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Dec 19, 7:35 AM (ET)

By JIM ABRAMS

(AP) Speaker of the House Dennis Hastert, R-Ill., right, meets with House Budget Committee Chairman Jim...
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WASHINGTON (AP) - House lawmakers opened the way for oil drilling in the Arctic National Wildlife Refuge as one of their last acts of an all-night session Monday bringing their legislative year to a close.

The House also narrowly passed a plan to cut deficits by almost $40 billion over five years in legislation hailed by GOP conservatives as a sign their party was returning to fiscal discipline and assailed by Democrats as victimizing medical and education programs that help the poor.

The ANWR provision was attached to a major defense bill, forcing many opponents of oil and gas exploration in the barren northern Alaska range to vote for it. The bill, passed 308-106, also included money for hurricane relief and bird flu preventive measures.

The deficit measure, passed 212-206, carried an extension of expiring welfare laws and repealed a program that compensates companies hurt by trading partners who "dump" their exports in this country.

The votes came before sunrise as bleary-eyed legislators struggled to wrap up their work for the year. Democratic anger over the process was put aside briefly as lawmakers greeted Rep. Joe Barton, R-Texas, who returned to vote after suffering a heart attack Thursday.

While House lawmakers were heading for the exits, the end was not in sight for the Senate, which can't leave for Christmas until it deals with spending bills and the deficit-cutting package and overcomes a filibuster on renewing the Patriot Act. A Senate vote on the deficit reduction bill could come Monday.

A $453 billion defense spending bill became the flypaper for issues that have eluded congressional compromise. Those included, along with the ANWR provision, $29 billion in federal aid for victims of Katrina and other storms; an additional $2 billion to help low-income families with home heating costs; and $3.8 billion to prepare for a possible bird flu pandemic. Of the defense money, $50 billion is for military operations in Iraq and Afghanistan.

Also in the bill is the compromise language worked out between Sen. John McCain, R-Ariz., and the White House banning the cruel, inhumane and degrading treatment of prisoners in U.S. custody.

Democrats and moderate Republicans have for years blocked drilling in ANWR, and its inclusion in the defense bill exposed that bill to a possible filibuster in the Senate that can only be broken with a 60-vote majority.

Democrats complained that they were being forced to accept ANWR drilling with their vote on military spending and hurricane relief.

Rep. David Obey of Wisconsin, the top Democrat on the Appropriations Committee, denounced the ANWR provision and another last-minute addition sought by Senate Majority Leader Bill Frist, R-Tenn.: liability protection for vaccine makers in most circumstances, coupled with a compensation fund to individuals harmed by the shots they receive.

"There is something especially outrageous about the willingness of the majority party leadership to allow the Defense Department bill, in a time of war, to be held hostage to totally unrelated special interest items," Obey said.

GOP conservatives, disturbed that their party has overseen a surge in government spending and massive federal deficits, applauded a provision in the defense bill that would cut all discretionary federal programs, except those affecting veterans, by 1 percent in fiscal 2006, producing savings of $8.5 billion.

They also hoped to take home news of the $40 billion deficit-cutting bill, which will hardly make a dent in the nation's $8 trillion debt but would be the first time since 1997 that Congress has reined in the growth in spending on federal benefits programs.

"Tonight the Congress will renew our commitment to the principles of fiscal discipline and limited government that minted this majority," said Rep. Mike Pence, R-Ind., who leads a group of House conservatives.

Republicans originally put the savings at $41.6 billion, but that figure was later reduced to $39.7 billion with restoration of Medicare payments for oxygen patients, a late concession to lawmakers with interests in the durable medical equipment industry.

Planned spending on Medicare was estimated to fall by $6.4 billion and Medicaid by $4.8 billion. Another $13 billion would be saved from student loan programs, in part by establishing a fixed 6.8 percent interest rate instead of maintaining lower variable rates.

The largest single savings in Medicare would reduce anticipated federal funding for the private HMOs established under 2003 Medicare legislation.

Officials said the changes to Medicaid include an attempt to make it harder for the elderly to transfer their assets to children or others in order to qualify for federal nursing home benefits.

Lawmakers had to abandon other measures that would have expanded the deficit-cutting package. They agreed, at a cost of $7.3 billion, to eliminate a scheduled 4.6 percent cut in physician payments under Medicare.

The House early Monday passed, on a 374-41 vote, a separate defense bill that sets Pentagon policy and authorizes military programs. Action on the bill was held up by resistance to an attempt by Republican leaders to attach language, eventually removed, to limit individual political donations to independent organizations, a source of financing that proved especially valuable to Democratic candidates in 2004.

The bill contains a 3.1 percent pay raise for military personnel, an increase in the death gratuity for the families of active duty personnel to $100,000 and an increase in the enlistment bonuses for active duty to $40,000.