Fast forward to 2007. We now find the president stricken with angst over the prospect of expanding (or even maintaining) an extraordinarily effective health care initiative, conceived and championed with bipartisan support, and a fiscal drop in the bucket compared with his drug plan for seniors. The object of his anxiety, and the threatened target of his veto pen, is the extension of the State Child Health Insurance Program (SCHIP). This successful and popular initiative, combining a larger federal and a smaller state share, subsidizes care for children from low-income families who are not poor enough to qualify for Medicaid.

Passed as part of the Balanced Budget Act of 1997, SCHIP, with a $40 billion federal subsidy over its first decade, reduced the number of uninsured children in the United States from 11.1 million in 1998 to 7.9 million in 2004. This unfortunately rebounded to 8.3 million by 2006, but largely because of the continuing erosion of employer-based coverage for families with children.

SCHIP needs to be reauthorized by Sept. 30. A bipartisan Senate compromise (negotiated by Republican Sens. Chuck Grassley of Iowa and Orrin Hatch of Utah, and Democratic Sens. Max Baucus of Montana and Jay Rockefeller of West Virginia) increases the federal subsidy from $25 billion to $60 billion over the next five years, and will enroll an additional 3.3 million children. The program will be fully funded by an increase in the federal cigarette tax from 39 cents to a dollar a pack. This approach is doubly advantageous, dramatically reducing the number of uninsured children and at the same time serving as a disincentive to tobacco addiction among youth (1.5 million children start smoking each year). It passed the Senate Budget Committee by a vote of 17-4 last week.

The $35 billion increase over five years is less than the Democrats initially wanted ($50 billion) and the American Academy of Pediatrics recommended ($60 billion). The Congressional Budget Office has determined that the program needs at least a $14 billion increase over five years to maintain the status quo but enroll no new children. The Bush administration is recommending a $5 billion increase, which virtually all other parties agree will gut the program, and the president is threatening a veto of the bipartisan Senate compromise.

While Bush's representatives say that he disagrees with the CBO projections - who knew of his actuarial acumen? - the president's overt objections are ideological. He has said that the Senate compromise is "the beginning salvo of the encroachment of the federal government on the health care system," that "expansion of government in lieu of making the necessary changes to encourage a consumer-based system is not acceptable," and that "you're really beginning to open up an avenue for people to switch from private insurance to the government." While I believe that he believes these things, I don't believe that they are the heart of the matter. Otherwise, where was the hand wringing over the Medicare drug expansion?

No, this is about money and power. Should the Senate's SCHIP compromise become law, the principal gored oxen will be the insurance and tobacco corporations, who contribute disproportionately to the president's party. A political problem for Bush is that even though kids don't vote, people and legislators, including Republicans, may on this issue vote on their behalf. When conservative commentators like Michael Gerson (Bush's former speech writer) and Mort Kondracke, in response to Bush's threatened SCHIP veto, openly attack the hollowness of his compassionate conservative pretensions, you know the president is on shaky ground.

While the Republicans are, for the time being, sticking with Bush on the war and executive privilege, it is unlikely that they will give him cover on the refusal of health care for kids. On the assumption that the president will not want to risk the indignity of a veto override, what remains to be seen is how the parties will split the current differences. I'm betting on a slight-to-modest increase in enrollment, which translates into a $20-25 billion increase on behalf of children's health over the next five years. A small step forward.