You are very correct, this is why the democrats are correct when they say Bush's plan will end social security. First the government will handle the deduction and investment for you, and at some time in the future a second change would be to let you handle it yourself. Of course there is the question of whether people would save or spend once they are fully in charge. We seem not to be able to cut off someone who has made foolish choices all his life. Thus some program of mandatory saving still with the employee handling the transaction does not seem unreasonable. Especially when compared to a the present system where the money is taken by the friendly government and simply spent on something else.
Alas, I don't have the same confidence you do that government will be willing to relinquish its power like that. If in fact the eventual goal is to let people completely handle their own money, then there's no reason why it can't be made the immediate goal instead.
We seem not to be able to cut off someone who has made foolish choices all his life.
I think "we" are quite capable of doing it. It's the politicians, abetted by the media, who don't want to let go. But ultimately, if there must be some mandatory savings program, the states are quite capable of handling that themselves. It's neither necessary nor appropriate for the federal government to be running it.