Bush Proposes $42-Billion Plan to Aid Working Poor

Texas Gov. George W. Bush unveiled a sweeping plan Tuesday to launch the working poor into the middle class by easing the path to basic needs like health care, shelter and financial stability.

His most ambitious and expensive domestic spending plan to date, the $41.6-billion, five-year “new prosperity initiative” marked the first time Bush has spelled out his plans to deal with America’s health care crisis. The initiative also included new tax credits and government programs aimed at those now living between “poverty and prosperity.”

At the plan’s core is an annual tax credit that would provide as much as $2,000 for low-income families and $1,000 for individuals to buy health insurance.

“Instead of helping people cope with their need, we will help them move beyond it,” Bush told about 200 people at a social services center in a working-class neighborhood here. “With the same energy and activism that others have brought to expanding government, we must expand opportunity.”

But critics instantly argued that the credit would be far too small to help many of the 44 million Americans without health insurance. Still, Bush’s foray into such traditional Democratic turf as covering the uninsured accelerates his move to the center following his tilt right during the battle for the GOP presidential nomination.

Among the proposals announced Tuesday:

* The tax credits to help people buy health insurance would be offered on a sliding scale to families making up to $60,000 a year or individuals making up to $45,000 a year.

* A plan to allow small businesses to buy cheaper insurance for their employees by buying policies through trade groups, such as the U.S. Chamber of Commerce or the National Restaurant Assn.

* A $1-billion fund that will pay 75% of the down payment and closing costs up to $1,500 for first-time home buyers making less than 80% of a region’s median income. In California, that 80% figure is about $44,000 for a family of four.

* Bank accounts to pay for education, a first home, or business loans in which the bank will match money deposited by low-income people, up to $300 a year. In return, the banks would receive a tax credit and credit for participating in government programs requiring they invest in their communities.

Democrats immediately attacked the proposals, saying Bush’s record as Texas governor showed his lack of concern for housing and health care for the poor.

Texas ranks at the bottom in the nation in health care measures such as the number of uninsured children and uninsured elderly. It has one of the country’s largest unfilled housing needs and its colonias--unincorporated neighborhoods on the Texas-Mexico border--often lack basic services such as sewers and running water.

“He has clearly changed his tune to appeal more to the mainstream,” said Doug Hattaway, a spokesman for Vice President Al Gore. “People won’t be fooled by the rhetoric when they look at his record.”

Gore has proposed a contrasting plan to cover what his campaign estimates would be 11 million to 15 million people. Gore, the presumed Democratic nominee, has put the cost of his health plan at about $150 billion over 10 years.

The measures Bush announced Tuesday are aimed at making insurance available to about 18 million Americans. They marked Bush’s most significant effort yet to cast himself as a compassionate conservative devoted to the middle class, less a hard-line Republican and more a Nelson Rockefeller moderate.

Last month, he announced a $13-billion education plan to boost reading skills and better train teachers. He also unveiled a $400-million environmental plan aimed at cleaning up abandoned industrial sites.

In hitting upon such traditionally Democratic issues, minus the increased federalism such proposals usually bring, Bush is hoping to draw in independent voters who trend toward more moderate candidates, while keeping the GOP’s religious and economic conservatives in his camp.

“It is true that government can undermine upward mobility--as welfare once did,” Bush said. “It is equally true that government--active, but limited government--can promote the rewards of work.”

Tax Credits to Pay for Health Insurance

The initiative will be paid for through a combination of yet-to-be announced spending cuts and the $4-trillion projected budget surplus, Bush aides said.

The biggest chunk of Bush’s plan--accounting for $35 billion--comes in the form of the tax credits available to pay for up to 90% of the cost of a health insurance policy.

People eligible for Medicaid, or who have the opportunity to buy insurance from their employers, would not be able to receive the tax credit.

Bush would also ease restrictions on how money can be used in special medical savings accounts. The cost to the federal government in lost revenue would be $4.6 billion over five years.

Bush aides admitted that $2,000 a year would not pay for a “luxurious” health plan. They acknowledged that in most cases, the money would not even cover the costs of a basic health plan, which can start at around $2,400 a year.

Instead, they said they believed that market forces would drive down the cost of basic policies after Bush’s proposal becomes law. In addition, Bush’s $483-billion tax cut plan, which increases the child tax credits to $1,000 per child, will return more money to the poor, increasing disposable income.

But health care experts said they doubted whether the credit, combined with the administrative hassle of obtaining it, would succeed as Bush hoped.

“When you look at the current average family policy, we are talking in the cost range of $4,000 to $5,000 a year,” said Diane Rowland, executive director of the Kaiser Commission on the Future of Medicaid, a nonprofit group that studies health care issues for low-income Americans.

“This proposal is probably assuming if you put that kind of a credit out, some kind of insurance policy will be out there to match it,” Rowland said. “But the question is: What will those policies cover? How meaningful would the coverage be?”

The second-biggest chunk of Bush’s new plan includes $2 billion to increase home ownership for the poor. One program is based on legislation now going through Congress that would allow people receiving Section 8 rent subsidies to use that money as a down payment on a home.

While the vouchers can currently be used to pay monthly mortgage payments, Bush’s proposal would allow recipients to use their yearly voucher allotment as a lump sum for a down payment. A year’s worth of Section 8 vouchers amount to around $3,000 a year nationally, Bush aides said.

Another policy to encourage home ownership would provide a 3 to 1 match of a lender’s contribution to a down payment. For instance, if a down payment and closing costs come to $2,000, the government will provide $1,500 of that amount to help the family make the payment.

Bush compared the plan, which will provide new homes to an estimated 650,000 people, to Abraham Lincoln’s Homestead Act, which provided property to 400,000 to 600,000 families.

Plan Rooted in Congressional Action

Many of the Bush programs have their roots in bipartisan housing and health care plans now underway in Congress. His plan for an individual development account, for instance, has already been passed by the House of Representatives.

Bush, through a spokesman, on Tuesday also distanced himself from comments made by one of his health care appointees in the New York Times that Latinos lacked “the belief . . . that getting pregnant is a bad thing.”

“Gov. Bush appreciates and respects the fact that the Hispanic culture celebrates life as he does,” Ari Fleischer said. “All parents of all backgrounds from all walks of life should encourage their children to make responsible decisions and choose the happy and healthy decision which is to abstain from sex until they’re married to their lifelong spouse.”

Times political writer Ronald Brownstein contributed to this story.