One of the hottest topics in Washington heading into President Bush’s State of the Union address next month is the possibility that Mr. Bush is going to throw his weight behind a proposal to create lifetime savings accounts and retirement savings accounts that would allow Americans to avoid taxes on the interest and dividend income and capital gains from savings. This is a national story, but it’s also a big story for New York City, which is the financial capital of America. The proposal has the potential to expand the number of Ameri cans owning stocks traded on the New York Stock Exchange, either through brokerage accounts with New York financial services firms, or through mutual funds that trade stocks through New York firms. It also could expand the levels of deposits in American banks, many of which are based here in New York. In other words, it would give the city’s economy a big boost.

The New York Stock Exchange and other financial institutions have taken a bashing recently, but even their critics acknowledge they are a crucial part of the city’s economy. There are some bright people willing to stake their own futures on the exchange’s fate, as shown by the decision last week of the president and chief operating officer of Goldman Sachs, John Thain, to leave Goldman to become the Big Board’s new chief executive. The city’s economy will always be more than just Wall Street — tourism, publishing, fashion, retail, entertainment, and manufacturing are important, too. But the financial sector is the jewel in New York’s economic crown, and what happens there affects the health of the whole city. So the talk in Washington is worth following closely.

As proposed by the Treasury Department in January, lifetime savings accounts and retirement savings accounts would allow all Americans to contribute $15,000 a year ($7,500 to each kind of account) to savings accounts in which the interest and capital gains would accumulate tax free. Withdrawals from the accounts would also be tax free. As a Washington Post dispatch put it earlier this month, “the plan would all but eliminate taxes on investment and savings for most Americans.”The plan didn’t go anywhere this year. Instead, Congress and Mr. Bush passed a tax cut that accelerated income tax rate-reductions while also reducing the tax rates on dividend income and capital gains.

But now there’s talk that the president will revive the savings account proposal when he appears before a joint session for his State of the Union address. There’s back and forth over the details — some want to reduce the amount of the allowed contributions. But this is a proposal that bears watching, both for its chances of helping New York’s financial industry and for its potential to serve as a bridge to the Social Security reform that may be Mr. Bush’s second-term project. All eyes will be on Senators Schumer and Clinton and members of the New York delegation in the House.