Senate OKs Child-Care Assistance Bill : Landmark Legislation Sent to House Despite Threat of Bush Veto

WASHINGTON —  The Senate approved landmark legislation Friday to help working parents pay for child care, overriding strong Republican opposition and ignoring a veto threat by President Bush.

The Senate approved the bill by voice vote and sent it to the House, where work has just started at the subcommittee level. The Senate measure was the first major federal program to assist with the growing problem of day care.

The bill, sponsored by Democrats, combines three different tax credits and a new $1.75-billion federal program to provide direct assistance to parents to pay for day care. It is aimed mostly at low-income and poor families.

In a final gesture to Republicans and Bush, the Senate adopted, 54 to 45, a new tax credit of up to $750 for parents of children under the age of 4.

Sen. Lloyd Bentsen (D-Tex.), “in the spirit of compromise,” proposed to add the new tax credit--taken from the Republican counterproposal--and make it part of the Democratic package.

To offset the cost, the Bentsen amendment would trim provisions of the dependent-care tax credit and a new children’s health insurance credit that are part of the Democratic proposal.

A subsequent Republican attempt to kill the health insurance credit was defeated, 53 to 44.

The estimated annual cost of the tax provisions is about $3 billion, which would be largely paid by an extension of the telephone excise tax.

The heart of the bill, which has provoked a veto threat by Bush, is a new $1.75-billion program of direct financial assistance to primarily low-income and poor parents to pay for child-care services.

White House press secretary Marlin Fitzwater said senior advisers would recommend that President Bush veto the bill.

He said the legislation “would invite state and government control over child care” and contended that it would “discriminate against families and diverts too much money from families.”

Bentsen offered the new proposal after trying until late Thursday night to reach an agreement with Senate Republican leader Bob Dole and other key Republicans. They failed to reach a compromise.

“In the long run, it finally came apart,” Bentsen said, adding that Republicans would not accept the health-insurance credit.

“They wanted it all,” Bentsen said. “The President of the United States can’t have it all.

“Some say the health credit is not important,” Bentsen said. “I strongly disagree with that. You bet it’s important. The person on welfare has better access to health care than the person trying to work.”

Dole said the revised package was not an appropriate response to the problems of child care, adding, “What we have now is a cafeteria plan--a little bit of this, a little bit of that.”

“There’s nothing in this bill the President wants except the dependent-care tax credit,” Dole said, charging that the health insurance credit would help the wealthy, not the poor. However, the health insurance credit would not apply to families with incomes above $18,000 a year.

The Senate adopted the Democratic plan Thursday, 63 to 37, after rejecting the GOP counterproposal, 56 to 44. But the Democrats accepted a series of Republican amendments.

Two of them, both adopted unanimously, turned the bill into a a mini-bonanza for senior citizens.

One amendment would increase the amount a person between 65 and 69 could earn before losing any Social Security benefits.

Benefits Lost

Currently, Social Security beneficiaries in that age group lose $1 in benefits for every $2 earned above the figure of $8,800.

The amendment, which would take effect in January, would raise the ceiling to $10,560 and reduce the loss to $1 for every $4 on earnings up to slightly more than $15,000.

The Senate also approved a “grandma” amendment to exempt from the earnings ceiling money made by people between the ages of 65 and 69 for taking care of children. The amendment was included in the Republican plan.

The Bentsen addition to the package would provide a supplement to the earned income tax credit for children under 4. The maximum would be $500 for one child and $750 for two or more children.

Phased Out at $15,000

The credit would be refundable, beginning in 1991, on an advance payment basis. It would fully apply to families with incomes of $10,000 and be phased out at $15,000.

To make room in the package for the new credit, Bentsen made the dependent care tax credit 90%--instead of 100%--refundable beginning at the end of 1990 and refundable on an advance basis in 1992.

Bentsen also agreed to implement the health insurance credit more slowly, starting with a maximum of $350 in 1991. The credit would reach $500 by 1994, refundable in advance beginning in 1992. It would apply fully for families earning up to $12,000 and end at $18,000.

The Democratic plan would create a new federal program costing $1.75 billion the first year, with 70% of the money going to parents for child-care expenses. Twenty-two percent would go to the states to set up day-care programs, and 8% would be for administration.