AT TIMES, America's debate about Social Security seems to belong in a file labelled ``Black helicopters, etc''. This dossier might contain reports that United Nations choppers are preparing to invade America; that gun control is a government plot to disar m and enslave the citizenry; and that the government is embezzling funds in the public pensions system in order to pay for its pet projects.

In the case of pensions, it would be nice to predict that absurdity will retreat in the face of a grand report, due soon after Christmas, from the administration's commission on Social Security (a term that covers public pensions as well as di

sability insurance and other benefits). The report will recommend ways-some modest, some ambitious-to plug the deficit that will emerge in the system after 2030.

It will point out that a 0.3 percentage-point increase in the payroll tax, together with other modest changes, would be enough to guarantee the system's solvency until 2050. It will also note that, if the Labour Department makes even mild cuts in its c

urrently exaggerated inflation estimates, Social Security's solvency will be extended well beyond then. Lastly, the report will suggest bolder changes, not because the world will end without them, but because a good system can be made even better.

Because of black-helicopter paranoia, this calm counsel will probably get lost in alarmism. Americans are convinced that the government itself is in the business of weakening the Social Security system. Every president since Franklin Roosevelt has been accused of raiding the system's trust fund to pay for wars, highways and (evil of evils) foreign aid.

This has never been fair. Money in the trust fund is used to buy government bonds, among the most secure (though hardly the most lucrative) of all investments; the government then uses the proceeds from selling the bonds to finance roads and such, but this does not mean the trust fund has been ``raided''. Nonetheless, the suspicions have grown worse with time. The Cato Institute, a libertarian think-tank that has churned out more than 30 books and reports on the subject, regularly declares that Social Security ``is about to collapse''. More young Americans believe in UFOs than believe they will ever get anything out of the Social Security system.

These fears are undoubtedly exaggerated. But the system is nonetheless in need of reform, and the remedies that Cato has pressed for nearly 20 years do have some merit. For example, there are good arguments for allowing the trust fund to be invested in things other than government bonds. More than that, the whole pension system could be privatised.

These ideas will be explored in the forthcoming report from the pensions commission. The Clinton administration appointed the commission in 1994, and went out of its way to give radicals as well as moderates a voice in it. Since late 1995, the commission has divided into three groups; and, after a year in which plenary meetings have given way to telephone calls and faxes between the faction chiefs, all sides have despaired of uniting behind one set of recommendations. The result will be three proposals f or pension reform, ranging from bold to revolutionary.

The merely bold idea is backed by six of the commission's 13 members, including its trade unionists. It suggests the administration should break with the 61-year-old policy of investing the trust fund's money only in government bonds, and seek a consensu s for putting 40% of its cash into the stockmarket. The trust fund would buy shares gradually, so as to protect itself from the risk of a sudden market crash; it would hold a wide mix of shares, so as to protect itself from the risk of particular sectors doing badly. Over the long run, American shares have brought annual average returns of 7%, much higher than the 2.3% for (admittedly safer) government bonds. By increasing returns to the trust fund, cautious stock investments would minimise the increases in the payroll tax needed to keep the system solvent in the second half of the next century.

A second proposal, backed by two members of the commission, goes a bit further. Rather than have the trust fund buy shares, it would require workers to put 1.6% of their pay into personal retirement accounts that would invest in private stocks and bonds.

As with the first plan, the point would be to give workers higher returns than they can expect from government bonds. But the notion of a personal retirement account represents a big change. Though the accounts would be managed by the government, each wo rker would have some say in how his money is invested. The success or failure of the investment would affect the size of the worker's pension.

The most radical proposal, backed by five members of the commission, takes the personal-account idea a leap onward. The current guaranteed pension would be replaced with a new one half as big. Workers would supplement this by putting 5% of their pay into personal accounts, for which (unlike in the second plan) they would be entirely responsible. Upon retirement, the worker would get the guaranteed benefit plus an annuity large or small, depending on the skill of his investment strategy.

Each plan has its strengths and weaknesses. The idea that the government should own a large chunk of the stockmarket through its trust fund raises thorny problems (see box). On the other hand, private retirement accounts hold risks, notably that unsophis ticated investors will fall prey to sharp practices. Britain experimented with personal pensions in the 1980s, and found that salesmen often pocketed a large share of novice investors' savings. In America, Prudential Insurance has recently offered more th an $400m by away of apology for a sales scam that cheated millions of savers of their money. To prevent this kind of thing a private-account system would have to be regulated toughly, which would involve some expansion in government activity.

The commissioners have little idea what will become of their proposals. Bill Clinton has worried out loud about raising the Social Security tax, which burdens weaker firms: unlike other taxes, it must be paid whether or not a company is making profits. The president has also worried about pushing back the retirement age: this might be cruel to manual labourers. Unwilling to raise taxes or cut benefits, the president presumably favours anything that might improve investment returns. So far, however, he ha s not endorsed stockmarket investment publicly.

Whatever the president decides, the debate on the commission's report will at least reveal the change in attitudes to Social Security. It used to be said that no politician could propose big changes to the system and survive. Now all support some kind of reform to it. The retired people's lobby, which used to pounce on anyone proposing change, is now balanced by the popular conviction that only big change can ensure that Americans will have pensions in a few years' time. Black helicopters do, surprisingl y, have their uses.

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