Congress to pass Iraq war funds by end of May: Pelosi

WASHINGTON (Reuters) - The U.S. Congress will send President George W. Bush a bill by the end of this month to pay for the war in Iraq through next year, House Speaker Nancy Pelosi said on Thursday. But first she must heal a rift within her own Democratic Party over veterans benefits.

The legislation, which would give Bush $162.5 billion for the wars in Iraq and Afghanistan through mid-2009, had been scheduled for debate in the House of Representatives on Thursday. With its timetable for withdrawing troops from Iraq, it already faced a White House veto.

But a group of fiscally conservative Democrats scuttled Pelosi's plans, objecting to the cost of an education benefit for veterans that Pelosi wanted to add to the war bill.

Pelosi said she hopes to work out the differences over the next few days with the goal of passing war funds -- with a December 2009, troop withdrawal timetable -- next week.

"We'll then send it on to the Senate. The Senate will work its will. And it will probably come back to us, and then we'll send it to the president. And, yes, we intend to do that by Memorial Day break" that starts May 23, Pelosi said.

Still unclear is whether the Senate will go along with troop withdrawal language if it passes the House. Last year, Bush vetoed a funding bill that sketched out dates for removing troops from a war that is now in its sixth year.

Bush has promised to again veto a bill that has conditions. The administration also opposes the Democrats' veterans' educational benefits proposal and another measure giving jobless benefits for the long-term unemployed in the United States.

The expanded unemployment benefits would be a temporary program to help people through the bad U.S. economy.

But fiscal conservatives complained that the expanded veterans' benefit is a costly new program that was not being paid for, despite House Democrats' "pay-as-you-go" rule that prohibits deficit spending for non-emergencies.

"We want government to function in a good and efficient manner and we want to pay for it," said Rep. Allen Boyd of Florida, one of the leaders of the group of Democratic fiscal conservatives known in the House as "Blue Dogs."

Boyd said Democrats were working on ways to pay for the veterans' college benefit, which some have estimated could cost $50 billion or more over 10 years.

The Blue Dogs took a strong stand against the veterans' measure after seeing Congress pass a $168 billion economic stimulus bill and a $50 billion middle-class tax fix. Neither came with tax increases or government spending reductions to make up for the costs.

"How many exceptions can we stand," asked Rep. Jim Cooper, a Tennessee Blue Dog. (Editing by Doina Chiacu)