Several billion dollars for construction programs and an industry-backed tax break hinge on the outcome of a battle between President Bush and congressional Democrats over the Iraq war. The center of the storm is a $124.2-billion spending bill on which House and Senate negotiators reached agreement on April 23. Three-fourths of the funds are for the military campaigns in Iraq and Afghanistan, but the bill also has up to $9 billion for construction plus a depreciation tax incentive. There’s bipartisan support for the defense money and at least some of the construction dollars. But Bush says he will veto the measure because of provisions setting a timetable for starting to withdraw U.S. troops from Iraq.

Construction is “not the target of the attack here,” says Jeffrey Shoaf, Associated General Contractors’ senior executive director for government and public affairs. “The big fight’s over the war and how best to handle it.” If both houses pass the measure and Bush vetoes it, Democrats probably won’t get the two-thirds majorities needed for an override. The next step after that isn’t clear, although a short-term stopgap is possible.

The bill’s construction aid includes $1.7 billion for military work, mostly in Iraq and Afghanistan, and $3.1 billion for domestic base closures. Much of that is likely to fund construction at posts adding personnel from those to be closed.

The package also has $1.3 billion for further Corps of Engineers work on levees and pumps around New Orleans. Veterans’ health care would get $921 million for maintenance and construction.Transportation security would receive more than $1.3 billion. Emergency highway repairs are allotted $683 million, but the legislation would require offsetting cuts in other highway aid.

Lawmakers attached provisions to raise the minimum wage and give small businesses $4.8 billion in tax incentives. The key construction tax break is a one-year extension of the Section 179 deduction for equipment, software and other depreciable assets. The bill also increases the amount small firms can expense, to $125,000 from $112,000. Industry would like a permanent extension. But John McClelland, American Rental Association vice president for government affairs, says, “Another year and an increase in the benefit—absolutely, we support this.”

hoaf says there may be a little bit of uncertainty for the bill’s construction provisions, “but in the long run [they] should work out OK.” But he adds, “This is a battle of the titans, the President up against the [House] speaker and the majority leader in the Senate. Both sides want 100% of what they want.”