White House threatens veto of Iraq aid bill over loans
House, Senate compromise bill in the works
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The House and Senate hope to reach compromise on a final version of the bill next week.
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CNN's Jonathan Karl on the White House's threat to veto an Iraqi aid package if any of the money is converted into loans.
CNN's Jonathan Karl on the Senate approving Iraq funding as loans, not grants.
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SPECIAL REPORT
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WASHINGTON (AP) -- The Bush administration threatened for the first time Tuesday to veto an $87 billion package for Iraq and Afghanistan if Congress converts any Iraqi rebuilding money into loans.
White House officials issued the warning even though many lawmakers agree that the bill's final version is likely to bow to President Bush and omit any loans. By underscoring Bush's opposition to loans, the administration threat could make it easier for congressional Republican leaders to nail down enough votes to help the president prevail.
The House bill included $18.6 billion to help Iraq rebuild its water supplies, health clinics and Army, and made the money a grant that country would not have to repay.
The Senate included $18.4 billion but would require Iraq to repay about half -- unless Saudi Arabia, Russia and other countries forgave 90 percent of the debt Baghdad ran up under Saddam Hussein's regime.
Bush and a host of administration officials had repeatedly expressed their opposition to loans in recent weeks, but had not issued a veto threat before. A letter written Tuesday reiterated White House arguments, but contained the first such veto warning.
"If this provision is not removed, the president's senior advisers would recommend that he veto the bill," wrote White House budget director Joshua Bolten.
"Including a loan mechanism slows efforts to stabilize the region and to relieve pressure on our troops, raises questions about our commitment to building a democratic and self-governing Iraq, and impairs our ability to encourage other nations to provide badly needed assistance without saddling Iraq with additional debt," the letter said.
Loan supporters say that with some of the world's richest oil reserves, Iraq should be required to eventually repay some U.S. aid. That is especially true with the United States facing record federal deficits, and many members of Congress hearing requests from their home districts for more funds for local roads and other projects.
House-Senate bargainers hope to reach compromise on a final version of the bill next week.
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