updated 5/6/2008 2:41:24 PM ET 2008-05-06T18:41:24

A new war spending bill proposed by House Democrats would prohibit using U.S. aid to rebuild towns or equip security forces in Iraq unless Baghdad matches every dollar spent, according to draft language obtained by The Associated Press.

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The bill also includes a mandate that the president negotiate an agreement with Baghdad to subsidize the U.S. military's fuel costs so troops operating in Iraq aren't paying any more than Iraqi citizens are.

A recent Associated Press report revealed that troops are paying the market average of $3.23 a gallon for gasoline, diesel and jet fuel, while Baghdad subsidies put domestic consumption inside the country at about $1.36 a gallon.

Meanwhile, Iraq is looking toward a massive budget surplus this year. With the country's oil production on the rise and record-high fuel prices, Iraq is expected to reap some $70 billion in oil revenues.

"We are saying give us the same subsidies you are giving your own people," said Rep. John Murtha, D-Pa., chairman of the House Defense Appropriations Subcommittee.

The House bill is the latest push by Democrats to challenge the Bush administration's policies in Iraq. Lacking the votes to force the administration to bring the troops home, Democrats have blamed the poor economy on the war and say that message will resonate with voters come elections this fall.

The plan also would set the goal of withdrawing most combat troops by December 2009 and require that any troops deployed into a combat zone would be properly trained and equipped by the Pentagon's own high standards. Murtha said the latter provision would effectively stop future deployments and end the war.

But both of these provisions are expected to fail in the Senate and be stripped from a final bill to be approved by the House this spring.

President Bush has requested $102 billion to pay for combat operations in Iraq and Afghanistan through September.

The Pentagon says it needs the money by Memorial Day, or else it will have to drain funds from elsewhere within its budget to cover combat costs. In information provided to lawmakers Tuesday, the military said the Army will run out of money by late July if Congress does not act — something Democrats say won't happen.

Fight for IraqAbout $3 billion of Bush's request would be devoted to reconstruction and relief programs, half of which would go toward the training and equipping mission.

The administration has been open to lawmakers' suggestions that Iraq assume more rebuilding costs, contending Baghdad is already on track to do so with regard to major infrastructure projects. But, depending on how the legislation is written, White House officials may be reluctant to restrict U.S. spending on rebuilding Iraq's military and police forces — the linchpin in Bush's exit strategy in Iraq.

The White House did not provide immediate comment on the proposal.

House Democratic leaders were unveiling their plan to party members in a closed-door meeting Tuesday afternoon, with a vote planned as early as Thursday.

The Senate has drafted a similar bill that would prohibit spending U.S. money on reconstruction projects worth more than $2 million. Instead of flatly barring aid to the Iraqi security forces, the Senate bill says the U.S. "shall take actions to ensure that Iraqi funds are used" to cover those costs, including the salaries of the forces and any payments to Sunnis who are part of the Awakening Movement.

In private negotiations with a group of bipartisan senators, the administration pushed hard to include a presidential waiver for the restrictions, but the lawmakers refused. The Senate plans to vote on the reconstruction legislation, included as part of the 2008 defense authorization bill, later this month.

According to one Democratic aide, the House restriction on reconstruction funds is likely to affect any project worth more than $750,000. The aide spoke on condition of anonymity because details of the bill had not been officially released.

U.S. aid for humanitarian efforts and refugee assistance would not be affected by the restrictions. However, the bill would require the secretary of State to give Congress within 45 days a timetable for transferring all reconstruction assistance to Iraq.

The bill is expected to top more than $178 billion. In addition to the $102 billion needed through September, Democrats want to add $70 billion Bush requested to pay for the wars between October and early 2009 — a tactic that lets them avoid a second war vote during the presidential elections.

Democrats are expected to include legislation — costing $16 billion over two years — to extend by up to six months unemployment insurance coverage for jobless people whose benefits have run out. Veterans of Iraq and Afghanistan would begin to receive a big boost in college aid.

As in the past, Democrats plan to include language banning permanent bases in Iraq and prohibiting torture of military detainees.

Barring any unexpected developments, the bill would bring the amount approved by Congress since Sept. 11, 2001, to fight terrorism and conduct the wars in Iraq and Afghanistan to about $875 billion.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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