US Senate passes FY08 budget bill with Iraq money

(Updates with Senate passage, details)

By Richard Cowan

WASHINGTON, Dec 18 (Reuters) - The U.S. Senate on Tuesday approved sweeping legislation to keep the government operating through September 2008 and handed President George W. Bush a victory by including additional Iraq war funds without conditions for ending the combat.

By a vote of 76-17, the Senate approved the $556 billion fiscal 2008 spending bill.

Marking another defeat for Democrats trying to end nearly five years of combat in Iraq, the Senate included $70 billion in new money for the war there and in Afghanistan. Attempts to attach Iraq troop withdrawal plans failed.

The House of Representatives could vote as early as Wednesday to approve the Iraq war funds. When the House passed its version of the budget bill on Monday, it specifically prohibited any new money for Iraq.

But with the Democratic-controlled Congress hurrying to recess for three weeks and Republican Bush promising to veto any budget bill that does not have money for the Iraq war, the House is expected to relent.

"We need to pass this spending bill, with troop funds, without any strings and without any further delay," Senate Republican leader Mitch McConnell of Kentucky said.

The Senate's assistant Democratic leader, Dick Durbin of Illinois, who opposes unconditional Iraq funding, said the latest batch of money could keep the wars running through May or June.

If Congress does provide the $70 billion, it would boost the overall cost of the two wars to about $670 billion so far.

Bush had asked Congress for an additional $190 billion for combat in Iraq and Afghanistan but has indicated he'd settle for less now. White House spokeswoman Dana Perino said "we're comfortable" with the $70 billion, as long as the rest is provided later.

Next year, as congressional and presidential elections heat up, Democrats are expected to again try to tie war funds to troop withdrawal timetables.

Before approving the Iraq money, the Senate defeated another in a string of Democratic attempts to shut down the Iraq war.

IRAQ TIMETABLE REJECTED

By a vote of 71-24, the Senate rejected a timetable of nine months for withdrawing most of the 158,000 U.S. troops in Iraq, which was sought by Senate Majority Leader Harry Reid of Nevada and Russ Feingold of Wisconsin.

"Senators must decide if they want to support the president's disastrous Iraq policy, which has left almost 4,000 Americans dead and almost 30,000 more wounded, and is costing $12 billion per month, or whether they want to focus our attention on fighting al Qaeda around the world," Feingold argued unsuccessfully.

The Senate also defeated an amendment by Senate Armed Services Committee Chairman Carl Levin, a Michigan Democrat, that would have set a non-binding goal of ending combat by the end of 2008 and switching the U.S. mission in Iraq mainly to counterterrorism operations and training Iraqi forces.

With the added money for the war, the bill would spend nearly $556 billion and pay for all government activities except the Pentagon's regular operations, which already are being funded with steadily increasing budgets, including $460 billion this fiscal year.

Congressional Democrats and Bush have argued all year about domestic spending priorities, with the administration trying to keep war-time budget deficits down by cutting or eliminating many social programs, ranging from health care and medical research to community development, law enforcement and education.

The bill denies many of those plans, instead trimming the growth of military spending slightly and funding some foreign aid programs at lower levels than Bush requested.

The legislation also would restrict the sale or transfer of cluster bombs -- lethal munitions that explode over a wide area and often hit unintended targets. It says the United States can't sell or transfer them unless the deal specifies they will not be used where civilians are known to be present.

Also, cluster bombs with a failure rate of over 1 percent can't be sold or transferred. This would reduce the risk of unexploded bombs detonated by civilians after fighting stops.

(Editing by Eric Beech)