Iraq Funds Approved In Senate Budget Bill

Republicans then moved to pass an amendment that would take $31 billion for Afghanistan operations -- the only war-related funding in the House bill approved Monday -- and add almost $40 billion. The entire sum would be allocated for Pentagon use for any operation in its anti-terrorism efforts.

On that vote, 48 Republicans were joined by 21 Democrats and one independent in supporting Iraq funds, with 23 Democrats, one independent and Sen. Gordon Smith (R-Ore.) opposed.

Before leaving for a two-week Thanksgiving recess, House and Senate Democrats had pledged not to give Bush any Iraq funding without withdrawal timelines. But the president threatened to veto the appropriations measures needed to keep the federal government running unless he received war funds.

Even if Democrats approved a resolution to keep the government functioning temporarily, they faced the prospect of shuttered military facilities and furloughs for military employees as the Pentagon threatened to move funds from other accounts to finance the war.

Democrats privately acknowledged weeks ago that Bush would get some Iraq funding, but hoped to secure $11 billion to $22 billion in additional domestic spending on the omnibus measure, which rolled 11 of the 12 spending bills into one huge package.

After a veto threat 10 days ago on the additional spending, Democrats pared down the figure to Bush's level but added about $11 billion in emergency funding for initiatives they supported, including drought relief in the Southeast and veterans' health care. A final dispute between House and Senate Democrats involved how much Iraq funding Bush would receive, setting up the compromise under which the House would first act only on Afghanistan funds.

But even that compromise almost unraveled yesterday as House Speaker Nancy Pelosi (D-Calif.) faced a revolt from fiscally conservative "Blue Dog" House Democrats, who demanded that Senate Democrats try again to fully offset the AMT "patch" with a revenue increase. That prompted the speaker to temporarily hold the massive spending bill on her side of the Capitol until Senate Majority Leader Harry M. Reid (D-Nev.) agreed to hold another vote on the AMT.

This time, the proposal was to pay for the tax fix by closing a loophole that allows hedge fund managers to defer compensation in offshore tax havens, but it also fell well short of passage in the Senate.

The House is scheduled to vote today on a proposal to patch the AMT without paying for it, which would break the Democrats' pledge not to approve any tax measure or mandatory spending increase that adds to the federal budget deficit. The Blue Dogs are still passionately holding out on the bill, threatening parliamentary tactics today to prevent Congress from leaving Washington until the Senate and the president agree to pay for an AMT fix.

"Sometimes you have to be willing to stand and take on a fight, even against someone who has all the advantages," said Rep. Dennis Cardoza (D-Calif.). "We're in a box. The president has a veto. The Senate has a hidebound group of senators complicit with the president in protecting tax cheats. But if [George] Washington looked across the river, saw the Redcoats and turned tail, we wouldn't have the country we have today."

But even Senate Democrats were tired of the confrontation.

"When all is said and done, I'm quite confident that when New Year's Eve comes in, we'll have passed an unpaid-for AMT through the Congress," said Senate Finance Committee Chairman Max Baucus (D-Mont.). "I think even the Blue Dogs are going to want to go home for Christmas."

Staff writer Jeffrey H. Birnbaum contributed to this report.