Clinton Veto Threat Raised by Panetta : Congress: Staff chief says President to draw line on House GOP welfare reform, capital-gains and crime plans. Senate changes could ease the White House objections.

President Clinton is prepared to veto a variety of House Republican initiatives, including welfare reform, a capital-gains tax cut and a repeal of the crime bill, unless the Senate eliminates certain provisions in each measure, White House Chief of Staff Leon E. Panetta said Sunday.

“We are not going to let them cut school lunches in order to provide tax cuts to the wealthiest in this country. We’re not going to let them cut 100,000 cops off the President’s crime bill. We are not going to let them move backward with regards to education cuts,” Panetta said.

“Those are areas where we clearly have drawn some lines,” he said.

Panetta’s comments went further than the President’s own remarks Saturday in his weekly radio address, in which he repeated his objections to certain provisions of the welfare reform bill passed Friday by the House but did not threaten to veto it. To date, Clinton has not vetoed one piece of legislation.

Also on Sunday, House Majority Leader Dick Armey (R-Tex.) predicted that the House-passed welfare reform bill will emerge from the Senate “by and large . . . intact” and he expressed confidence that Clinton would sign it.

“Oh, there’s no doubt about it,” Armey said. “The President’s been talking about an opportunity to ‘end welfare as we know it’ since his first campaign.”

Still, Armey conceded that the Senate is unlikely to rubber-stamp the House welfare bill. Indeed, many senators, Republicans as well as Democrats, have flatly declared their intention to come up with a less Draconian package. They include some key committee chairmen, such as Sen. Bob Packwood (R-Ore.), head of the Finance Committee.

Sen. Daniel Patrick Moynihan (D-N.Y.), ranking member on the Finance Committee and a noted welfare expert, strongly disagreed with Armey’s optimistic forecast that the final bill will much resemble the House measure.

“That bill?” Moynihan said dismissively Sunday on CNN’s “Late Edition.” “We’re not even going to take that bill up,” he said, meaning that the committee intends to write its own legislation.

Moynihan said the House bill amounted to “cruelty to children” and expressed relief that Panetta “finally said the President will in fact veto” any welfare bill containing objectionable provisions.

“To deny benefits to your children is to invite social calamity,” he said. “You are talking about your future.”

Armey, the second-ranking House Republican, also pledged to work to cut funding for abortions and abortion-related services.

“All the 10 years I have been here we have been losing votes on federal funding for abortion,” Armey said. “I think we have to look at that to begin with. Where have we programs in place now in current law where you have taxpayer subsidies to abortion and abortion-related activities? We can begin with those, and I intend to roll back those legislative areas, as much as many others.”

On the GOP proposal to cut the capital-gains tax rate by one-third, Panetta said the Clinton Administration finds the House proposal “unacceptable” but said the President is willing to consider one that is paid for and “targeted at the middle class. . . .” Both Panetta and Armey spoke on NBC-TV’s “Meet the Press.”

On Saturday, Clinton commended the House for including in its welfare bill certain child-support enforcement measures, including the threat of revoking professional and driver’s licenses to help ensure that payments are made.

But the President also complained that the bill does little to promote work--a theme that Panetta expanded upon Sunday.

That bill, Panetta said, “is weak on work requirements and very tough on children.”

“We want to basically reverse those priorities. . . . We do want to provide a safety net with regards to children and with regards to young mothers.”

Panetta said specifically that the President would object to the bill’s provision combining school lunch and breakfast programs into block grants to the states.

“You can’t just simply pass this on to the states and say: ‘To hell with our kids. . . . We’re not going to pay attention to what happens to families here. We’re not going to pay attention to whether they actually produce work or not.’ That is a responsibility we all have at the federal and state level,” Panetta said.

The House welfare reform bill, which cuts federal spending by $66 billion over five years, would transfer to the states most authority over social spending, including cash assistance, foster care, child care and school meals programs.

It would also end the federal “entitlement” guarantee that any person who qualifies for aid will receive it.

* CLINTON LACKS OPPOSITION: Having no primary challengers for ’96 is not all good news. A14