NEW YORK (CNN/Money) - They've debated foreign policy and flu shots, terrorism and tax cuts. Now President Bush and Senator John Kerry are battling over the third rail of American politics: Social Security.

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Kerry on Sunday cited a New York Times Magazine article to suggest that Bush was planning a "January surprise" if re-elected -- the swift privatization of Social Security.

Kerry said that would be "a disaster for America's middle class." The Bush camp disputed the report and denied having used the word "privatize."

Bush may not have said the word, but as part of his long-standing pitch for an "ownership society," the president has proposed the creation of personal retirement accounts, which would give workers at least some control over how to invest their payroll taxes, including the possibility of investing in stocks.

Those who choose to create such private accounts would receive smaller government checks in their golden years. But proponents argue that workers would come out ahead because of the potential for higher returns.

Opponents say that exposing Social Security funds to market risks could decimate needed retirement money.

The debate will continue, but the drive toward privatization could very well heat up if Bush is re-elected. So what would such a system look like? (And for more on how the election will affect your finances, click here).

The White House hasn't been specific but in May 2001, Bush established the President's Commission to Strengthen Social Security, a 16-member panel.

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The commission delivered three proposals, all involving personal investment accounts and all allowing the accrued savings to be bequeathed to heirs.

Investors would likely be able to choose from a handful of stock and bond index funds, or more conservative options, for their personal accounts.

"You wouldn't be able to buy a single company stock," says Olivia S. Mitchell, a professor of insurance and risk management at Wharton who served on the commission. "It was not a vehicle intended for day-trading or anything like that."

In the simplest reform plan, workers would be allowed to invest two percent of their taxable wages in personal accounts. This plan would leave the rest of the system essentially unchanged.

The second option would let workers put four percent of their wages, up to $1,000 a year, into a personal account. The rest of their payroll taxes would be deposited into the existing Social Security fund, which holds special government bonds. This plan would also keep down costs by adjusting Social Security benefits to keep pace with price inflation instead of wages, which have risen more rapidly over time.

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A third proposal was similar to the second but required workers to deposit one percent of their earnings into retirement accounts before they could invest an additional 2.5 percent of their payroll taxes.

Bush has yet to spell out which option he favors, but the second model has gotten the most attention.

"When the commission returned its report, most people focused on the second one because it's the most coherent," said Robert Bixby, executive director of The Concord Coalition, a nonpartisan group that advocates fiscally responsible policies.

Another hint that Bush might lean toward that second model? The White House's Council of Economic Advisers referenced the plan in a section on Social Security reform in its 2004 "Economic Report of the President."

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No matter what plan he chooses, any privatization would also come with so-called transition costs, the initial increase in the gap between worker contributions and retiree benefits that would result as workers send part of their payroll taxes into private accounts.

Estimates of the gap vary -- it's the "$2 trillion hole" that Kerry refers to in his speeches -- but there's no question that money would have to be moved into the system to make up for the money moved into private accounts.

The bottom line? In the end, whether it's now or later, a generation of Americans has to pay.