Showdown in Congress over child healthcare.

A bill to extend insurance for children by $35 billion faces a likely veto.

With a popular children's health insurance program set to expire this week, US lawmakers who want to expand it are scrambling to find enough votes to withstand a probable veto of their legislation.

It's the first in what is shaping up to be a season of standoffs over funding. President Bush has threatened to veto nine of 12 spending bills for fiscal year 2008, as well as the proposed renewal of the 10-year-old State Children's Health Insurance Program (S-CHIP).

But with access to healthcare becoming a top issue in the 2008 presidential campaign, the skirmish over a relatively modest program, originally launched with bipartisan support, is becoming a proxy fight for larger, more divisive matters.

Tensions over spending intensified Monday, as Mr. Bush took a shot at the Democratic-controlled Congress for failing to move on appropriations bills.

"The fiscal year ends in less than a week. Yet Congress has not sent a single appropriations bill to my desk. Not one," said Bush in remarks on the budget Monday. "If they think that by waiting until just before they leave for the year to send me a bill that is way over budget and thicker than a phone book, if they think that's going to force me to sign it, it's not. This would be bad for our country, it would be harmful for our economy, it would be unfair for the taxpayers," he said.

Democrats said that, with record deficits, Bush was spoiling for a fight with the Congress over spending to rebuild ties to the GOP conservative base.

"It's no wonder the president is rightly defensive about his fiscal record, and clearly he is itching to veto appropriations bills for fiscal year 2008 in a vain attempt to reestablish his bona fides with conservative groups," said House majority leader Steny Hoyer, responding to Bush's remarks.

But the first fight before the Congress will be over the S-CHIP renewal, which goes to the House floor this week.

Last week, House and Senate negotiators agreed to an increase for the S-CHIP program of $35 billion over five years, to be financed with a 61-cent tobacco tax increase. That increase will reduce the number of uninsured children by some 4 million, or about 10 million covered by the S-CHIP program overall.

The White House is calling for an increase of $5 billion over five years. Mr. Bush says that the version moving through Congress would move millions of children who now have private health insurance into "government-run healthcare."

"Instead of working with my administration to enact this funding increase for children's health, Democrats in Congress have decided to pass a bill they know will be vetoed," President Bush said in his weekly radio address Saturday.

But the looming standoff will be especially tough for Republicans, who do not want to head into 2008 elections having to defend a vote against insuring poor children. Most elements of the compromise deal have already cleared the Senate by a veto-proof 68-to-31 vote. (It takes 67 votes to overturn a presidential veto.)

Sen. Orrin Hatch (R) of Utah, who helped negotiate the compromise, says that he's "very sympathetic" with Bush's views that S-CHIP not become "a big, one-size-fits-all government program," but that he hopes the president will work with the Congress to come up with a compromise.

But, unusually, the key vote in S-CHIP is likely to come in the House, which requires 290 votes to override a presidential veto. Responding to reports that the White House will be asking for $200 billion for the war in Iraq this week, House Democrats say the claims that insuring 10 million children under S-CHIP is "excessive spending" is a sign that Bush has the wrong priorities.

"For this president who helped rack up $3 trillion in new debt, it is not about the spending, it is about priorities and the president has made his clear," said House Democratic Caucus chairman Rahm Emanuel, in a statement.

Meanwhile, House Republicans are hoping to pull over tobacco-state Democrats, riled that the S-CHIP increases are paid for by tobacco taxes. "Tobacco taxes fall hardest on the working poor – the very people who S-CHIP was originally designed to help," wrote Rep. Jim McCrery (R) of Louisiana, the top Republican on the House Ways and Means Committee, in an oped on Monday.

A veto on the S-CHIP reauthorization would be only the third of the Bush presidency.

"It's the riskiest use of the veto we've seen yet," says Julian Zelizer, a congressional historian at Princeton University. "Democrats have been able to corner the president and Republicans into an area of healthcare where's its very difficult to say no. That's a big gamble, because it's such a symbolically charged issue."

But beyond politics, there are deep divisions over values at stake in this week's S-CHIP debate. Conservative and libertarian analysts are calling the S-CHIP renewal the first battle in stopping the growth of government-managed healthcare.

"This is a program that doesn't make any sense. Taxpayers have to send their money to Washington, so Washington can send it back to the states and tell the states how to spend it on health insurance for poor and middle-class kids," says Michael Cannon, director of health policy for the CATO Institute, a libertarian think tank. "There's no evidence it's a cost-effective way of paying for healthcare, and evidence that it makes private healthcare more expensive."

Other health policy analysts chide the White House for not working with the Congress to find a compromise. "The White House has stood at the sidelines and just been negative, rather than enter constructively into a discussion to wind up with what might be a compromise proposal," says Henry Aaron senior fellow of the Brookings Institution.

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What happens if S-CHIP expires this week?

If Congress and the White House fail to renew the State Children's Health Insurance Program (S-CHIP), most states will still have some access to federal funds.

That's because S-CHIP allotments cover three years, and 14 states and the District of Columbia have enough prior-year S-CHIP balances to make it through fiscal year 2008. They are: Colorado, Connecticut, Delaware, Florida,Idaho, Indiana, Nevada, New Hampshire, New York, Tennessee, Texas,Vermont, Washington, and Wyoming.

However, immediate shortfalls are expected in 13 states: Alaska, Georgia, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Jersey, Rhode Island, and Wisconsin. Four other states – California, Missouri, North Carolina, and North Dakota – are projected to run out of federal S-CHIP funds in October.

In addition, the Secretary of Health and Human Services can redistribute unspent fiscal year 2005 funds, about $108 million, to shortfall states.

That would cover approximately 18 days of spending for the 13 states projected to run out of S-CHIP funds Oct. 1.

Source: Congressional Research Service

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