Iraq Funds Package Gains Ground

President Bush’s budget request for operations in Iraq cleared its first major hurdle in Congress on Tuesday, but the administration faces growing opposition from members of both parties to having U.S. taxpayers foot the bill for rebuilding the war-scarred nation.

The Senate Appropriations Committee voted 29 to 0 to approve a bill giving Bush the $87 billion he recently requested in new spending, with most of the money intended for Iraq. The bill passed after Republicans who control the panel thwarted Democratic amendments to require Iraq -- through use of future oil revenue or other means -- to eventually repay the $20 billion included for reconstruction projects.

But it became clear during committee debate that when the bill goes to the Senate floor -- possibly this week -- the administration will have to work hard to derail other proposals to make the reconstruction aid a loan rather than a grant. Republicans were among those expressing support for such proposals.

“We ought not to be too fast to grant, to give away, $20 billion if we can find some way not to,” said Sen. Arlen Specter of Pennsylvania, one of several Republicans exploring loan alternatives. “There’s no reason [the Iraqis] should not pay for the reconstruction of their own country.”

Senate Appropriations Chairman Ted Stevens (R-Alaska) said a compromise on the issue might be reached before the bill clears the Senate. But for now, the administration and its congressional allies remain opposed to any such agreement.

“We’ve got a problem on the loan issue, but we are hanging tough” in opposing it, said Tom Korologos, senior counselor to L. Paul Bremer III, the U.S. civilian administrator in Iraq.

House Majority Leader Tom DeLay (R-Texas) dismissed the idea of a loan, saying that Iraq’s future oil revenue is already committed to reconstruction.

“Everybody thinks they’re awash in oil,” he said. “It’s not a matter that there’s a bunch of oil out there that can pay back the $20 billion.”

The administration also came under fire Tuesday over contracts awarded to U.S. firms to help rebuild Iraq. Rep. Henry A. Waxman (D-Los Angeles) charged that “well-connected” U.S. firms -- including Halliburton, the oil services firm Vice President Dick Cheney once headed -- were being paid for work that could be done by Iraqis for much less.

“The problem is this: Too much money appears to be going to Halliburton and Bechtel while costing the U.S. taxpayer millions and imperiling the goal of Iraqi reconstruction,” Waxman wrote in a letter to the White House Office of Management and Budget.

Waxman, the ranking Democrat on the House Government Reform Committee, said members of the Iraqi Governing Council have said that some of the costs of rebuilding projects could be cut by 90% if handled by Iraqi firms.

The administration has defended the contracts, saying the U.S. companies are the best ones equipped to do the work.

Little controversy surrounds most provisions of the $87-billion spending bill Bush wants Congress to pass. There is wide support, for instance, for the money allocated to funding the U.S. military operations in Iraq and Afghanistan. But the $20.3 billion included for Iraq’s postwar reconstruction has drawn intense criticism and scrutiny.

Democrats and Republicans have looked askance at some of the administration’s specific plans for the money, such as instituting a ZIP Code system for the Iraqi postal system and restoring wetlands in the country.

Democrats have argued that such projects are hard to justify when money is scarce for comparable U.S. projects. For example, at Tuesday’s committee hearing, Sen. Barbara A. Mikulski (D-Md.) questioned the $100 million sought to improve housing in Iraq.

Complaining that domestic housing programs lack sufficient funding, she said, “Hello, Baltimore?” She added that as a result of Hurricane Isabel, the major city in her state “looks like Baghdad on the bay.”

But the Appropriations Committee rejected, on party-line votes, Democratic amendments to cut the Iraqi reconstruction funding to $10 billion and to split the proposal from the military funding requests.

The panel also rejected an amendment by Sen. Byron L. Dorgan (D-N.D.) that would have replaced the reconstruction money with a plan to establish a financing authority that would use future Iraqi oil revenue as collateral to borrow money for rebuilding.

Dorgan and his supporters noted that before the war, senior administration officials had argued that Iraq would be able to finance much of its own rebuilding. Administration officials now say that may be true in the long run but that a quick infusion of cash is needed now to stabilize Iraq -- and make it easier for U.S. troops to withdraw from the country.

The Dorgan amendment was defeated even though two Republicans -- Specter and Sen. Robert F. Bennett (R-Utah) -- said they supported its concept. They agreed to vote against it, leaving open the possibility of supporting a similar proposal during the full Senate’s debate.

Sen. Susan Collins (R-Maine) is working with half a dozen other Republicans to come up with such an amendment, although she has not completed the details.

“My concern is that one day Iraq will be a free and prosperous nation,” Collins said. “At that point, it is reasonable to me to ask the Iraqi government to repay some of our generosity.”