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Spending bills for Iraq, Afghanistan approved

Bush urges loan provision be removed in conference

The Senate voted to convert half of President Bush's $20.3 billion Iraqi rebuilding plan into a loan.
The Senate voted to convert half of President Bush's $20.3 billion Iraqi rebuilding plan into a loan.

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George W. Bush

WASHINGTON (CNN) -- The House and Senate approved hefty spending bills Friday for Iraq and Afghanistan, giving the White House much -- but not all -- of what it wants for U.S. military and reconstruction efforts in the two countries.

Key differences in the two measures must be resolved by lawmakers before President Bush can sign a bill.

The Senate version of the bill, an $85.1 billion spending package, was passed 87-12. It contains one provision strongly opposed by the White House: a plan to convert about half of the $20 billion in reconstruction funds for Iraq into loans, as opposed to grants.

Eight Senate Republicans broke party ranks Thursday night to support the loan amendment.

The House bill, larger at $87 billion, follows the administration's wishes by maintaining all of the reconstruction funds as grants, meaning Iraq would not have to pay back the money. It was approved by a 303-125 vote, but most House Democrats opposed the measure.

The two versions must be reconciled in conference before one bill can be sent to the White House for the president's signature.

The vote on the key question of loans vs. grants came late Thursday in both the House and Senate.

Over White House objections, the Senate approved the loan provision 51-47.

President Bush, traveling in Asia, released a statement praising passage of the supplemental funding request by both houses and criticizing the Senate for the loan provision.

"These funds will provide the resources necessary to make Iraq more secure and support its transition to self-government, which is critical to winning the war on terror," the president's statement said. "They will also continue our efforts to help build an Afghanistan that is prosperous, democratic, and at peace, and that contributes to regional stability."

Bush said the Senate's action with the loans is "unfortunate."

"Loans are the wrong approach, they would slow the reconstruction of Iraq, delay the democratic process, and send the wrong message to both the region and the world," the statement said. "The loan provision must be removed in conference."

One of the amendment's co-sponsor, Sen. Evan Bayh, a Democrat of Indiana, said it was designed not to saddle Iraq with more debt, but to encourage other nations, including France and Germany, to forgive debts incurred during Saddam Hussein's dictatorship.

"How would they feel if the rest of the world had demanded repayment of Nazi debt, or Vichy debt?" Bayh asked.

Bayh's co-sponsors on the amendment included fellow Democrat Sen. Ben Nelson of Nebraska, and two Republicans -- Sen. Susan Collins of Maine and Sen. John Ensign of Nevada.

"Why should the American taxpayer not be paid back if the taxpayer in France, if the taxpayer in Germany, if the taxpayer in Russia -- countries that were not willing to support us when we were doing what was right in the world -- why should those taxpayers be paid back and not the taxpayers of America?" Ensign said.

The amendment passed despite an 11th-hour conversion by Sen. Kay Bailey Hutchison, a Texas Republican and early supporter of loans, who announced in a news release Thursday afternoon that she was switching sides.

Thursday's votes on the loans followed a three-day campaign by the administration to keep the money in the form of grants, including a direct, forceful and fervent appeal by President Bush, visits to Capitol Hill by Secretary of State Colin Powell and Vice President Dick Cheney, and phone calls to wavering senators from national security adviser Condoleezza Rice.

The administration officials argued that the Arab world would look on a loan as evidence that the United States had invaded Iraq for its oil; that converting the money in the loan would complicate efforts to get other nations to contribute; and that loans were unworkable until a permanent government is established.

In the House, those arguments prevailed. The House defeated a Democratic amendment to make the reconstruction money a loan by a vote of 226-200.

Still, many conservative Republicans worried about the deficit joined Democrats in arguing for the money to be repaid.

--CNN congressional producers Ted Barrett and Steve Turnham contributed to this report.

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