Welfare Provision Faces Veto Threat : Congress: President will oppose reform legislation if GOP insists on denying benefits to unwed teen-age mothers, his chief of staff says.

With final congressional action approaching on the nation’s welfare system, White House Chief of Staff Leon E. Panetta indicated Sunday that President Clinton will veto the legislation if Republicans insist on denying cash benefits to unmarried teen-age mothers.

The Senate last week rejected such a provision, but a welfare bill passed in March by the more conservative-leaning House contains it. It will be up to a conference of lawmakers from both houses to decide now whether the provision will be included in the final blueprint sent to Clinton.

“If, in the conference, this bill moves in any way toward the original House position, that’s trouble for this [welfare-overhaul] bill,” Panetta said on CBS-TV’s “Face the Nation.”

Also on Sunday, representatives of both parties remained at odds over proposals to change the nation’s major health care programs, Medicare and Medicaid. Panetta and Alice Rivlin, director of the Office of Management and Budget, said Republican plans to cut spending increases in the programs would create a “second-class” health care system.

House Budget Committee Chairman John R. Kasich (R-Ohio) disagreed and said bipartisan cooperation will be needed to pass health care legislation and avert broader economic problems.

“If we’re going to get this job done, we’ve got to check our egos at the door,” said Kasich, who along with Rivlin appeared on NBC-TV’s “Meet the Press.”

On welfare policy, the Senate Democrats’ leading voice on the issue, Sen. Daniel Patrick Moynihan of New York, said he will urge senators who participate in the conference deliberations to implement the tougher House bill. Moynihan, who has criticized Clinton’s welfare policy as an abandonment of dependent children, said he wants to force the President to veto the overall legislation.

“I will be in the conference, and I will be encouraging the worst”--that is, the House-passed provisions, including the cutoff of cash benefits to unwed mothers, Moynihan said on ABC-TV’s “This Week With David Brinkley.”

A final Senate vote on its welfare legislation is expected in the next few days. Speaking on the ABC program, Senate Majority Leader Bob Dole (R-Kan.) said he hopes to move the legislation from the conference committee to the President within two weeks.

Public opinion polls and the rhetoric of politicians from both parties indicate that welfare policy remains a hot button with many voters. Clinton campaigned in 1992 on a general pledge to change the system to encourage and enable welfare recipients to gain employment. In 1994, the House Republicans’ “contract with America” called for denying benefits to unwed mothers.

Now one of the GOP presidential contenders, Sen. Phil Gramm of Texas, has failed to win Senate support for the provision.

Speaking on the NBC program, Gramm said he remains hopeful that the conference will use the tougher House restrictions. Gramm is seeking to highlight his differences with Dole, the party’s presumed front-runner, on welfare and other social-policy issues.

The two GOP presidential candidates also commented on the possible White House aspirations of Colin L. Powell, the retired general who is on a national book tour to promote his memoirs. “In the end,” Gramm said, “I don’t think Gen. Powell is going to run.”

Dole said he would welcome Powell “in my Administration somewhere” but declined to say whether he would consider Powell as a vice presidential nominee. Dole noted the favorable publicity surrounding Powell’s book tour but said harsher scrutiny awaits him in presidential politics.

“Sooner or later, somebody is going to ask him a hard question,” Dole said. “Now he says that he doesn’t really fit--he’s not comfortable in either party. Well, we’re not going to change the party to make him comfortable. I mean, he’s going to have to take stands on issues like the rest of us.”