Deal Reached on Spending Bill for Iraq, Storm Relief

House and Senate negotiators reached agreement last night on a $94.5 billion package to pay for Iraq war and hurricane recovery costs, after shaving numerous extraneous provisions that the Senate had wanted to stuff into the bill.

The bill, which is expected to reach President Bush's desk next week, would designate $65.8 billion to the Pentagon to cover troop pay, provide recruiting incentives, buy new body armor and fund continued operations of the wars in Iraq and Afghanistan, among other items. Diplomacy projects in the region would receive $3.9 billion in new funding.

The bill would also provide $19.8 billion in hurricane relief, exactly what President Bush had requested, but nearly $9 billion less than the Senate had sought. The package squeezed in a few other priority items, including $500 million in agricultural aid -- cut from nearly $4 billion in the Senate version -- along with the $1.2 billion in border security funding and $2.3 billion in avian flu prevention that Bush had additionally requested.

The agreement came after long negotiations. Some Republicans in the Senate, including Appropriations Committee Chairman Thad Cochran, who represents storm-ravaged Mississippi, had viewed the must-pass bill as an opportunity to address other pressing needs. The Senate bill wound up exceeding Bush's original $92.2 billion request by $14 billion.

But a White House veto threat dampened the mood, and Republican leaders in both chambers worried that the appearance of out-of-control spending could hurt them in the November elections. They touted the final product -- even lower than what Bush was willing to accept -- as a victory for their cause.

"Congress is cracking down on excessive Washington spending, and this supplemental spending bill proves that we're on the right track," said Senate Majority Leader Bill Frist (R-Tenn.).

One item dropped from the bill: $700 million for a railroad relocation project along the Mississippi Gulf Coast. The compromise package also trimmed $1.2 billion from the Federal Emergency Management Agency disaster fund, which provides individual assistance and pays for debris removal. And it struck language that would have compelled the Pentagon to cover hurricane damage to shipyard facilities that would otherwise be covered by private insurance -- a provision that budget watchdog groups have pounced on as a perk for a major Northrop Grumman facility in Pascagoula, Miss.

Instead, the final language included $140 million for the Navy to help with infrastructure improvement costs related to Katrina. This money would be available to shipbuilders in the Gulf Coast who had existing Navy contracts and suffered storm damage.

Meanwhile, even as Congress resolves one spending challenge, other battles are percolating. Some Republican senators are pressing for additional health and education spending, in the upcoming annual appropriations bill that would provide money to those accounts. House moderate Republicans have also objected to proposed limits on spending for social programs, which the White House and House Republican leaders want to impose to show fiscal discipline.