A Labor Department project designed to provide financial assistance to demobilized Iraqi soldiers has come under fire from Senate Democrats, who failed by one vote Tuesday to extend jobless benefits to U.S. workers.

Sen. John Kerry (Mass.), the presumptive Democratic presidential nominee, was the only Senator absent from the vote on jobless benefits Tuesday.

Acting at the request of Coalition Provisional Authority Administrator Paul Bremer, the Labor Department allocated $5 million last year to provide financial assistance to unemployed Iraqi soldiers, whose army was disbanded when Saddam Hussein was ousted from power.

“This $5 million project aims to employ and provide unemployment compensation to demobilized Iraqi soldiers in the civilian economy, in order to reduce any on-going tensions caused by their unemployment,” according to the department’s 2005 budget justification.

Bremer serves as administrator of the U.S.-led interim government that was created until Iraq once again establishes self-rule.

The provision was discovered by aides to Sen. Tom Harkin (D-Iowa), who serves as the ranking member on the Appropriations subcommittee on Labor, Health and Human Services, and Education. Democrats were quick to seize on the program as an example of what they say are the Bush administration’s misplaced priorities.

“It is stunning that the president can’t seem to find the resources to do what is right for the millions [of] unemployed workers in this country, yet he is willing to divert resources from cash-strapped domestic agencies to send abroad,” Harkin said.

A Harkin aide said the Iowa Democrat is particularly interested in learning how Labor Secretary Elaine Chao is spending other funds Congress appropriated for the International Labor Affairs Bureau, monies which are traditionally used to help countries that sign trade agreements with the U.S. comply with its labor and child labor standards. The Harkin aide said Labor officials are scheduled to brief the Senator’s staffers about the International Labor Affairs Bureau on Monday.

Democratic Senators echoed Harkin’s criticism, and questioned the administration’s commitment to domestic priorities.

“How can you explain that this administration thinks it is an emergency to help the unemployed in Iraq and ignore the unemployed in America?” griped Sen. Dick Durbin (Ill.), the assistant Democratic floor leader.

“It is a bizarre preference to provide unemployment insurance to ex-Iraqi soldiers at the same time that we won’t extend unemployment insurance to Americans who are out of work,” added Democratic Policy Committee Chairman Byron Dorgan (N.D.).

Ed Frank, a spokesman for the Labor Department, defended the allocation, saying President Bush is implementing employment policies that have not only helped U.S. workers but also the Iraqi people.

“The president has signed legislation extending unemployment benefits three times — providing $23 billion in aid to help American workers get through the recession and aftermath of 9/11,” Frank said. “We also spend $15 billion a year on employment and job training for American workers. The president’s sound economic policies have led to the creation of more than a million new jobs across America in the past few months, and his leadership abroad is helping many Iraqis find new jobs and new prosperity. “

The Democratic attempt to extend the jobless benefits fell short by one vote along a 59-to-40 tally with Kerry being the only Senator to miss the vote. Democrats needed to reach the 60-vote threshold to achieve victory.

Andy Davis, Kerry’s Senate spokesman said the Massachusetts Senator was campaigning in Kentucky and his “schedule did not permit him to get back and vote.” But Davis added that Kerry “strongly supports extending unemployment benefits and doing what it takes to strengthen this lagging economy.

“He is working to change the direction of this economy so that workers don’t have to rely on unemployment benefits to make ends meet,” Davis said.

With the war in Iraq and the economy cementing themselves as the two defining issues in this election year, it appears that Democrats will try repeatedly in the coming weeks to link the two subjects. Dorgan said he would try to offset the cost of the administration’s request for an additional $25 billion to seed a reserve fund for the war with more than $16 billion in unspent Iraq reconstruction money allocated by Congress last year.

Dorgan and his Democratic colleagues charged that Bush is forsaking domestic needs, including the nation’s infrastructure and the public education system, to help pay for the rebuilding of Iraq. He said the upcoming debate on the reserve fund would allow Democrats the opportunity to contrast their party’s priorities with the GOP’s goals.

“We clearly will provide whatever is necessary for the safety of the soldiers, but I think it is also an opportunity to talk about the fact that we are spending literally tens of billions of dollars on reconstruction and doing the very things in Iraq that many people on the floor have objected to doing here at all, helping people who are unemployed, for example,” he said.

But National Republican Senatorial Committee Chairman George Allen (Va.) chastised the Democrats for trying to make the funding of the Iraq war a political issue.

“For them to be playing around these political games, screwing around like this trying to make political hay I think is unfortunate and they don’t mind politicizing many things at all,” he said. “You would think when we are at war you ought to put the partisan gimmickry to the side, especially when we have so many people in treacherous, precarious harm over there in Iraq and Afghanistan.”

Still, Sen. Barbara Boxer (D-Calif.) predicted that the differences between Democrats and Republicans on funding priorities “are going to shape up to be a huge issue in the presidential race and the Congressional races.”