Capital briefs

* TAX PACKAGE COMING? To the disappointment of many conservatives on Capitol Hill, the White House so far has failed to come out with the investor tax-cut package that President Bush, in remarks he made last month following the economic summit in Waco, indicated was in the works. The President talked about increasing the caps on contributions to 401(k) and IRA retirement plans, hiking the amount of capital losses that can be deducted annually, and reducing the double-taxation burden now imposed on dividends. The dividend proposal is the most popular among conservative GOP members-Rep. Chris Cox (R.-- Calif.) has already introduced a bill (HR 5323) to cut dividend taxation-because they think it would be welcomed by a large number of Americans and would be hardest for Democrats to attack as a "tax cut for the rich." (Almost 30% of dividend recipients report incomes under $30,000.)

House Ways and Means Committee Chairman Bill Thomas (R.-Calif.) is not enthusiastic about pushing an investor tax relief package this late in the session, but he and his fellow panel members would have little choice but to vote it out of committee if the President strongly pushed it as a way to boost the economy and the stock market. Even though Senate Majority Leader Tom Daschle (D.-- S.D.) would not even consider such tax relief this year, many conservative analysts believe that since some 60% of American voters now directly or indirectly own stocks, House passage of a pro-investor package could help GOP candidates this fall.

* NOT WAITING FOR US: Instead of waiting for the United States-with or without the United Nations-to attack Iraq, a publication owned by Saddam Hussein's eldest son is urging people to attack the United States. An editorial in the weekly Economist (Al-Iqtisadi) of Iraq suggested that suicide terrorists attack the United States and her allies. "The United States practices international terrorism against the whole world. By doing so, it turns peoples and governments into hostages, thereby causing the suspension of international activities and generating fears and instability in the international domain. This conduct has similarities with Hitler and Nazism which led the world to a world war. . .," said the editorial.

"The confrontation with the aggressors should transcend the means of condemnation and rejection, particularly in the Arab and Muslim street They should use all means-- and they are numerous-against the aggressors, including boycott, closing air and sea ports to civilian ships and airplanes that belong to the U.S. and its allies, striking their economic interests and establishments, and considering everything American as a military target, including embassies, installations, and American companies, and to create suicide/martyr [fidaiyoon] squads to attack American military and naval bases inside and outside the region, and mine the waterways to prevent the movement of war ships."

* SIMON'S BACK: The beleaguered campaign of California Republican gubernatorial candidate William Simon, Jr. ended on a high last week after Superior Court Judge James C. Chalfant dismissed the entire $78-million civil fraud verdict that a jury had saddled on his family investment company on July 30. Instead, the judge ordered former Simon partner James Hindelang-who turned out to be a convicted drug smuggler-to pay $100,000 in legal costs to Simon's lawyers. Simon had assailed the jury verdict as "crazy" and "fundamentally flawed" and repeatedly predicted that it would be overturned, but his opponent, incumbent Democratic Gov. Gray Davis, seized on the verdict, making it the subject of widely broadcast TV ads.

Some California Republicans think the verdict reversal might actually be enough to put Simon in front. They point out that, despite recent bad publicity over Simon's apparent flip-flop on gay-related issues and widely published criticism of the candidate and his campaign by longtime Reagan political operative Lyn Nofziger, Simon was very much in the race against Davis before the judge's ruling. He was trailing Davis by only seven points statewide in the last Field Poll and a Public Opinion Strategies poll for Simon reportedly showed the race almost even. With the reversed verdict, "The Simon campaign begins anew!" beamed California GOP Chairman Shawn Steel.

* McCLINTOCK UP: In other good news for California Republicans, the Field Poll also showed conservative GOP State Sen. Tom McClintock leading Democrat Steve Westerly in the race for state comptroller by a healthy 42% to 30% statewide. Field also showed that in the race for state insurance commissioner, Republican Gary Mendoza, onetime issues director for Rep. Chris Cox (R.-Calif.), trails Democrat John Garamendi, a former commissioner, by a slim 40%-to-35% margin.

* SENATE BREAKS PIGGY BANK- Heedless of the Bush Administration's request for fiscal sanity, the Senate-whose members apparently are willing to give farmers anything they ask for this election year-passed a massive $6-billion drought relief package for farmers. They did so even though money for such relief is already in the bloated farm bill passed earlier this year that calls for spending $180 billion over 10 years. Agriculture Secretary Ann Veneman called the Senate action "unacceptable," adding that "the needs for the current drought must be met within the additional resources provided for in the Farm Bill." White House spokesman Ari Fleischer commented pointedly, "The farm bill has plenty of money in it."