U.S. House passes fiscal 2008 funding compromise

(Updates with House vote, adds details)

By Richard Cowan

WASHINGTON, Dec 17 (Reuters) - The House of Representatives on Monday passed a $515.7 billion budget compromise to keep most of the U.S. government running through September 2008 and position President George W. Bush to obtain a good chunk of new Iraq war funds he requested.

The House approved the fiscal 2008 money for all federal agencies except the Pentagon, which already has received a $460 billion check from Congress for its day-to-day operations, not including combat.

As early as Tuesday or Wednesday, the Senate could approve an identical measure except for one key detail: While the House-passed bill prohibits any new money for the unpopular war in Iraq, Senate Republicans are expected to attach about $70 billion for the Iraq and Afghanistan wars.

The House-passed bill contains $31 billion just for Afghanistan.

Bush has demanded that the budget bill contain at least some money for the Iraq war, without any of the conditions for ending it that Democrats have been seeking.

"I'm pleased to report that we're making some pretty good progress toward coming up with a fiscally sound budget," Bush said in a speech in Fredericksburg, Virginia.

White House spokeswoman Dana Perino again reminded Congress that without unconditional funds for the Iraq war, "the president would veto the bill."

Reflecting fellow Democrats' disappointment with Bush's refusal to allow more investment in their domestic priorities, House Appropriations Committee Chairman David Obey of Wisconsin called the overall spending compromise "totally inadequate."

But Obey managed to wring money out of some Bush priorities in order to add funds for more medical research and programs for the poor, including education and rural health care.

Conservatives also won billions more for building a southwestern border fence and the deletion of language that would have allowed the United States to ship contraceptives to family planning agencies abroad.

MONEY FOR IRAQ WAR

Bush asked Congress for about $190 billion in new funding for the long-running wars in Iraq and Afghanistan, most of it intended for Iraq. If the $70 billion is approved, Democrats will wage a spirited election-year fight over the remaining $120 billion and how to attach conditions to bring American troops home.

Each year, Congress faces the difficult task of passing a dozen individual spending bills to pay for military activities, domestic law enforcement, health, education, road building, space exploration and other programs.

Bush's budget, submitted in February, would have expanded domestic spending in a way that would not have kept up with population growth or inflation. He asked Congress to cut medical research grants, eliminate some student aid, cut vocational education, some law enforcement and help for the poor to pay winter heating bills.

The House-passed legislation would reverse many of those reductions while mostly keeping with Bush's spending ceiling.

Democrats unsuccessfully sought to increase Bush's domestic spending by about $22 billion out of the nearly $3 trillion the government will spend this year overall.

Among the high-profile provisions in the deal are:

* Delaying until June 1, 2009, an anti-terrorism initiative requiring passports or other documents for those entering the United States by land;

* $1.3 billion in foreign military financing and $415 million in economic support funds for Egypt. A small portion of the money would be conditioned on Egypt's progress on human rights;

* About $700 million Bush sought for economic and military assistance for Pakistan but with new conditions attached;

* $1 billion for Sudan humanitarian and peacekeeping programs;

* Significant cuts to Bush's Millennium Challenge Corporation to reduce global poverty and promote economic growth in poor countries;

* $3.7 billion more than Bush sought for veterans care;

* $190 million to help rebuild a Minneapolis bridge that collapsed in August. (Additional reporting by Caren Bohan in Fredericksburg; editing by Mohammad Zargham)