Senate supplemental proposal gives Defense wide spending flexibility

Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, said Monday the administration's $87 billion fiscal 2004 supplemental request for Iraq and Afghanistan would remain largely intact in his panel's draft, calling it "one of the most important pieces of legislation I will ever work on." Stevens was so convinced of the necessity of the administration's package in open hearings and private briefings that his bill would generally give the Defense Department wide flexibility in transferring funds among accounts-an ability lawmakers have been hesitant to provide previously.

The measure would curtail the administration's request for $5 billion in Defense Department transfer authority to meet needs where it sees fit, halving that amount to $2.5 billion. By contrast, the $79 billion fiscal 2003 supplemental for Iraq and other purposes contained $2 billion in transfer authority. But the measure would give the Pentagon the option of receiving an additional $5 billion if they come back at a later date and submit an additional justification to the appropriations committees, for a total of $7.5 billion in flexible funds.

The Senate draft would also approve the White House request of about $2 billion for the "Iraq Freedom Fund," a separate, flexible, Defense Department account established by the 2003 supplemental to support post-war operations in Iraq and Afghanistan as the Pentagon sees fit.

Stevens said the $65.6 billion defense portion of the bill would hew largely to the administration's request, although it would transfer some funds from the Air Force account to the Army because the latter has more immediate needs in Iraq. An aide said the measure would transfer about $300 million between Army and Air Force accounts.

The measure also would give L. Paul Bremer, head of Iraq's Coalition Provisional Authority, wide latitude in spending the $20.3 billion in Iraq security and reconstruction funds requested by the administration.

The $20.3 billion request, which includes about $5 billion for security forces and Iraqi authorities, has come under fire from Democrats and some Republicans for items such as $4 million to develop a set of telephone numbers and other provisions they say have little to do with emergency needs.

"It's up to Bremer how to allocate the money. All of these things are necessary," Stevens said, although he added where the money goes would be subject to Defense and State Department approval, and his bill would impose strict reporting and auditing requirements.

Stevens and Foreign Relations Committee Chairman Richard Lugar, R-Ind., joined by Commerce Committee Chairman John McCain, R-Ariz., also the No. 2 Republican on the Armed Services Committee, said they would work to rebuff efforts by Democrats to split the measure into separate military and reconstruction portions.

At least one such Democratic amendment is expected-as well as calls on both sides of the aisle to refashion $15 billion for infrastructure projects into a loan program. Lugar said Iraq's $200 billion debt to other nations dwarfed that of Germany after World War I.

McCain said if the package redirected the funds into the form of a loan to be paid back out of future oil revenues, "every despot, every extremist will see that the United States was only there for one reason and that's oil. And to an extent they'd be right."

At the Appropriations markup, Sen. Byron Dorgan, D-N.D., will offer an amendment to require Iraqi oil be used as collateral for international loans to finance Iraqi infrastructure projects.

"Iraq has the second largest oil reserves in the world. Those resources can and should be used to help finance reconstruction of Iraq," he said Monday in a statement.

Bremer said last week that oil revenues instead should be used to pay down the nation's $200 billion in international debt. But Stevens said a provision in his bill would prevent any funds from being used to repay debt run up by Saddam Hussein's regime.

An aide added the measure would ensure Iraq reconstruction contracts are competitively bid, but would not go so far as Governmental Affairs Committee Chairwoman Susan Collins, R-Maine, and Sen. Ron Wyden, D-Ore., in demanding justifications for limited-bid contracts be published in the Federal Register. Collins also backs crafting the $15 billion reconstruction funds into a loan.

McCain, an opponent of President Bush's tax cut policies, nonetheless said he would oppose an effort led by Foreign Relations ranking member Joseph Biden, D-Del., to suspend tax cuts for the top 1 percent of income earners to pay for the 2004 request.

"That debate should be held another day," McCain said.

As Senate appropriators split into two groups Monday night to plot strategy, Democrats indicated they were planning a series of amendments to the proposal.

Senate Appropriations ranking member Robert Byrd, D-W.Va., said he would discuss with his fellow Democrats precisely how to approach the supplemental.