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GOP Blocks Dems On Iraq Budget

The Republican-led House voted 221-202 Thursday to block Democrats from offering their alternative to President Bush's $87 billion plan for post-war Iraq and Afghanistan.

The Democratic plan would have paid for the entire measure by canceling tax cuts planned for the wealthiest Americans. It also would have shifted $4.6 billion for Iraqi rebuilding to accounts for the U.S. military, and made half the remaining reconstruction aid for Iraq a loan.

The vote came as the White House reiterated its opposition to converting any or all of the $20.3 billion earmarked for Iraq's reconstruction into a loan. It did not, however, threaten to veto legislation that would do just that.

A Senate showdown over the issue was possible Thursday, and the vote was likely to be close. In a positive sign for the administration, Sen. Arlen Specter, R-Pa., who had previously voiced support for loans, said that after talks with Mr. Bush and other administration officials he had decided to instead back the president's plan for grants.

"We ought to give the president leeway to carry out his planning," Specter said on the Senate floor.

The House was debating its own similar package, and approval by both chambers seemed likely by week's end. Congressional leaders hoped to rush a final version to Mr. Bush for his signature in time for the Oct. 23 and 24 meeting of donor nations in Madrid, Spain.

First, though, there is a fight over loans to be waged. Mr. Bush sent Vice President Dick Cheney and Secretary of State Colin Powell to lobby GOP senators over lunch Wednesday, but they did not seem to win over the loan advocates.

"I'm not overly confident, but I think people will listen" to arguments about the need for grants, not loans, said Senate Majority Leader Bill Frist, R-Tenn.

The administration said loans would feed Arab worries that the United States wants to control Iraq's huge oil reserves.

But loan supporters said part of their goal was to protect U.S. taxpayers at a time of massive budget deficits at home.

They also said their plan would encourage other countries to help, because their proposed $10 billion in loans would become grants if Saudi Arabia, Germany and other countries forgive 90 percent of the roughly $120 billion they are owed by Saddam Hussein's regime.

"The worst scenario is for us to be left holding the bag," said Sen. Lindsey Graham, R-S.C., one of the loan proponents.

Sen. Ben Nelson, D-Neb., said he and other pro-loan senators hoped to have their amendment ready Thursday. The money would be lent to the U.S.-picked Iraqi Governing Council or whatever Iraqi government is recognized as its successor.

"The loan is there to give an incentive to the holders of prewar debt to forgive their loans, and then we will forgive ours," he said.

Lawmakers and aides said other senators involved included Evan Bayh, D-Ind.; Saxby Chambliss, R-Ga.; Susan Collins, R-Maine; John Ensign, R-Nev.; and Olympia Snowe, R-Maine.

A handful of other Republicans and most Democrats were expected to support the loan amendment, but the result remained uncertain.

"Obviously the White House is not on board with us, so that makes it difficult," Chambliss said.

One factor could be how many of the three Senate Democrats running for president — John Edwards of North Carolina, John Kerry of Massachusetts and Joe Lieberman of Connecticut — campaign out of town and miss the vote.