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Senate defies Bush, insists part of Iraq spending package be loans

WASHINGTON—Congress headed Thursday toward approval of spending $87 billion on Iraq and Afghanistan, but the Senate denied President Bush a complete victory by insisting that a portion of the aid to Iraq be given as a loan.

Final congressional passage of the controversial $87 billion spending measure was certain and expected to come Friday. That will be a major political success for President Bush, who also scored a big win for his Iraq policy Thursday at the United Nations.

Both victories are expected to smooth the way for Bush's efforts to press other nations to donate money and troops to help rebuild Iraq at a conference later this month in Madrid.

The loan dispute in the Senate was the only blemish on Bush's day of triumph on Iraq policy. The Senate voted 51-47 to require that $10 billion—half the amount the bill would devote to reconstructing Iraq—be given as a loan to the oil-rich nation rather than as a grant, as Bush insisted. A loan proposal similar to the Senate's failed 226-200 in the House of Representatives.

"It's very hard for me to go home and explain how you give $20 billion dollars to a country that is sitting on one trillion dollars worth of oil," said Sen. Lindsey Graham, R-S.C., summing up the view of loan supporters.

Bush fought the loan idea fiercely, personally meeting with loan advocates and directing members of his administration, including Vice President Cheney, to lobby against it. They argued a loan would create suspicions about U.S. intentions in the region and hurt efforts to get other countries to issue grants to Iraq.

Though the effort swayed some Republicans, it left others smarting.

"There were some very sharp elbows thrown by the administration," said Rep. Mike Pence, R-Ind., who had favored loans. Passage of a loan plan in the Senate proved "this was not an effective legislative effort" by the White House, he said.

Most Democrats and more than a few Republicans felt such loan terms were essential to ease deep reservations held by Americans about spending $87 billion overseas at a time of economic weakness, rising deficits and tight budgets at home.

Eight Republicans, 42 Democrats and one independent, Jim Jeffords of Vermont, voted for the loan.

Nevertheless, under the Senate's loan terms, the United States would forgive the $10 billion debt if other Iraqi creditors—such as Russia, Saudi Arabia, Germany and France—waive repayment of 90 percent of their outstanding loans. The Congressional Research Service places Iraq's outstanding debt between $93 billion and $153 billion.

That means U.S. taxpayers could still end up footing the entire $87 billion bill. Most of the money—$67 billion—would support U.S. military efforts.

Differences in the House and Senate bills will be ironed out in a conference committee next week. Administration officials said they would try to kill the loan package in the conference, where the administration will hold considerable sway.

Bush's request for so much money for Iraq galvanized Democrats, who saw it as an opportunity to link slow progress in post-war Iraq with the slow domestic economic recovery.

"What we are considering today is not a final package, it is a down payment of more to come," said House Democratic Leader Nancy Pelosi of California. "We want an accounting, a justification of the $87 billion you are asking for now, and we want an accounting for this failed policy."

Sen. Edward Kennedy, D-Mass., delivered a blistering critique of the administration's Iraq policy on the Senate floor Thursday, accusing the administration of lying about the reasons for war.

"Iraq was not a breeding ground for terrorism," Kennedy said. "Our invasion has made it one."

The spending bill presented a quandary for four Democratic lawmakers now running for president. All four—Sens. John Kerry of Massachusetts, Joseph Lieberman of Connecticut, John Edwards of North Carolina and Rep. Richard Gephardt of Missouri—voted for the resolution last October that authorized the use of force in Iraq.

That vote has haunted them throughout the early campaign season as former Vermont Gov. Howard Dean jumped to the front of the pack on the strength of his antiwar stance.

Edwards and Kerry said they would vote against the spending bill. Gephardt and Lieberman said they would vote for the bill.

Rep. Dennis Kucinich, D-Ohio, who is also running for president but winning comparatively little support, opposed both the war-authorization vote and the $87 billion spending measure.

Republican leaders, ridiculing Democrats who vowed to vote against the bill, said the money was crucial to secure peace in Iraq and assure the prompt return of U.S. troops.

"This isn't about your patriotism, it's about your judgment," Majority Leader Tom DeLay, R-Texas, said. "This bill doesn't just fund the war, it funds the overall strategy of the war on terror. The reconstruction money is defense spending, it is war spending and it is homeland security spending. They serve the same strategy and combat the same enemy."

The authors of the loan were two centrist Democrats, Evan Bayh of Indiana and Ben Nelson of Nebraska, and five moderate and conservative Republicans—Susan Collins and Olympia Snowe of Maine, John Ensign of Nevada, Saxby Chambliss of Georgia and Lindsey Graham of South Carolina.

Two other Republicans who had backed loan plans—Kay Bailey Hutchison of Texas and Arlen Specter of Pennsylvania—withdrew their support after Bush lobbied them.

"I have not seen the president with such fervor and such determination and such intensity since I saw him two days after 9-11," Specter said.


(c) 2003, Knight Ridder/Tribune Information Services.