O.C. Executives Want Bush to Quickly Tackle Recession : Advice: Leading lights in this GOP enclave think President has fumbled, and offer their strategies.

Reduce the capital gains tax. Revive the investment tax credit. Cut government waste and red tape.

That’s what Orange County executives say they want from President Bush. The list isn’t much different from what business people around the nation want.

What’s different here is that even in this Republican enclave there’s a strong sense that Bush has fallen down in managing the economy and that he had better take some meaningful action soon.

Listen to one prominent local Republican: “I voted for President Bush during the last election,” said Timothy L. Strader, chairman of the Newport Beach bank holding company CommerceBancorp, “but I’m very disappointed in his domestic policy now.

“I would suggest that the President admit the country is in a depression, not a recession.”

And Strader’s not the only one: There is a lot of grumbling over lunch in the sunny dining room of the Pacific Club these days, or during intermission at the Orange County Performing Arts Center, or out on the golf course at Big Canyon Country Club--all the haunts of the county’s rich and powerful.

What does the President need to do to woo these business people?

The Times recently asked a cross-section of more than two dozen local business leaders what advice they would give Bush on the economy. Most of the answers conveyed a sense that the economy has gone way off track and that it will take urgent measures to get it rolling again.

A handful of proposals were mentioned repeatedly:

* Reduce or abolish the tax on capital gains, the profit you make when you sell an asset, which the Administration has hinted it will try to do. Many Democrats oppose this move unless there is a corresponding increase in income taxes on the rich.

* Restore the investment tax credit, which until the mid-1980s gave companies a tax break when they invested in new plants or equipment. The Administration has said it will probably try to revive the credit; some prominent Democrats also favor it.

* Cut burdensome regulations that--according to many business people--hinder economic growth.

* Find a way to cut the billions of dollars the government wastes every year.

Criticism of Bush’s handling of the economy persists even though, at first glance, Orange County’s economy is in better shape than the nation or the rest of California.

The local unemployment rate, for instance, was only 4.4% in November, way below the state rate of 7.4% and the national rate of 6.8%. Despite pockets of poverty, the county’s population is more affluent and its economy more muscular than the national averages.

But there are ominous cracks in the foundation of the local economy that worry these business people.

The extremely important local real estate industry, for instance, shows no signs of reviving any time soon; big cuts in federal defense spending mean the county’s powerful aerospace plants will continue to shrink.

Whether Bush can dispel all this pessimism after Tuesday--when he discloses his economic recovery plan at the State of the Union address--may determine whether he is reelected.

“We need long-term solutions to fix our problems and what’s coming out of Washington right now are quick fixes,” said R. Darlene Firestone, president of the Irvine consulting firm Premier Relocations Services Inc. and a Republican.

A few people already have the President’s ear: They have either bought the access by contributing a bushel of money to the Bush campaign or, in some cases, they are important enough that Bush has sought their advice.

Take billionaire land baron Donald L. Bren, for instance, whose Irvine Co. owns tens of thousands of local acres. Bren actually does talk to the President occasionally about economic policy, but declined through a spokesman to divulge how he advises Bush or whether he differs much with the President’s economic policies. If Bren wanted to get a message through to the President, says the spokesman, he “wouldn’t do it through the newspapers.”

Others are a lot less reticent.

Many of Orange County’s top business people tend, like Bren, to still own the companies they run. They often still have a bit of the swashbuckler about them, and they can be as partisan and outspoken as they want because they own the company and are not responsible to thousands of shareholders.

So sour is the economy that even some of these dyed-in-the-wool Republicans are starting to wander off the reservation.

Two of these business people recently had Democrat Bill Clinton in for breakfast, rattling the national Republican political Establishment when the Arkansas governor seemed to make a pretty good impression.

Kathryn G. Thompson, an Aliso Viejo home builder and a big Bush donor to the tune of $100,000, is unapologetic about helping set up the breakfast.

“We needed a long-term growth plan long before now,” she said, “but that message evidently didn’t get across. Now the State of the Union address is supposed to offer us some magical cure?”

As expected, a lot of the executives interviewed by The Times thought government should interfere less in business.

People do not realize that jobs can be lost to “onerous permitting procedures” and “unrealistic regulatory requirements,” said Les McCraw, chairman of Fluor Corp., an Irvine-based international construction giant and the county’s largest company.

“It is the Administration’s responsibility to balance the necessary social and economic reforms against the backdrop of the nation’s overall welfare,” said McCraw, a Republican, in a statement.

But the local executives also revealed the sort of deep divisions expected to be found between industries with widely differing objectives.

Most of the real estate people interviewed, for instance, want investors to be able to use their losses on real estate--called “passive losses”--to shelter other income from taxes. Under the 1986 tax reform act, this provision was eliminated.

On the other hand, some of the people interviewed opposed much intervention in the economy at all; they specifically opposed reviving the passive losses provision.

“Taxes shouldn’t be manipulated to further economic policies,” said James L. Doti, president of Chapman University and a conservative economist who has long studied the county’s economy.

“I’d favor abolishing the capital gains tax, for instance,” he said, “but simply because I want a level playing field so that economic decisions would be based on the free market.”

Times correspondents Rose Apodaca and Shannon Sands contributed to this report.