposed it. In a written statement to Congress in 1935, Roosevelt said that any Social Security plan should include ‘voluntary contributory annuities, by which individual initiative can increase the annual amounts received in old age’ – adding that government funding ‘ought to ultimately be supplanted by self-supporting annuity plans.’ “

Later that night, former education secretary Bill Bennett went significantly further and claimed that Roosevelt “said it would be good to have [Social Security] replaced by private investment over time.” That clearly wasn’t what FDR was thinking.

I independently picked up on the issue in an item for OpinionJournal’s Political Diary the next day. I quoted FDR as saying that “for perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions. “After that, I suggested he called for moving toward supplanting old-age pensions with “self-supporting annuity plans.”

Former Social Security commissioner Robert Ball properly notes that I did confuse the terminology of the day by thinking Roosevelt’s call for supplanting old-age pensions referred to Social Security. Instead, he was referring to the need to replace an early welfare program for the elderly with Social Security.

But at no point did Mr. Hume or I claim that FDR would have endorsed Mr. Bush’s private accounts. We were correct in noting that FDR had proposed a voluntary program to allow people to buy annuities.

All this touched off a firestorm from overheated liberal critics. Columnist Ellen Goodman claimed that conservatives were saying “that FDR himself endorsed personal accounts.” James Roosevelt, a grandson of the former president, called it an “outrageous distortion” that might warrant Mr. Hume’s firing. Former labor secretary Robert Reich called the citing of Roosevelt’s interest in private annuities “just one example of how the Republican propaganda machine is lying to the American people about Bush’s plan for Social Security, just as it has lied about so much else.”

But Roosevelt had, indeed, proposed a plan under which all workers would have been allowed to make periodic voluntary payments in exchange for certificates representing the amounts they had deposited. At 65, workers would have been able to trade in their certificates for annuities that paid up to $100 a month (the 1935 equivalent of some $1,300 today) based on their total deposits plus interest. In fact, Roosevelt expressly cited the need for private plans to become available as the worst of the Depression passed: “I am greatly hoping that repeated promises of private investment and private initiative to relieve the government in the immediate future of much of the burden it has assumed will be fulfilled.”

But Congress balked. In an article this month titled “When Congress Killed Private Accounts,” National Journal notes that Rep. Frederick Vinson of Kentucky, who later became Treasury secretary under President Truman, helped kill the private annuity plan, saying he saw no “particular need” for it at that time. But he also told his House colleagues, “Many of us think the time will come when the voluntary annuity plan, which rounds out the security program for the aged, will be written into law. “Yes, the plan proposed by Roosevelt and rejected by Congress in 1935 is substantially different from the one Mr. Bush is advocating. But taking into account 70 years of progress in financial instruments, there are also many similarities.

No one really knows how FDR would have thought about fixing Social Security today, 70 years after he brought it into existence and 60 years after his death. That’s because Roosevelt was anything but an ideologue. The historian Eric Goldman wrote of FDR that “he trusted no system except the system of endless experimentation.” FDR himself said in a speech at Oglethorpe University that “this country needs … bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”

I suspect that, whatever his views might be on personal accounts today, FDR would have little use for liberals who attack them without any suggestions of their own on how to “try something.”

Mr. Fund is the author of “Stealing Elections: How Voter Fraud Threatens Our Democracy.” To subscribe to the “Political Diary” e-mail newsletter featuring Mr. Fund, please visit www.OpinionJournal.com, from which this column is excerpted. © Dow Jones & Company Inc.