Nearly a quarter of all children in Texas have no health insurance. Only Arizona has a higher proportion without insurance, and only California has a higher number.

Earlier this year, some members of the Texas Legislature decided to do something about it. They wanted the state to become a full-fledged participant in the Children's Health Insurance Program (CHIP), which provides federal money to pay most of the cost of health insurance for a family with an income up to twice the poverty level -- $33,400, for example, for a family of four.

Gov. George W. Bush liked the concept of the program but with one big caveat - he wanted to limit eligibility to families with incomes of no more than 150 percent of the poverty level rather than 200 percent, effectively eliminating about 200,000 children from the program. Essentially, he wanted to turn down federal money that was the state's for the asking.

As the front-runner for the Republican presidential nomination, Bush has made "compassionate conservatism" the centerpiece of his campaign. To his Democratic critics here, his tight-fisted approach to the children's health insurance program illustrates the inherent contradictions of social policy that professes to be caring but is driven, the critics say, by the bottom line.

Bush's concern, according to those who participated in protracted negotiations over the issue, was that the aggressive "outreach" efforts required under CHIP, which will include bilingual advertising, toll-free telephone information and low-income neighborhood campaigns, would also swell the state's Medicaid rolls. Medicaid provides health insurance coverage for all children below the poverty level and requires considerably more state money than CHIP.

In the end, Bush agreed to the more generous 200 percent eligibility limit. But he did so grudgingly. "You crammed it down our throats," he told state Rep. Glen Maxey (D), the liberal who led the CHIP fight, according to Maxey and another lawmaker who overheard the conversation on the House floor.

"Some believe compassion is only found in a government spending program," Bush said last week in a written response to questions from The Washington Post. "I disagree. I believe my approach of compassionate conservatism combines limited government assistance with the compassionate hearts of Texans and Americans who are working to help neighbors in need."

It Plays in Texas

That philosophy has struck a responsive chord in Texas. Despite the vocal objections of liberals, there has been a long tradition of providing limited state services and a bipartisan consensus against any personal or corporate income tax.

In 1996, Texas had the third most regressive tax system in the country, according to a 1996 study by Washington-based Citizens for Tax Justice, largely because of its heavy reliance on the sales tax, which tends to take a higher proportion of income from the poor than the well off. The tax system has not changed, but a strong economy has boosted state tax revenues by about 25 percent during Bush's time in office and almost tripled the state's budget surplus to $6.4 billion in the most recent two-year budget cycle.

Despite the windfall, Texas dropped from 49th to 50th among the states in per capita state government spending while Bush has been in office, according to data compiled by the Center for the Study of the States at the Rockefeller Institute in Albany, N.Y. The latest comparative analysis available from the Texas comptroller's office ranks the state 47th in the size of its monthly welfare payments to a family of three and in per capita state spending on public health, and 40th in per capita state spending for elementary and secondary education.

Under a new welfare system enacted during Bush's first year in office, welfare rolls in Texas have declined dramatically, as they have in many other states during the 1990s. The Texas system, crafted by the legislature but supported by Bush, is in some ways "much more friendly to families" than the federal welfare reform legislation signed by President Clinton in 1996, said Christopher T. King, a welfare expert at the University of Texas's Lyndon B. Johnson School of Public Affairs. Time limits on welfare benefits, for example, do not apply to children in Texas but do apply under the federal law.

In terms of welfare, Bush is "no different than other governors," King said. "I don't see the Clinton administration looking that much better. We're toughening up on welfare moms everywhere."

Historically, however, the Texas welfare system has been among the least generous in the country. According to the Washington-based Center on Budget and Policy Priorities, between 1970 and 1996, the inflation-adjusted "real value" of the state's monthly cash assistance to welfare recipients dropped by 68 percent, the steepest decline in the country.

