WASHINGTON - Trying to make good on a campaign promise favored by bankers, President George W. Bush unveiled a federal budget outline Wednesday that calls for letting Americans invest a portion of their Social Security taxes in the private sector.

"Personal retirement accounts, which would be voluntary, would enable individuals to build financial wealth and security in a way that the current Social Security system does not," the 175-page document says. "Personal accounts invested in safe private financial markets will earn higher rates of return than the traditional system."

Industry groups applauded the plan Wednesday, as did Republican lawmakers Tuesday night when President Bush mentioned it in his first address to Congress.

Social Security reform "must offer personal savings accounts to younger workers," the President said, getting tepid response from Democrats. "Social Security now offers workers a return of less than 2% on the money they pay into the system. To save the system, we must increase that by allowing younger workers to make safe, sound investments at a higher rate of return."

The White House has not provided any details as to how the plan would work, nor how much individuals could invest. Those specifics are expected to be developed in the fall by a Social Security reform commission the President said he will form this spring. It is not clear if he will appoint industry representatives to the commission.

Bankers were reluctant to talk about the plan until specifics are released, but their Washington watchers were confident that investments would be handled by financial firms.

"Any investment funds that are up for management are going to be a boon for the banking industry," said Joe Belew, president of the Consumer Bankers Association.

"Financial services companies are expected to hold the private accounts, which I expect would work somewhat like an individual retirement account," he said. "But the details have to be worked out as to how to design the accounts and who would manage them."

Former Republican Rep. Steve Bartlett of Texas, who is now president of the Financial Services Roundtable, cautioned that "how the accounts will work will be the debate over the next four years."

Moving Social Security funds out of the government coffers, where the rate of return was 1.7% last year according to the White House, into the stock market has long been politically controversial. Proponents say their biggest hurdle is assuring lawmakers that the risks are overblown.

"Other than establishing some broad parameters for safety and soundness, the government should step out of the way and allow individuals to choose who is going to manage their accounts," Mr. Bartlett said.

Though the White House is months from recommending what percentage of Social Security taxes could be privately invested, analysts speculated during the campaign last year that 2% is a viable amount. That would equal about $13.2 billion for 2001 alone.

"What you're going to have for a while are very small accounts - $100 or $200 a year on average being put into these accounts," a Securities Industry Association spokesman said.

Though most industry representatives support privately run Social Security accounts, some said they are focusing on more immediately achievable goals such as enactment of other retirement savings incentives and elimination of the estate tax.

"You should only shoot at ducks that are flying, and the Social Security duck is not presently flying," said Kenneth A. Guenther, executive vice president of the Independent Community Bankers of America.

Indeed, Mr. Bartlett predicted private savings accounts would not be "ripe for action" until 2003 at the earliest.

Industry lobbyists are disappointed that their top legislative tax priority - raising the caps on tax-deferred contributions to IRAs and corporate 401(k) retirement plans - is not part of the President's tax plan, the focus of which is lowering individual income tax rates. But they said they have not given up the fight for these savings enhancements.

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