Bush Vetoes Health Measure

At Grassley's behest, Leavitt and White House economic adviser Allan Hubbard contacted Sen. Ron Wyden (D-Ore.), who along with Sen. Robert F. Bennett (R-Utah) had been pushing a bipartisan measure to provide universal health coverage through private insurers. But in more than 20 phone calls and meetings, Wyden said, the White House was never willing to go beyond Bush's far more limited health-care tax proposals.

One senior Republican aide, who insisted on anonymity to discuss internal deliberations, said the White House refused to believe Grassley's repeated assertions that Wyden was not interested in using SCHIP for a broader new health initiative. "They cut themselves out of the process by insisting that any SCHIP extension be linked to" their broader health agenda, this official said.

In April, Grassley and Hatch decided to pursue a separate deal with Democrats, and it was too late for the White House to realize its ambitions. "Even if I got run over by a bus, it would be a non-starter," Wyden said. "Senators Grassley and Hatch had moved on."

Then, in August, the Bush administration changed the rules on the existing SCHIP system to make it far more difficult for states to expand eligibility. The administration said that the new rules were meant to more sharply focus the program on the uninsured children of the working poor. But Democrats -- and some Republicans -- saw such an important decision being made in the middle of legislative deliberations as punitive and provocative.

"The new SCHIP rules just sent a cannonball into the crowd that was working on this," said Sen. Edward M. Kennedy (D-Mass.).

At the same time, House Democrats decided to defuse Bush's new effort to draw a line on fiscal issues by making sure that the first bill he vetoed this fall was one on children's health care instead of one of the spending bills he has threatened to block. "They saw it coming, but they never altered their game plan," said Rep. Rahm Emanuel (D-Ill.).

White House aides offered no apologies for their negotiating tactics. "None of us were embarrassed" by the effort to pursue a broader health agenda, said Hubbard, director of the National Economic Council at the White House. He said the reauthorization of SCHIP is an opportunity not only to help poor children but also to expand access to health care for other Americans.

Leavitt said he was surprised "that the Democrats in Congress, who have for years pursued national health insurance, rejected an invitation of a Republican president to advance the cause of every American having insurance."

Staff writer Michael A. Fletcher in Lancaster, Pa., contributed to this report.