The legislature this year boosted the monthly welfare cash payment from $188 to $201. Bush allowed the increase to become law, but he also tried strenuously to tighten welfare rules. Texas does not cut off cash assistance to the children of parents who refuse to seek work or otherwise violate welfare regulations; Bush unsuccessfully sought to change this by going to a system of "full family sanctions" for welfare rules violations. He also tried but failed to impose a lifetime welfare ban for anyone convicted of felony possession of drugs; in Texas that can involve less than a gram of cocaine or other hard drug.

During Bush's tenure, state spending for public education has increased, and in 1997 he led a concerted effort to revamp the school financing system to make it more equitable for poorer school districts. That effort failed when Bush could not persuade the Republican-controlled Texas Senate to approve a substantially altered version of his plan passed by the Democratic-controlled House.

But beyond public education, Bush has pushed most forcefully for tax cuts rather than using the budget surplus to improve what his critics here say are numerous underfunded state programs. The dispute has produced an echo of the now familiar Washington debate over how best to use the federal budget surplus.

"Far be it for me to be critical of having a $6 billion surplus and deciding to give some of it back, but I'll be here when we don't have a $6 billion surplus, when we have a $1 billion or $2 billion deficit," said state Sen. Rodney Ellis, a Democrat from Houston. "If you don't address the intractable problems during the best of times it's very difficult to make the case during the worst of times."

"Substantively, [Bush] is much less solid than he is symbolically," added Rodolfo O. de la Garza, a professor of government at the University of Texas. "He's an authentic Texas Republican. That means that he doesn't believe that government has a major role in addressing social issues."

Instead of government programs, Bush has called for more reliance on "faith-based" private organizations to help those in need. "I often say government does not have a monopoly on compassion," he said in his second State of the State address in 1997. "Texas is a loving place, full of loving people. Many organizations in Texas, faith-based groups, want to do more to help their fellow Texans. . . . Our laws and rules in Texas should encourage people to help."

Linda Edwards, a Bush spokeswoman, said the thrust of the governor's attempt to encourage faith-based organizations has involved reducing or eliminating state regulations and other legal requirements that may have served as barriers to the groups' work. At Bush's urging, the legislature this year also provided $7 million for grants to organizations that help people avoid welfare and prepare for jobs, she said.

The $7 million, however, came out of the welfare block grant that Texas received from the federal government. Bush's policies often seem to mean "be conservative with state money, compassionate with federal money," Celia Hagert, an analyst at the Center for Public Policy Priorities in Austin, recently told the Houston Chronicle.

On a personal level, Bush's brand of "compassionate conservatism" is almost unanimously praised. "Most people like him," said Bruce Buchanan, another University of Texas professor of government. "There is a tone that seems genuine. Although he is hesitant to use government like a Democrat would, there is no hard-edged aspect to his personal style, nor are there any punitive measures."

Bush has conspicuously reached out to African American Texans and even more so to Hispanics, considered a key voting bloc that could be open to serious GOP inroads in next year's presidential election. When he first came to office, Bush staked out positions on immigration and bilingual education that were in sharp contrast to the harsher stance of another Republican governor of a state with a large Hispanic population, Pete Wilson of California.

Similarly, while Bush has said he is opposed to affirmative action programs, he has not tried to disturb a program begun under Ann Richards, his Democratic predecessor, that monitors the amount of state contracts for goods and services that go to minority- and female-owned firms and encourages, on a "good-faith effort" basis, the awarding of state contracts to such firms.

"The reality is that George Bush is no Ann Richards, but most minorities in Texas would take him over Pete Wilson any day of the week," said Ellis, who is black. "In a comparative sense, if you take what is expected of a typical Republican in this state or in the country, that gives George Bush a lift. But at some point the hard reality of public policy comes into play, and that's where I think, on the national level, that Governor Bush will have a challenge."

`The Border Region'

One "hard reality" of Texas is the pervasive poverty of what is known as "the border region," a 43-county stretch in southwest and south Texas from El Paso to Brownsville. A 1998 study by the office of then-Comptroller John Sharp (D) calculated that if this region became the 51st state, it would rank first in the nation in its poverty rate, percentage of schoolchildren in poverty and unemployment rate.

