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Washington remains abuzz with speculation that Arizona Sen. John McCain may bolt the GOP ... the McCain Media Machine has been working at warp speed the last several weeks ... NBC's Tim Russert reported that new Senate Majority Leader Tom Daschle (D-S.D.) was spending the weekend with McCain in Arizona ... that led to a Washington Post report that McCain advisers-including former campaign manager John Weaver, Weekly Standard's Bill Kristol, and former Christian Coalition strategist Marshall Wittmann-were helping to map out an independent presidential campaign against President Bush in 2004 ... that led to the president calling McCain and having him over for a private dinner ... Human Events reported that GOP leaders in Arizona are urging Arizona Rep. John Shadegg to challenge McCain for his Senate seat in the 2004 GOP primary ... now senior McCain adviser Mike Murphy tells WORLD the whole thing has become "overblown" ... he blames "trigger-happy media" and "a staffer or two way off [the] reservation." Murphy on McCain's bottom line: "He ain't gonna switch and a third-party run is highly, highly unlikely."

Pleased with President Bush's newly signed tax-cut bill? You may not be getting back as much as you thought if you live in Alabama, Iowa, Louisiana, Missouri, Montana, North Dakota, Oklahoma, Oregon, or Utah ... according to the American Legislative Exchange Council, taxpayers in all nine states may now end up paying more in state income taxes, even as they are paying less in federal income taxes ... Why? "Each of these states permits taxpayers to use the federal income tax as a deduction on state returns," says ALEC's Michael Flynn. "Consequently, a federal tax rebate would retroactively increase a taxpayer's state taxable income." Ouch.

Conservative direct-mail honchos in Washington relish the sight of a Democratic-controlled Senate ... new political power in the hands of Massachusetts Sen. Ted Kennedy and New York Sen. Hillary Rodham Clinton could be a great boon for conservative fundraising, sluggish in recent months ... Says the NRA's chief lobbyist, Chuck Cunningham: "The biggest problem in the last few months [since the inauguration] has been complacency among grassroots folks." He says it will be great for the NRA to see Sen. Daschle and others trying to defeat conservative amendments in the coming months.

National Review essentially declared Jersey City Mayor Bret Schundler dead and buried in a June 5th article by John J. Miller and Ramesh Ponnuru: "It looks like the Bret Schundler era is coming to a rapid end. The reform-minded Republican mayor of Jersey City is leaving office soon, and he badly trails former congressman Bob Franks in the GOP gubernatorial primary, set for June 26."

Schundler acknowledges a tough fight, but he offers a list of reasons pundits-even conservative ones-may wake up surprised on June 27: (1) polls show the race tightening from a 26-point spread a month ago (Franks 46 percent, Schundler 20 percent) to just 10 points (Franks 40 percent, Schundler 30 percent) ... (2) Schundler says he now has more money to spend because of an influx of matching funds: "We spent about $2 million over the last six months. We'll spend $4 million over the next three weeks" ... (3) Schundler is targeting high-intensity, conservative issue voters passionate about tax cuts, school choice, Second Amendment rights, and the right to life ... (4) Schundler notes he's got strong credentials to win the general election as a compassionate conservative: "In my last campaign I got 45 percent of the black vote, 70 percent of the Hispanic vote, about 80 percent of the Asian vote, and a majority of the white vote" in an overwhelmingly Democratic city ...

Pollster John McLaughlin, who isn't working for either campaign, adds: "The fact that the Franks campaign is now running negative ads against him gives credibility to what Schundler's saying."

Senate Democrats will move quickly to spotlight health care issues like the Patients' Bill of Rights and a costly universal prescription drug benefit for all Medicare recipients, even though the system is headed for serious fiscal problems ... some conservatives are worried ... "Unless the White House and Republicans in Congress make a better case than they have of why free-market solutions are really the answer to the problems in the health sector, we will be fighting HillaryCare all over again," says Grace-Marie Turner, president of the nonprofit Galen Institute ... She and her colleagues are developing a "Prescription Security Card" that provides financial assistance to low-income seniors without drug coverage and works like a Medical Savings Account for middle- and upper-income seniors who are looking for a tax-free way to save for drug expenses.