URL: sfgate.com/article.cgi?file=/news/archive/2003/10/28/national0225EST0434.DTL

House-Senate negotiators considering an $87 billion package for Iraq and Afghanistan have rejected a Democratic proposal to compensate federal employees on active duty with the National Guard and reserves.

The proposal by Sen. Dick Durbin, D-Ill., would have made up the differences between the workers' regular salaries and their service incomes, as many states and private employers are already doing. He said 23,000 federal employees would be affected.

The Senate had included the provision in its version of the Iraq spending bill, but senators in the conference agreed to eliminate it Tuesday in a 16-13 vote that was mainly along party lines.

Sen. Ted Stevens, R-Alaska, chairman of the Senate Appropriations Committee, said Durbin's legislation would create a disparity between the pay of guardsmen and reservists and those of active-duty personnel. He said other congressional committees should consider the proposal before it is approved.

Senate and House leaders hope to finish work Wednesday resolving differences between the versions of the bill approved by the House and Senate.

"I don't think we're too far apart on too many issues," said Rep. Bill Young, R-Fla., chairman of the House Appropriations Committee.

The biggest difference is a Senate provision to make part of the package in the form of loans. President Bush has threatened to veto the bill if the loans are included in the final package. Some Republican senators who supported the loans acknowledged they had little hope of prevailing.

"I don't have the vote totals on it, but my sense is they probably have located the votes to get the package" without loans, said Sen. Sam Brownback, R-Kan., a participant in the House-Senate conference meeting Tuesday.

Another Republican senator who supported the loans, Sen. Susan Collins of Maine, said she wasn't optimistic. She said failing to include the loans "would be very unfortunate."

"I think that public support for the package would be boosted by having some provisions for the loans," she said.

The Senate version of the bill included $18.4 billion for reconstruction of public works and for security but would require Iraq to repay about half of that unless other countries forgave 90 percent of the debt Iraq ran up under Saddam Hussein, deposed as president by U.S. troops. The House version includes $18.6 billion, none of which would have to be repaid.

The bulk of both bills, about $66 billion, would pay for U.S. military operations in Iraq and Afghanistan.

The White House and Republican congressional leaders strongly oppose loans, saying Iraq already is too deeply indebted and has no government with authority to borrow more money. Another argument has been that loans secured by Iraq's vast oil reserves could support claims of war opponents that the United States went to war to tap into Iraq's oil wealth.

At a news conference Tuesday, Bush said the administration was working hard with lawmakers "to make the case that it's very important for us not to saddle Iraq with a bunch of debt early in the emergence of a market-oriented economy, an economy that had been wrecked by Mr. Saddam Hussein."

The Senate had voted 51-47 to convert part of the rebuilding funds into loans. Although the House did not include loans in its package, it supported the concept in a 277-139 nonbinding vote.

Supporters of loans said their case was strengthened last week when much of the $13 billion in new aid pledged at an international donor's conference was made as loans.

Also Tuesday, negotiators agreed to add $100 million for the search for conventional weapons stockpiles in Iraq. U.S. military commanders have said many of the explosives used in attacks against American forces have come from supplies taken from former Iraqi military bases.

©2003 Associated Press