The Bush Social Security plan

The Center on Budget and Policy Priorities, admittedly a Democratic-affiliated think tank with a stake in opposing the Bush Social Security plan, has an interesting post giving details based on a briefing this afternoon by a "senior Administration official." The details are consistent with but go beyond anything Bush said tonight.
We finally see here how the Administration, if it had its way on this, actually might reduce the Social Security portion of the fiscal gap - although, with unusual candor for this Administration, the official admits that "the personal accounts would have a net neutral effect on the fiscal situation of the Social Security and on the federal government."
The idea is to let workers divert 4% out of the 12.4% payroll tax into the accounts, but to make them pay for the diversion on retirement via benefit reduction in the amount of the revenues so diverted plus 3% annual interest. Then there would be further benefit cuts on top of that, having nothing at all conceptually to do with privatization as such, although the Administration declines, at least at this point, to say what they would be. Here is where the fiscal gap would actually decline, via benefit cuts that could in principle have been imposed in any event.
What exactly is the point of this exercise? A charitable view would be that it aims to make possible the further benefit cuts by using the paid-for private accounts as a carrot or a distraction. But in fact all that the private accounts exercise does is raise hackles, make the entire thing more controversial, and induce Democrats to respond to the Administration's rhetoric by saying there is no problem. Plus it raises the specter of people who fail to earn 3% on their accounts being worse off than if the whole thing weren't undertaken to begin with, thus reducing the downside worst-case security that any rational retirement plan, private as well as public, would include.
Wouldn't it be a lot more rational to seek a principled bipartisan compromise involving revenue increases plus benefit cuts?
To paraphrase the religious right, WWRD (what would Reagan do?). We know the answer to that because he actually did it in 1983 - agreeing with the Democrats to a package of revenue increases plus benefit cuts.