Bush campaigned frequently in the border region in 1998 and did exceptionally well amid a low voter turnout of the largely Hispanic and Democratic electorate. Democratic legislators from the region argue that it provides a good test case of how "compassionate conservatism" has worked under Bush.

"We have become a laboratory for what the phrase `compassionate conservatism' means," said state Sen. Eliot Shapleigh (D), who represents El Paso. "What has happened in the 43 counties, where one in five Texans lives? It's a fair question to ask. What has happened since George Bush took office? The answer is that the border has dropped a point a year relative to the nation in average per capita income."

Critics such as El Paso County Attorney Jose R. Rodriguez (D), who calls Bush's record on border issues "very dismal," contend that Bush has largely ignored the needs of his state's poorest region while courting its voters with soft and sympathetic rhetoric. Among other complaints, the critics cite his refusal earlier this year to back a special $1 billion bond program for road improvements in the border region, where heavy truck traffic generated by the North American Free Trade Agreement that Bush strongly supports is causing major congestion problems.

"It's simply not true," replied Elton Bomer, Bush's current secretary of state, who has been named the governor's special liaison to the border counties and Mexico. Bomer noted that Bush has aggressively continued a program begun in the late 1980s to bring water and sewer lines to the border's colonias, the squalid shantytowns that have cropped up outside established cities with little or no planning or public services. He also cited a recent announcement by the Texas Department of Transportation that it will invest $1.8 billion in mostly federal funds for NAFTA-related road and bridge improvements in the border region over 10 years.

Tony Garza, who was Bush's first secretary of state and is now a member of the Texas Railroad Commission, which regulates the oil and gas industry, defends Bush's record. Garza, the highest-ranking Hispanic official in the state, argues that under Bush, "Texas has remained a very competitive state in terms of low unemployment rates, job generation and small business development" and that this "traditionally Republican" approach to social and economic problems is benefiting low-income Texans from the border communities to the inner cities of Dallas and Houston.

"I think that is what so many people find so attractive about George Bush," Garza said. "He's a conservative that articulates these positions in a way that we recognize . . . [is] about creating climates where individuals who want to succeed in our schools and our marketplace can."

In the view of Bush and conservative legislators here, CHIP was precisely the kind of government program that could get out of hand in the future. In his two-year budget proposal, "Setting Priorities, Getting Results," Bush estimated that 20 percent of children who are eligible for Medicaid but not enrolled -- or close to 120,000 youngsters -- "will come in seeking CHIP but will be enrolled in Medicaid instead," at a far greater cost to the state.

CHIP advocates insisted Bush's numbers were inflated, in part because signing up for Medicaid is much more difficult in Texas than in most other states -- and much harder than enrolling in CHIP. While a CHIP family will be able to mail in an application or even apply by phone or Internet, a Medicaid parent in Texas must attend a lengthy interview with a state eligibility worker, must document income and assets, and cannot have savings greater than $2,000. And while a CHIP family need not reapply for a full year, the Medicaid parent must repeat the more arduous process every six months.

"Thirty-nine states have already dropped the assets test, and 26 states have dropped the face-to-face interview requirement and accept mail-in applications for children's Medicaid," the Center for Public Policy Priorities said in a recent report. "Texas could drop both of these barriers to children's coverage at any time."

Bush's estimate was subsequently undermined by the Legislative Budget Board, a powerful group headed by senior lawmakers. That, in turn, helped push the legislature toward approval of the 200 percent eligibility level.

"The fight lasted the entire session," said Rep. Elliott Naishtat (D-Austin), chairman of the Human Services Committee in the Texas House. "We finally got 200 percent, but the governor fought us tooth and nail. Now he's pretending that he supported the program."

Staff researcher Madonna Lebling contributed to this report.


50th in state government spending per capita.

40th in Medicaid recipients per 100 persons in poverty.

47th in amount of maximum monthly welfare payment per family of three.

47th in state government spending on public health.

50th in percentage of children in foster care.

40th in per capita state government spending for public K-12 education.

SOURCES: Texas Comptroller of Public Records, Center for the Study of the States