Oct. 3 (Bloomberg) -- President George W. Bush today vetoed legislation that would have expanded a children's health insurance program, telling lawmakers they should send him a version that will cost less and focus on low-income families.

The president indicated he is open to compromise on boosting funding for the State Children's Health Insurance Program, known as Schip. Democrats and many Republicans in Congress backed an increase of $35 billion over five years, more than doubling the program's budget, while Bush initially proposed raising it $5 billion over the same period.

``I'm more than willing to work with members of both parties and both houses if they need a little more money in the bill to help us meet the objective of getting help for poor children,'' Bush said in Lancaster, Pennsylvania, where he addressed the local chamber of commerce.

The veto, Bush's fourth since taking office, was announced at the White House as the president departed for Lancaster, and it was immediately denounced by Democrats. The administration and the Democrat-controlled Congress have been at odds over spending, with the president threatening to veto 11 of 12 appropriations measures for the year that started Oct. 1.

House Majority Leader Steny Hoyer, a Maryland Democrat, said the Schip veto ``not only violates his own campaign promise in 2004, but also demonstrates a stunning lack of compassion for some of the most vulnerable members of our society.''

`Heartless' Veto

Senate Democratic leader Harry Reid of Nevada said Bush is ``detached'' from the priorities of the public and called the veto ``heartless.''

Even some of Bush's usual allies criticized the president's action. Republican Senator Orrin Hatch of Utah said the expansion ``is the morally right thing to do,'' and he hopes there will be enough votes to overturn the veto.

While Democrats have enough Republican support in the Senate to override it, the House fell short of the two-thirds majority required when it passed the measure Sept. 25. Hoyer is proposing to delay an attempt to overturn Bush's veto until Oct. 18, giving Democrats more time to put pressure on Republican lawmakers.

The Democratic Congressional Campaign Committee is buying radio advertising targeting some of the Republicans who voted against the measure and who may be vulnerable in the 2008 elections. Labor unions and other groups backing the expansion said they will collectively spend as much as $5 million on their own campaign focused on Republicans opponents.

House Republicans

Representative Roy Blunt of Missouri, the second-ranking Republican in the House, said he is ``absolutely confident'' that the veto will be sustained. ``Our numbers are solid on this,'' he said after meeting with Bush at the White House yesterday.

Bush said that while he ``strongly'' supports Schip, the expansion would move it beyond the original intent of serving children from poor families. He said in some states it would assist children in families with incomes as high as $83,000 a year. ``That doesn't sound poor to me,'' Bush said.

Schip is a joint program of state and federal governments designed to cover children whose families don't qualify for Medicaid yet can't afford private insurance. Authorities in New York sought to raise the eligibility threshold to $83,000 a year and were turned down by the administration.

Eligibility Levels

New Jersey, which has the most generous program, allows children in families earning as much as $72,000 to sign up. State officials say that the higher cost of living in New Jersey justifies letting more families have access to program.

The measure passed by Congress mostly limited coverage to families with income at 300 percent of the federal poverty level, or about $62,000 for a family of four.

Ed Gillespie, counselor to the president, said Health and Human Services Secretary Michael Leavitt and White House economic adviser Al Hubbard will lead negotiations with Congress once the override attempts end.

The president will support an increase in funding as long as it is focused on meeting ``the intent of the program'' to serve low-income families, Gillespie told reporters as Bush returned to Washington.

Bush said his other objection was that the expansion reflects ``the desire by some in Washington, D.C., to federalize health care. I don't think that's good for the country.''

The legislation passed by Congress would have added about 3.8 million children to the 6 million now covered by Schip, with the additional funding paid for by raising the federal tobacco tax to $1 a pack of cigarettes from 39 cents.

To contact the reporters on this story: Holly Rosenkrantz in Washington, at hrosenkrantz@bloomberg.net; Roger Runningen in Lancaster, at at rrunningen@bloomberg.net;

Last Updated: October 3, 2007 15:11 EDT