House lawmakers on Thursday approved a second Iraq spending bill that contains a raise in the federal minimum wage and tax cuts for smaller businesses.

President Bush vetoed the previous spending bill last week, because it included a timeline for withdrawing U.S. troops from the region. That bill also contained the same provisions to raise the federal minimum wage from $5.15 to $7.25 an hour over the next two years, along with $4.8 billion in tax cuts to small employers to offset increased labor costs.  

The second bill, which passed by 221-205, divides Iraq war funding into an immediate $42.8 billion installment and a second $52.8 billion pending progress reports in July.

The president has since threatened to veto the second bill, calling it a piecemeal approach to funding the war.

"They provide 100 percent of the money for the special interest projects that don't have anything to do with fighting the war on terror, and 50 percent of the money to go to those who wear our uniform. They got it wrong," Bush said at a Defense Department briefing on Thursday.

The Senate is expected to take up the bill early next week, with a final version headed to the president by the end of the month.

Meanwhile, both business and labor groups are calling on Congress to consider the minimum-wage hike and tax cuts in separate legislation.

"A minimum-wage raise deserves to move forward on its own merits," Let Justice Roll, a Washington-based labor rights groups representing more than 650 business owners, said in a letter sent to Congress this week. "It is unconscionable that a minimum-wage raise passed both houses of Congress by the first of February and is still stalled in Congress."

Last week, a coalition of national business groups urged lawmakers not to "muddy the water and confuse the issues surrounding the minimum wage by adding it to a controversial war bill."

The U.S. Chamber of Commerce, among other groups, says the wage increase will fall disproportionately on smaller employers, who are less able to absorb higher labor costs.

If approved, it would be the first increase in the federal minimum wage in a decade. Most states have already raised the wage above the federal level.

According to the Labor Department, roughly 2 million workers nationwide are paid the federal minimum wage or less, making up 2.7 percent of all hourly-paid workers.