Bowing to pressure from Armed Services Chairman Duncan Hunter (R-Calif.), House Republican leaders agreed Wednesday to fully fund President Bush’s Defense spending request in the fiscal 2005 budget.

The deal came during an afternoon meeting between Hunter, Majority Whip Roy Blunt (R-Mo.) and Budget Chairman Jim Nussle (R-Iowa). Those three had been in protracted negotiations along with other Republican leaders for a week in anticipation of today’s scheduled Budget Committee markup.

The crux of the dispute has been Nussle’s determination to shave half of 1 percent — about $2 billion — off Bush’s defense spending request. Hunter and many Armed Services members threatened not to vote in favor of the budget unless Bush’s request was fully funded.

“Hunter is going to get his full request, but it will be written into the bill that he will be instructed to find $2 billion in waste, fraud and abuse” within his committee’s jurisdiction, said a senior Republican aide.

While the numbers involved are small relative to the overall military budget, Nussle has been eager to implement such reductions partly in order to show that “everything is on the table.”

Anxious to take action against swelling deficits, most Republicans agree that non-Defense discretionary spending must be curtailed. But Nussle, fiscal conservatives and many appropriators have repeatedly argued that Congress cannot make a serious dent in the deficit unless it also addresses mandatory spending.

While conservatives have pushed for austere discretionary spending levels, moderates have responded by arguing that discretionary funds should be frozen only if the Defense budget is also addressed.

Ever since Hunter led an orchestrated attack on the proposed Defense budget at a Republican Conference meeting last week, Nussle and Republican leaders spent hours in talks with the Armed Services chairman hoping to convince him to ease his demands.

“It’s persuasion,” a senior GOP aide said of the leadership’s approach to Hunter. “Threatening generally doesn’t work. You have to persuade people.”

Sources familiar with the meetings described Hunter as “dug in,” saying he insisted on fully funding Bush’s spending request and would not entertain talk of a compromise.

Defense funding has not been the only point of contention so far in Nussle’s budget proposal. As he did last year, Veterans’ Affairs Chairman Chris Smith (R-N.J.) has agitated for increased spending on programs under his jurisdiction.

Though there was no firm deal on veterans spending as of Wednesday, Members involved in discussions on the issue said that significant progress had been made.

“We haven’t definitized a number, but we’ve reached a meeting of the minds,” said Rep. Mike Bilirakis (R-Fla.), the Veterans’ Affairs vice chairman.

Sources said, as of press time, that there was a strong possibility Nussle would also mark up so-called “paygo” legislation at today’s session. Legislation on paygo rules, which require offsets to spending increases, have also sparked some controversy in the Senate this week and are just one of several budget process reforms that GOP moderates and conservatives have lobbied for in recent weeks.