The people who hope to win a capital gains tax cut are sweetening the pot by offering to bring back one of America's most popular tax breaks -- the individual retirement account -- and they have drafted a new form of IRA to achieve their goal. But the proposed new IRA is drawing the same criticism that has been aimed at capital gains tax cuts -- that it would disproportionately benefit upper-income taxpayers, produce a negligible effect on economic growth and push the deficit cost into the future. The proposal, dubbed the "IRA Plus," comes three years after Congress sharply curtailed the tax benefit for conventional IRAs. Introduced Thursday by Sens. William Roth (R-Del.) and Bob Packwood (R-Ore.) as part of a bill to cut capital gains taxes, the IRA Plus would allow taxpayers to invest $2,000 a year in an account, but would not provide an immediate tax deduction; instead, it would allow taxpayers to withdraw their IRA earnings tax-free when they retire. To its backers, which also include the Bush administration, the plan is the ideal way to restore the IRA. Not only would Packwood and Roth's IRA plan spur savings, thereby providing capital the nation needs to grow, proponents say, but it would do so while actually reducing the federal budget deficit by several billion dollars in its first few years of operation. That gives it a big political advantage over costly IRA proposals advanced by the Democrats and means that it can help pay for the administration's capital gains initiative. "The beauty" of the proposal "is that it's budget sensitive, so you don't have to choose between capital gains and IRAs; it allows you to do both," said Bruce Thompson, director of Merrill Lynch & Co.'s Washington government relations office. "That increases the attractiveness of it." But critics say that the Packwood-Roth proposal has all the economic drawbacks of a conventional IRA -- and then some. Many economists have questioned whether IRAs achieve their stated purpose, which is to increase personal savings; these analysts contend that the vast bulk of the $40 billion deposited into IRA accounts probably represents savings that would have occurred anyway. The likelihood of generating new savings is even smaller, these analysts argue, if taxpayers don't have the inducement of an immediate tax write-off. "If you're at that period in your life where you don't have much money on hand, this {proposal} gives you nothing," said Robert McIntyre, director of Citizens for Tax Justice, a labor-backed group. "So it's even more attuned than the old IRAs to people who have money." That in turn means that little new savings would be created, McIntyre said, because upper-income people tend to save a large fraction of their incomes anyway. What is more, the Packwood-Roth proposal is in some ways the ultimate budget gimmick, critics say. The adverse impact on the deficit would be delayed for many years when the government would lose tens of billions of dollars in taxes on the earnings in IRA accounts. In the near term, the plan would raise an estimated $11 billion in federal revenue over the next five years because some taxpayers would be willing to pay a special tax to convert their old IRAs to IRA Pluses (which would allow penalty-free withdrawals for education and certain other purposes). "I wouldn't describe anything as the ultimate gimmick because there appears to be no limit to Congress's imagination," said Henry Aaron, a Brookings Institution economist. "But something that gives a break that won't appear in the budget accounts possibly for decades certainly deserves to be considered for the award." Supporters of the Packwood-Roth IRA plan dispute this line of reasoning. They contend that such IRAs would be popular because taxpayers could be shown that the long-term value is at least equal to, and possibly greater than, a conventional IRA. Merrill Lynch, which has about 10 percent of the IRA market, conducted group discussions with some of its customers and found that seven out of 10 said they would be interested in an IRA of the Packwood-Roth variety. As for the long-term deficit impact, that would be more than offset by the increased savings -- and concomitant economic growth -- that would result, according to Martin Feldstein, former chairman of the Council of Economic Advisers. "The increase in savings would outweigh the loss of taxes," Feldstein said. But even some economists who generally approve of IRAs voice reservations about the long-term fiscal effects. The Packwood-Roth variety "has a kind of cheat-the-future aspect to it," said Lawrence Summers, a Harvard University economist. No less a source than Treasury Secretary Nicholas F. Brady, who endorsed the Packwood-Roth proposal this week, once said in congressional testimony that such IRAs would impose a "hit on future generations."