UPDATE 1-US Congress sends consumer safety bill to Bush

(Adds chemical industry reaction, paragraphs 11-12)

By Georgina Coolidge

WASHINGTON, July 31 (Reuters) - A bill that aims to improve U.S. consumer product safety after millions of Chinese-made toys were recalled last summer cleared Congress on Thursday and now goes to President George W. Bush for his signature into law.

The legislation sharply cuts the amount of lead allowed in toys and other products, increases funding for the Consumer Product Safety Commission (CPSC) and includes a partial ban on controversial plastic-softening chemicals called phthalates.

By a veto-proof 89-3 vote the measure overwhelmingly passed the U.S. Senate after the House of Representatives gave its massive approval Wednesday with a 424-1 vote.

The White House had previously expressed concern about certain provisions in the bill but White House Press Secretary Dana Perino said that Bush would sign it despite having some reservations.

"We are committed to ensuring that the products that come into America are safe for consumers and that the regulating agencies have what they need in order to do their job," Perino told reporters.

Mattel Inc MAT.N, RC2 Corp (RCRC.O) and other companies were forced to pull millions of Chinese-made toys from shelves in 2007, mainly due to excessive lead content in paint.

The CPSC's annual budget would rise from its current $80 million to $118 million starting in fiscal 2010 and grow to $136 million over five years, under the bill.