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Clinton talks taxes, deals

As the president seeks the governors' help, he reminds them that the GOP bill could force cuts in social programs.

President Clinton renewed his threat to veto a Republican-passed tax cut bill, but told the nation's governors he remains hopeful that the administration and Congress can reach a compromise and avoid a budgetary disaster this fall.

Speaking to the National Governors' Association, Clinton also urged the governors to redouble their efforts to provide health insurance for children. However, many of the state executives challenged the administration's contention that they have moved slowly to implement a new federal health care plan and said where they have, Washington is to blame.

Clinton and Senate Majority Whip Don Nickles, R-Okla., reassured the governors that they would resist any efforts by Congress to take back unused welfare funds that have been building up in the states since the approval of a welfare reform plan three years ago.

Clinton and Nickles, in back-to-back appearances, outlined the arguments for and against the $792-billion tax cut approved by by Congress last week _ a debate that is expected to rage through the August congressional recess as both sides position themselves for expected negotiations in the fall.

Clinton said Congress could not cut taxes by nearly $800-billion and provide additional funding for beleaguered farmers, national defense and other areas without having to dip into projected Social Security surpluses.

He warned that a big tax cut would trigger an interest rate increase by the Federal Reserve.

"People will lose what they get in a tax cut in higher interest rates," he said.

Clinton, stressing deep differences with the GOP, nonetheless told the governors, "I am not nearly as pessimistic as a lot of people are about the prospects of our reaching an agreement, and I am determined to do so."

Nickles also signaled a willingness to compromise, but rejected claims that the Republican bill threatens the economy or the financial soundness of Social Security. With projected surpluses of $3-trillion during the next 10 years, he said it was time to let taxpayers keep "their money."

The governors were more animated in their response to Clinton's comments about the Children's Health Insurance Program. Clinton said that while many states have made progress enrolling children in the new program _ aimed at low-income families that do not qualify for Medicaid _ much more should be done.

Clinton said the federal government would write to school superintendents and principals urging them to increase efforts to identify eligible children, and would begin an outreach program through the United Way.

He also said the government would initiate state-by-state reviews to eliminate roadblocks that might be preventing children eligible for either CHIP or Medicaid from being enrolled.

Governors from both parties defended their records and said they are well ahead of initial projections for enrolling children in the program. Citing a week-old study by the Kaiser Family Foundation, the governors' association issued a fact sheet that said states already have enrolled 1.3-million of the estimated 2.6-million eligible children. The governors also said that enrollment has risen 55 percent since December.

"All of us feel we have very good stories to tell about what we're doing," said Democratic New Hampshire Gov. Jeanne Shaheen, adding, "This is one where I'm going to disagree with the president."

Shaheen said it had taken her state a year to receive a federal waiver to implement the program without the approval of the legislature. Wisconsin Gov. Tommy Thompson, a Republican, said his state had waited 18 months for federal approval of a program far more ambitious than CHIP, one that covers children and their parents. "The president should be pointing at his own administration," he said.

So why would Clinton tweak the governors on the issue? Thompson said he did not know until he perused a chart showing how many children the states have added to the program over the last six months.

"That's it," he said, pointing to Texas, which was the only state showing a drop in enrollment.

George W. Bush of Texas, one of the few governors who was not attending the meeting, is the leading GOP presidential candidate.

_ Information from the New York Times was used in this report.

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