As the battlefield in Iraq has become increasingly chaotic, the war is causing new divisions between the White House and senior lawmakers on Capitol Hill over how to pay for the conflict now and in the future.

Many thought President Bush would have a stronger hand in Congress as the war progressed, but the uncertain costs of fighting the war and of rebuilding Iraq have only caused Congress to reassert itself as the holder of the federal Treasury’s purse strings by demanding more say in foreign and domestic spending decisions.

The biggest blow for Bush came Tuesday on his tax cut, when the Senate narrowly adopted, by a margin of 51-48, an amendment by Sen. John Breaux (D-La.) to cut Bush’s proposed $726 billion tax-cut package by more than half to $350 billion. They rejected a similar proposal 32-68 last week, just one day after the war started.

Yesterday’s vote came just hours after Bush officially unveiled a $75 billion emergency spending request to pay for the war in Iraq.

But even that spending proposal came under fire from lawmakers concerned that Bush wanted them to write him a “blank check” for the war. They also complained it did not go far enough in paying for the reconstruction of post-war Iraq nor in funding homeland security costs.

“The fact that we are at war does not mean that Congress should simply hand off its constitutional responsibilities [as appropriators],” said Senate Appropriations Committee ranking member Robert Byrd (D-W.Va.).

“In truth, this supplemental bill is simply a down payment on the full costs of the war in Iraq. It assumes a short fight. It assumes that rebuilding Iraq will be inexpensive. Those are not assumptions that we should make.”

Even House Republicans, among Bush’s staunchest supporters on Capitol Hill, said they would not accede to Bush’s request for a pot of money with few strings attached.

“The flexibility part, I think, is going to be a very controversial part in both the House and the Senate,” House Majority Leader Tom DeLay (R-Texas) told reporters Wednesday. “Congress has always balked on giving too much flexibility.”

Privately, House GOP sources made clear that the administration would not get a blank check.

“They’re going to get some discretion but not as much as they’re asking for,” said a senior House Republican aide, explaining that only a “small portion” of the money would have the kind of flexibility the White House wants, “not the kind of numbers they’re looking for.”

Sen. John McCain (R-Ariz.) agreed that the flexibility issue would be a tough sell.

“You want the president of the United States to have flexibility, but at the same time you don’t want Congress to give up its oversight authority,” McCain said.

As for the overall emergency request, Senate Foreign Relations Chairman Dick Lugar (R-Ind.) said the $3.5 billion included for rebuilding Iraq “barely touches on the reconstruction of Iraq” once the current conflict ends.

Lugar suggested that Congress would have to reallocate funds for the massive rebuilding effort, or be forced to break the budget caps they are still debating on the Senate floor by passing another emergency supplemental possibly this fall. Either way, he and other concerned lawmakers said, Congress was missing an opportunity during the fiscal 2004 budget debate to actually set aside enough money for Iraq’s reconstruction.

Though the Senate Republican leadership initially opposed a successful Russ Feingold (D-Wis.) amendment that created a $100 billion reserve fund to pay for the war and reconstruction, Senate Majority Leader Bill Frist (R-Tenn.) indicated he would support keeping the provision in the budget resolution. But even that may not be enough to cover the expenses the U.S. will incur in Iraq.

Sen. Chuck Hagel (R-Neb.) said Congress would have to pay for not just repairs to Iraqi infrastructure, which could cost hundreds of millions of dollars, but also may have to take responsibility for the Iraqi government’s $170 billion in debt.

White House officials have indicated that the cost of rebuilding Iraq will be paid with modest appropriations from Congress as well as revenues from the sale of Iraqi oil and aid from other countries, possibly under the auspices of the United Nations.

But many in Congress warned that the assumption was a gamble, especially since many countries in the U.N. continue to disagree with Bush’s decision to invade Iraq without U.N. support.

“We’re going to have to do this alone or use Iraqi assets, but that’s not going to take us very far,” said Sen. Patrick Leahy (D-Vt.), the ranking member on the Senate Appropriations foreign operations subcommittee.

Democrats in Congress have made clear that they believe Bush has fallen short of funding homeland security, police, fire and medical personnel. Indeed, Byrd has already indicated that he wants to double the president’s $4 billion supplemental request.

“Democrats are always asking for more money with little or no credibility on why they want it,” DeLay said. “I rely on the president to know what he needs rather than some pseudo-expert running around the House or Senate.”

But David Sirota, spokesman for House Appropriations Committee Democrats, said that the minority has often based its estimates on what the administration’s own experts have said.

“Democrats have repeatedly fought to do what experts in the field tell us we need to do,” said Sirota. “The Republican leadership and the president have repeatedly rejected and vetoed funding that is necessary to protect the homeland.”

Frist acknowledged the reality that Senate Democrats and some Senate Republicans would want to increase homeland security funding. While Frist would not commit to an increase, he said he would entertain arguments for more homeland defense funding during consideration of the supplemental spending bill.

“Our challenge is to sort out whether that is adequate and sufficient,” Frist said.

Frist also held out the possibility that Congress would add funding for an airline bailout to the supplemental bill. The White House did not include the proposal in its supplemental request, despite entreaties from several Republicans lawmakers. And Bush on Tuesday urged Congress to pass his request unchanged.

“One thing is for certain, business as usual on Capitol Hill can’t go on during this time of war, and by that I mean this supplemental should not be viewed as an opportunity to add spending that is unrelated, unwise and unnecessary,” Bush said.

But Sen. Trent Lott (R-Miss.), who chairs the Senate Commerce panel’s aviation subcommittee, said he would push for at least a little relief for ailing airlines who could go further into debt with potential spikes in fuel prices as well as decreased passengers due to the war. And House leaders indicated they were inclined to follow suit.