£38bn war bill casts shadow over Bush

George Bush was forced onto the defensive today when it emerged he will need £38billion in emergency funding for the wars in Iraq and Afghanistan.

It came as Mr Bush suffered a setback with the claim that 380 tonnes of high explosive had been looted from a compound in Iraq and could be in the hands of terrorists. John Kerry called the incident "one of the great blunders of Iraq", adding: "The incredible incompetence of this president has put our troops at risk."

Bill Clinton gave the Kerry campaign another boost by going on the stump for a second day, in Florida, where the Kerry campaign is one point behind.

Looking thin after heart surgery seven weeks ago, Mr Clinton urged: "If one candidate is trying to scare you and the other is trying to get you to think, if one candidate is appealing to your fears and the other one is appealing to your hopes, you better vote for the one who wants you to think and hope."

Mr Bush replied by pulling out former New York mayor Rudolph Giuliani and accusing Mr Kerry of "pessimism and retreat" over the war.

"The choice is not only between two candidates, it is between two directions in the conduct of the war on terror," he said. "Will America return to the defensive, reactive mindset that sought to manage the dangers to our country? Or will we fight a real war with the goal of victory?"

His campaign is banking on an appearance in Ohio by California governor Arnold Schwarzenegger to counter the Clinton effect.

Although the war funding issue is embarrassing for the Bush administration, it could help his campaign by keeping the focus on Iraq and terrorism - both issues where he is seen as stronger than Mr Kerry.

The White House said no final decisions on funding had been taken. But Yale University economist William Nordhaus estimated that in modern prices the Vietnam War cost around $500 billion (£270 billion) over eight years from 1964 while Iraq would hit half that level by next autumn, after 21/2 years.