December 25, 2002

White House officials reportedly urge Pres Bush to propose cutting taxes on corporate dividends for shareholders by about half as part of tax-cutting plan he will announce in January; proposal is intended to stimulate economy and reduce what many economists says is incentive in current law for companies to avoid paying dividends and to run up debt; many economists are skeptical that cut in dividend taxes would provide much immediate stimulus to economy, Bush's most important justification for new tax cuts; 50 percent cut would cost Treasury more than $100 million over 10 years, and tax benefits would overwhelmingly flow to nation's very wealthiest taxpayers (M)

Afghanistan has achieved degree of stability in year since Hamid Karzai began governing, even if it is not yet united country with functioning multiethnic army; Karzai acknowledges some failures of his government, namely security and disarmament, and vows to tackle those issues more energetically in year ahead; Burhanuddin Rabbani, former president who last year opposed Karzai's presidency, now voices unreserved support for him and central government; American forces based in country now contemplate moving from combat operations toward development activities, deploying larger teams of civil affairs officers in 8 to 10 provincial centers to give boost to economic development; American officials say battle against Taliban and Al Qaeda is drawing to end and effort to win peace and help government establish its control countrywide is new target; economic condition of country remain precarious; regional warlords continue to flex enormous power, but Karzai is intent on winning them over by persuasion rather than force of arms (M)

Organization for Economic Cooperation and Development and International Monetary Fund are offering advice on Japan's bank problems; OECD recently said Japan's banks need more taxpayer money to survive; IMF is in middle of yearlong inspection of banks that some hope will shed light on problem of bad loans; former IMF economist Sayuri Shirai says report, scheduled for next summer, will prove that several banks do not meet international capital standards (M)

Selena Roberts Sports of The Times column discusses scholarship athletes like Ohio State University tight end Ben Hartstock and Miami University defensive lineman Jim Wilson, contending that free education, networking opportunities and potential future recognition makes playing for scholarship worthwhile; photos (M)

Federal appeals court strikes down Maine's program that requires drug makers to sell drugs to state Medicaid programs at discounts that typically reduce retail prices by 18 percent and to give similar discounts to tens of thousands of people who earn too much to qualify for Medicaid; finds that goal of program is to provide prescription drug benefit without creating net costs for state, placing entire burden in drug companies; program was approved by Department of Health and Human Services in waning days of Clinton administration and was challenged by drug industry; number of states have filed bills to establish drug-discount programs like one in Maine (M)