SCHIP

Captain's Quarters blogged The legislation that passed the Senate limits the S-CHIP application to households that earn 300% of the federal poverty line. This is an apparent change from earlier versions that had the limit at 400%, and that can be found in Section 110 (a)(8)(a) -- except that 110 (a)(8)(b) allows states to make exceptions that could force the government to provide grants to others as well. At 2007 poverty levels, a family of three could make up to $52,000 per year and still be eligible in 2007, and in 2008 that number would likely go to $54,000 or more as the poverty level gets indexed to inflation. In Alaska, that number goes to $64,000.

It is outrageous that legislation to help poor people should be twisted to provide government health insurance for middle class people instead.

Even with the reduction in application, this still moves money from primarily poorer people with the sharply regressive cigarette tax and gives it to the middle class. It also undermines the market for private insurance, which has better coverage than the government Medicaid coverage that will crowd out the free-market solutions. The expansion beyond the S-CHIP's original intent to assist poor children dilutes the program and adds to entitlement programs that are already threatening to bankrupt the nation.

And what is bad is that many do not realize how this expansion is focused on people making that much money. I had to explain it to a friend who is just getting by on social security that this is not focused on people in his financial condition.

Will the President veto the legislation? He has only issued three vetoes in almost seven years, and two of those protected embryos. He has not vetoed an entitlement expansion, especially not the prescription program for Medicare that he championed.

If he does not veto it, his threat to veto will mean nothing.

A veto on S-CHIP will put enormous pressure on a handful of Republicans who stuck to fiscal responsibility and who face tough re-election campaigns already in the House. It may also create some pressure on Senators who gave the bill a thin veto-proofing that the House failed to achieve in its bipartisan vote.

If they do not vote to sustain his veto it will mean that they really don't care at all for fiscal conservative principles.

I don't believe the President will veto the bill, although he should. He will probably want to save his political capital for Iraq and the appropriations bills that he will almost certainly veto in the next month or two.

If he fails to veto this absurd bill he will never succeed with vetoes of appropriation bills laden with pork.

Those will require continuing legislation that will create a lot of contentiousness, and the gains from vetoing the S-CHIP expansion will be minimal among his base. His presidency has not been an exemplar of spending control as it is.

If he surprises and follows through on his veto threat, the pressure on Republicans will be enormous. It could set leadership on Republicans from safe seats to reverse their support for the expansion as written, hopefully by presenting the tax-break package that the GOP developed belatedly to combat this version of S-CHIP. That would keep incumbents in tough races from having to explain a vote against the original, while forcing Congress to do the right thing.