Bush threatens budget-bill veto

President Bush yesterday warned lawmakers that he will veto budget legislation if it does not restrain spending, a day after lawmakers failed to cut taxes by $70 billion and hours after immigration reform stalled in the Senate.

As the House broke off negotiations on a fiscal 2007 budget -- and members of both chambers sought to add billions more in spending in this midterm election year -- Mr. Bush urged lawmakers to stay on track to cut the deficit in half by 2009.

"If necessary, I will enforce spending restraint through the exercise of the veto," Mr. Bush said.

While Mr. Bush has several times threatened to veto legislation, he has never done so in his 5 years in office.

But he acknowledged on Thursday that when lawmakers meet the bottom line of his proposed budget, he has no choice but to sign the bill into law.

The Senate Appropriations Committee has not met the bottom line, instead adding billions onto a separate spending bill for war and hurricane rebuilding to produce a measure that would spend about $107 billion.

Republicans and Democrats on the committee also eagerly approved more federal aid for farmers, added $2.3 billion to fight a possible avian-flu pandemic, voted to give more aid to the U.S. fishing industry hurt by Hurricane Katrina and spread dollars among other interests.

Mr. Bush had requested nearly $92 billion to feed U.S. war efforts in Iraq and Afghanistan, continue rebuilding Gulf Coast states hard hit by Katrina and other storms last year and to increase foreign aid.

Following weeks of negotiations between the House and Senate, Republican leaders had been hopeful they could finish their tax-cut package this week. Treasury Secretary John W. Snow canceled a trip to the Midwest to work on a compromise.

The tax cuts, central to Mr. Bush's domestic program, would have extended the maximum 15 percent tax rate on capital gains and dividends beyond 2008, when the lower rates are set to expire. Without congressional action, capital gains taxes would jump to 20 percent and dividends would be taxed as regular income.

House Majority Leader John A. Boehner, Ohio Republican, said he still hoped to "move forward with the budget" after the two-week recess that begins Monday.

But Mr. Boehner was still stinging from several days of leading intense negotiations among warring Republican factions in the House, after which Mr. Boehner canceled a vote on the budget, which no Democrats appeared to support.

Moderate Republicans such as Rep. Nancy L. Johnson of Connecticut were pushing for about $7 billion in additional funds for health, education and other domestic programs the Senate already approved. Several moderate Republicans face tough re-election campaigns this year.

Conservative Republicans balked, demanding tight spending caps and pushing budget reforms that would further control domestic spending.

• This article is based in part on wire service reports.