I recently wrote about consumer bankruptcy and promise-breaking. Of course, the same can be said about corporate bankruptcy. But this point is lost on “Will” Wilkinson of the Cato Institute, whose Fox News report on Social Security harps on the difference between government “promises” to pay Social Security benefits and the “property” people keep in corporate (and government) stocks and bonds. His big sales pitch seems to be that stocks and bonds, unlike Social Security promises, “cannot be held hostage, whittled down, or bargained away by future Congresses.”

Let’s start with bonds. “Bond” is just a fancy name for a debt that a corporation owes its creditors, the bond holders. As TPM readers know, a debt is just a promise now to pay later. (Pensions are promises now to pay later, too, and we know where those are headed.)

Through bankruptcy, the federal government offers both corporations and real people a chance to break these promises with relatively few consequences, although the government is trying its darndest to take back the offer when it comes to real people. Just ask Enron’s employees, whose pensions full of Enron bonds disappeared in bankruptcy without even a puff of smoke, about bonds never being “whittled down.”

But what about stocks? Stocks are a stake in the company – a chance to actually own a part of Google or, dare we say, Citibank. That’s gotta count for something, right?

Not so fast. Corporations that offer stocks can liquidate or reorganize under the bankruptcy code too. When that happens, stockholders have it even worse than bondholders.

The downside of owning something is, if you’re in debt, your creditors can foreclose on what you own. So when a corporation has debts it can’t pay and files for bankruptcy relief, the creditors have the right to take what the stockholders “own” - their shares. When asbestos maker Johns-Manville filed for Chapter 11 to deal with lawsuits by workers it injured and killed, for instance, all its stockholders suddenly found themselves sitting on a worthless pile of certificates.

So much for stocks and bonds as “property.”

Of course, “Will” Wilkinson is technically correct. Stocks and bonds cannot be “bargained away” by future Congresses — but they don’t need to be. The laws are already in place for every one of those promises to disappear in a puff of smoke. Compared to the alternative (depending entirely on a system in which stock and bond holders lost billions of dollars worth of “property” in over a million companies over the past 10 years) promises by a publicly accountable Congress seem like a pretty safe bet.