Bush, Democrats clash over new spy bill, immunity

By Thomas Ferraro and Tabassum Zakaria

WASHINGTON (Reuters) - Democratic U.S. lawmakers defied President George W. Bush on Thursday and moved ahead with an anti-terror spy bill that allows lawsuits against telephone companies that participated in his warrantless surveillance program after the September 11 attacks.

As the Democratic-led House of Representatives prepared to vote on the measure on Thursday, Bush denounced it as inadequate and urged the chamber to pass the Senate version of the bill, saying these companies deserved praise, not punishment.

About 40 civil suits have been filed accusing AT&T Inc., Verizon Communications Inc and Sprint Nextel Corp of violating the privacy rights of law-abiding Americans swept up in the electronic surveillance of phone calls and e-mails.

"This litigation would undermine the private sector's willingness to cooperate with the intelligence community, cooperation that is absolutely essential to protecting our country from harm," Bush said at the White House.

"The House bill could reopen dangerous intelligence gaps by putting in place a cumbersome court approval process that would make it harder to collect intelligence on foreign terrorists," he added.

Bush said, "The House leaders know that the Senate will not pass it. And even if the Senate did pass it, they know I will veto it."

House Speaker Nancy Pelosi, a California Democrat, brushed off Bush's complaints.

"He knows that our bill protects the American people and we all understand our responsibilities to do that," Pelosi told reporters on Capitol Hill.