Nov. 29 (Bloomberg) -- Democratic Representative John Murtha said he is ``optimistic'' that House Democrats and President George W. Bush can agree on Iraq war funding after an earlier $50 billion proposal linked to troop withdrawals was blocked in the Senate.

``Congress wants to come up with an agreement,'' Murtha, chairman of a House subcommittee on military spending, told reporters in a video conference from his office in Johnstown, Pennsylvania. ``Leadership may be willing to compromise'' on the time line for withdrawing troops from Iraq, he said.

Democrats, who have a majority in both houses of Congress, are in a standoff with Bush over $190 billion in war funding requested by the administration. A $50 billion spending bill linked to troop withdrawals was blocked by Senate Republicans earlier this month, and Democrats have said they won't approve any more money this year.

Defense Secretary Robert Gates said Nov. 20 that the military plans to lay off 200,000 civilian employees and close some Army bases as early as February if more money isn't approved.

Murtha, who returned Nov. 27 from a trip to Iraq, said the military situation there has improved ``substantially'' with the deployment of more troops, yet the Iraqi government has failed to capitalize on the reduced violence in Baghdad.

``The central government is pretty close to dysfunctional,'' Murtha said. ``They need to do something for heaven's sake, and that has not happened.''

Point of Negotiation

Since the March 2003 invasion, 3,877 U.S. troops have died in the Iraq war. About 160,000 U.S. troops are in the country now, and Bush has said that number will drop to about 130,000 by the middle of next year.

Murtha said he was encouraged by a telephone conversation on Tuesday with Bush's Iraq coordinator, Army Lieutenant General Douglas Lute, about reaching a compromise on war funding.

Though the timeline may be a point of negotiation, Murtha said troop training and readiness requirements and prohibitions on torture would have to be included in final legislation.

``Congress has passed `no-torture' legislation over and over again,'' Murtha said.

Murtha said that because of the number of troops in Iraq and the amount of support equipment in the country, a full withdrawal could take as long as two years. Still, Congress should press for troop withdrawal dates to put pressure on the Iraqi government and limit the American commitment, he said.

``The American public is impatient, Congress is impatient,'' Murtha said. ``We need a goal.

To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net.

Last Updated: November 29, 2007 15:55 EST