Iraq loan provision draws White House veto threat

The Bush administration Tuesday threatened to veto the fiscal 2004 supplemental for Iraq and Afghanistan if a Senate-approved loan provision is accepted. "If this provision is not removed, the president's senior advisers would recommend that he veto the bill," OMB Director Josh Bolten said in a letter sent Tuesday to House and Senate Appropriations Committee leaders.

The Senate approved the amendment, despite vigorous White House and GOP leadership lobbying, to convert $10 billion of the Iraq reconstruction funds into a loan unless other nations forgive 90 percent of Iraq's prewar debt. GOP lawmakers and aides said the provision would likely be removed in conference, as the House bill would provide its entire $18.65 billion Iraq aid package in the form of a grant. "The House will hold firm in support of the president and, in the end, I expect the conference report will drop the loan provision," House Appropriations Chairman C.W. (Bill) Young, R-Fla., said.

Not even a 277-139 vote in favor of a Democratic-sponsored motion to instruct conferees to accept the Senate stance on loans and other items this afternoon swayed Young. "This doesn't affect it at all," he said. Senate Appropriations Chairman Ted Stevens, R-Alaska, also opposes the loan provision.

In all, the House bill would provide $86.9 billion for military and reconstruction activities in Iraq and Afghanistan; the Senate bill contains $86.5 billion. The House is set to appoint conferees on the measure Tuesday, and Young said a formal conference could convene next Tuesday. Besides its preference for loans, the Senate also added amendments to increase veterans' healthcare spending by $1.3 billion, and expand benefits to National Guard members and other reservists. Those provisions also were endorsed by Tuesday's Democratic-sponsored motion.

But Bolten's letter said the administration "strongly opposes these provisions." The $1.3 billion for veterans' health care, heavily lobbied by influential veterans groups, could be accepted as part of the supplemental, GOP aides said. "It's going to be hard to get that out," one leadership aide said. That money also is included in the Senate version of the VA-HUD spending bill.

Meanwhile, six House-passed spending bills not yet approved by the Senate are included in a new continuing resolution approved Tuesday afternoon by the House on a 396-19 vote. The House has passed all 13 of its bills and the Senate only seven. But the Senate is unlikely to take up the remaining six individually and the CR, which would fund the government through Nov. 7, will be the vehicle for Senate passage of a six-bill omnibus, which it would then send to a conference committee.

House Majority Leader Tom DeLay, R-Texas, said he hopes to have all pending appropriations conference reports completed by the end of next week, leaving only the fiscal 2004 spending bills the Senate has not passed. DeLay also said he hopes to have the fiscal 2004 Iraq supplemental spending conference report completed next week.

"We want to make sure everything is done right and not just done right away," he said. A spokesman for Majority Leader Bill Frist, R-Tenn., said he was cautiously optimistic the Senate could complete the omnibus next week, but Young said the targeted adjournment deadline of "Nov. 7 might not be realistic" for completion of the omnibus conference.