House OKs $27-Billion Child-Care Legislation : Congress: Most benefits under Democratic plan would go to ‘working poor.’ Bush has threatened a veto.

The House on Thursday overwhelmingly approved comprehensive Democratic child-care legislation at a five-year cost of $27.5 billion despite strong veto warnings from President Bush.

The 265-145 vote ends months of political stalemate in the House. The measure, which targets most of its benefits to low-income working parents, will now go to a Senate-House conference to be reconciled with a much different version approved by the Senate last June.

The eventual result of the negotiations--and Bush’s reaction to the final product--remained uncertain.

But the House outcome represented a major victory for the House Democratic leadership, which had revived the child-care legislation--a high-priority item on the party’s national agenda--after months of intramural squabbling among Democrats over funding.

Immediately after the results were announced, House Republican Whip Newt Gingrich of Georgia announced that he had checked with the White House and the President would veto the bill if it arrived at his desk in its present form.

Earlier, Speaker Thomas S. Foley (D-Wash.) brushed off veto threats, saying: “We don’t just fall over dead every time a President says that he’s inclined to veto something.”

An alternative bill with a five-year price tag of $20.5 billion, backed by the White House and all but a handful of Republicans, was defeated on a 225-195 roll call. Its sponsors, however, claimed credit for reshaping the Democratic leadership’s bill more to their liking, especially in regard to church-sponsored child-care centers.

Bowing to the wishes of many Democrats, especially those from rural areas, the leadership bill would require states receiving federal grants to issue vouchers to parents so they could choose what kind of child care they wanted. This was seen as a concession to religious providers, who account for about 30% of all child-care services.

An effort to make states’ use of vouchers optional instead of mandatory was rejected, 243 to 182, and a proposal by Rep. Don Edwards (D-San Jose) to require that fed eral funds be used only for “non-sectarian” child care without religious worship or instruction was defeated on a 297-125 roll call.

Other provisions of the bill would:

--Authorize additional funds to expand Head Start to a full-day, year-round program.

--Set up a new program to use public schools to provide care for preschool youngsters as well as before-school and after-school care for an estimated 10 million “latchkey” children whose parents work outside the home.

--Provide block grants to states for child-care services.

--Vastly expand the Earned Income Tax Credit to give more benefits to larger low-income families and to those with children under 6 years old. Earned Income Tax Credit payments would amount to $14.5 billion over the next five years, accounting for more than half of the additional cost of the child-care bill.

--Authorize payments to help businesses provide day care for their employees’ children.

The Senate-approved child-care legislation authorized $1.75 billion a year in grants to the states and tax credits worth about $2.5 billion a year for payments to needy parents. It also would set safety and quality standards for day-care centers.

President Bush proposed a child-care program based entirely on tax credits that would have cost an estimated $7 billion over the next five years.

The fast escalating cost of child-care legislation reflected a “bidding war” between Democrats and Republicans, according to several key members of Congress.

“It’ll be $100 billion a year before you can put your hat back on,” Rep. Jerry Lewis (R-Redlands) said in an interview. “We’re going way beyond the fundamental need.”

Rep. Bill Archer (R-Tex.) told the House that the Democratic leadership’s bill would cost at least four times as much because of the effort to appeal for votes by both sides of the aisle.

House Republican leader Robert H. Michel of Illinois complained that his effort to insist that funds be raised to cover the cost of child care was sidetracked by the Democratic leadership despite the majority party’s ostensible interest in “pay-as-you-go” financing of new legislation.

“Their rhetoric is pay-as-you-go, but their reality is spend-as-you-please,” Michel said.

Democrats, however, insisted they would extend a federal telephone tax and phase out the existing child-care dependent tax credit for families with incomes of $70,000 or more.

“The time has come to put our money where our mouths are--that children are our most important natural resource,” said Rep. Thomas J. Downey (D-N.Y.).

Summing up arguments for the Democrats’ bill, House Majority Leader Richard A. Gephardt of Missouri said: “Put up or shut up--the Democratic bill gives more child care to more families in this country” than the Bush-backed alternative.

Rep. Bill Frenzel (R-Minn.), however, said in the debate that only $14.4 billion of the estimated $27.5 billion of additional costs over the next five years would be covered by increased taxes, adding: “What a weird way to take care of children--hand them an IOU for $13 billion.”