Financial executives on Wednesday applauded President Clinton's plan to shore up Social Security as well as supplement the retirement program with a new savings vehicle.

But industry officials, Republican lawmakers, and Federal Reserve Board Chairman Alan Greenspan said individuals-not the government-should control how the money is invested.

In his State of the Union speech Tuesday, the President proposed steering 60%, or about $2.7 trillion, of the federal government's projected surplus over the next 15 years to bolster the retirement program with a "small portion" being invested in the stock market.

A senior administration official on Wednesday said the government would invest 20% to 25% of the total in the stock market.

President Clinton also proposed devoting more than 11%, or $500 billion, of the surplus to universal savings accounts for most citizens. He described these so-called "USA accounts" as a pension plan that would supplement Social Security.

"Americans living longer than ever simply must save more than ever," the President said. "With these new accounts, Americans can invest as they choose and receive funds to match a portion of their savings, with extra help for those least able to save."

Under his proposal, the government would distribute seed money for each account, which White House officials suggested Wednesday would total about $100 per family. The account holder could then deposit personal funds that the government would match at varying rates depending on income.

For instance, a family making $40,000 could get a 50% match on contributions. Lower-income families would get a higher match, possibly as much as 100%. The highest income earners could be excluded from the program.

The accounts are designed to placate Republicans, who have advocated personal savings accounts as a substitute for traditional Social Security.

"That's a good start," Sen. Chuck Hagel, R-Neb., said immediately after the speech. "That's the right direction."

House Banking Committee Chairman Jim Leach agreed. "This is a new emphasis on saving for retirement," he said. "I think that's a plus.

"I personally believe this Congress, this two-year period, is fundamentally going to be about Social Security."

Lawmakers on Wednesday tried to drag Mr. Greenspan into the debate. He said any surplus should be used to reduce the government's debt.

Addressing the House Ways and Means Committee, Mr. Greenspan also objected to the government investing Social Security funds in the stock market. That could result in "suboptimal use" of domestic savings because the government, rather than the private sector, would decide which companies to invest in, he said.

Donald B. Marron, chairman and chief executive officer of PaineWebber Group Inc., applauded the President for tackling what used to be the "third rail of politics."

However, Mr. Marron said that the President's proposals do not change the need for structural changes to the Social Security system. "Social Security was not created as a retirement plan but as a safety net," he said.

He agreed that the government should not invest on behalf of its citizens. "It should give the people choices."

Nor should Wall Street make a killing from the government's plans, Mr. Marron said. Using index funds would be "appropriate," he said, because it would keep costs low. The fact that the portfolios are not actively managed would mean less fee income for banks and brokerages, he said.

Stephen B. Timbers, president of Northern Trust Global Investments of Chicago, estimated index fund managers could approach $10 million a year in fees.

Though not huge, the fee income would still be "something that a lot of people will want to bid for," he said.

Not only could these savings accounts provide a business opportunity for financial firms, but they would likely improve the country's overall financial strength, said James Chessen, chief economist for the American Bankers Association.

"It is very positive that the President is interested in personal accounts," Mr. Chessen said. "Anytime you can stimulate additional savings, you are going to raise capital and stimulate the economy for the long term."

Richard Buoncore, president and chief operating officer of Key Asset Management, a division of KeyCorp, Cleveland, said the accounts could continue to fuel the bull market.

"It sounds great; all the people in the financial services business will benefit," he said. "It's in everyone's interest to see more money invested in the stock market."

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