By Jane O'Brien
BBC News, Washington
Democrats have failed to force a timetable for troop withdrawal
It has been a frustrating year for the Democrat-controlled Congress.
They came to power on an anti-war ticket but have so far failed to change the course in Iraq or bring American troops home.
Despite holding the purse strings, attempts to cut funding for the conflict have been met with the President's veto and an inability to raise enough votes to overturn it.
And after a yearlong battle, Congress appears to have handed Mr Bush another victory by approving a $555bn (£277bn) budget for the war and federal government funding until September 2008.
Before Thanksgiving, Democrats vowed to withhold funding for Iraq unless a timetable was agreed for withdrawing troops.
But just a few weeks later they have been forced to concede to Mr Bush's demand for $70bn of unrestricted funds for Iraq and Afghanistan.
The proposed troop withdrawal failed in the Senate by 71 votes to 24.
None of the Democratic presidential candidates were present, but front-runner Senator Hillary Clinton said in a statement that she would not "support continuing to fund a flawed and failed strategy in Iraq".
Mrs Clinton said she had supported an unsuccessful amendment proposing to redeploy US troops from Iraq within nine months before ending military funding for the war there.
So how does a lame-duck Republican president continue to hold power over a Democrat-controlled Congress?
Steve Ellis, vice-president of the national non-partisan budget watchdog Taxpayers for Common Sense, says it is down to presidential powers.
Nancy Pelosi said President Bush was on a "short leash"
"Under our Constitution the president wields significant power with his veto pen and as long as he can keep the minority party on his side in Congress he can stymie any aggressive move by the majority party," he says.
"Time is also on the president's side and when Congress doesn't get the spending bill to him until December - more than two months into the fiscal year - their backs are against the wall and they don't have any room for manoeuvre."
Other stumbling blocks included a freeze on the alternative minimum tax (AMT) - a measure introduced 30 years ago to close tax loopholes for rich Americans.
The AMT has not kept pace with inflation and some 23 million people who are today classed as middle-income earners would have been forced to pay extra next year.
Congress voted at the last minute to delay the tax for a year, but the Treasury now stands to lose some $50 billion because they could not agree on how to offset the shortfall.
"It comes down to this," says Mr Ellis. "The Democrats have to work out how to pull the levers of power, because they are not getting their work done properly."
The bill was cleared by the House on Wednesday and will now go to President Bush for expected approval.
House Speaker Nancy Pelosi complained that "the president and his Republican enablers in Congress" had blocked Democratic Party attempts to set a timetable for the return of troops from Iraq.
But she said that the $70bn of funding - much less than the $190bn that President Bush had asked for - was putting the president on a "short leash".
"Democrats will be relentless in our efforts to bring our troops home honourably, safely and soon," she said.