The uproar over whether Attorney General Alberto Gonzales repeatedly has lied to Congress has spilled into the fight on how to best monitor terrorists overseas, with Congressional Democrats balking at Bush administration demands to give the embattled Gonzales more power to oversee warrantless wiretapping activities.

“Part of the problem is that this administration wants to give the current attorney general unprecedented powers,” one Senate Democratic leadership aide said. “It’s giving some people heartburn.”

One Democratic Senator said authorizing the attorney general to make decisions on warrantless wiretapping is “the only sticking point” between the White House and Congressional Democrats.

“Nobody here has any interest in giving Gonzales much authority to do anything,” the Senator said.

Besides being accused of perjury by some Democrats for his testimony regarding both a National Security Agency warrantless wiretapping program and decisions to fire nine U.S. attorneys, Gonzales also has come under fire for not telling Congress about FBI abuses of other terrorist surveillance laws, such as the widespread misuse of national security letters designed to compel libraries and stores to release records on their customers. In fact, many Democrats and liberal activists blame Gonzales for what they see as a deterioration of civil liberties and the rule of law under the Bush administration.

“One of the reasons we think court oversight is important is because there have been recent instances where Congress has given [the executive branch] authority that was misused. National security letters come to mind,” one knowledgeable Senate Democratic staffer said.

And Democrats may have an ally in a notable Republican critic of Gonzales, Sen. Arlen Specter (Pa.), who said Wednesday that giving the attorney general unchecked authority over how to conduct surveillance of suspected terrorists “is a major concern of mine as well.”

However, the Democratic Senator noted that the majority has to tread carefully during the debate: “The concern is that if something were to happen, Republicans will try to pin it on us for not acting.”

That is exactly the rhetorical tack most Republicans have been taking — ominously warning that the Democrats’ failure to pass a foreign surveillance bill could leave the United States open to attack during the monthlong August recess.

“Regardless of what they think of the attorney general, if we want to avoid the possibility of another 9/11 attack, we need” to pass this bill, Senate Intelligence Vice Chairman Kit Bond (R-Mo.) said in a conference call with reporters Wednesday. “It should not be a matter of personalities.”

Similarly, Sen. Orrin Hatch (R-Utah) stated … “Anybody who holds up this bill is risking the lives of millions of Americans.”

In the House, Minority Leader John Boehner (R-Ohio) repeatedly has said Congress should not adjourn for the August recess until a deal is reached.

“I’m hopeful that it will be finished before we leave this week. Republicans are committed to staying here if we have to, to get this vital tool to our counterintelligence and intelligence missions. We are under an increased threat of attack from al-Qaida and there is no reason to leave this terrorist loophole open,” he said.

Speaker Nancy Pelosi (D-Calif.) has said she expects to pass a bill this week, while Senate Majority Leader Harry Reid (D-Nev.) has not promised action but has indicated he remains hopeful a deal can be reached soon. Leaders from both parties were unable to reach an agreement with the administration at a White House meeting Wednesday morning.

Democrats say they are mindful of the political landmines that await them if they don’t pass a bill this week, and they furiously have been trying to craft a compromise with the White House that would clarify that, even if electronic communications between intelligence targets are routed through the U.S., no warrant is needed to surveil them if those communications originate outside the country. Current law, proponents of the change say, has hampered intelligence-gathering activities because it requires warrants for communications that originate overseas but travel through U.S. telecommunications networks.

Key to the Democrats’ most recent proposal is language that would force the attorney general to seek yearly approval from a Foreign Intelligence Surveillance Act court for his guidelines on how to determine which targets are overseas. Targets within the U.S. would be subject to current law regarding secret wiretap warrants.

“The administration has offered a proposal that would instead permanently grant the Attorney General excessive surveillance powers by giving him sole authority to direct surveillance while completely removing the FISA court from the process,” Senate Intelligence Chairman Jay Rockefeller (D-W.Va.) said in a statement. “That is simply unacceptable. The FISA court must continue to play an essential role in authorizing surveillance and overseeing its execution.”

Other Democrats defended the proposal, saying the purpose is not necessarily to prevent Gonzales, specifically, from having terrorist surveillance authority.

“It is essential to preserve the crucial role of the FISA court in protecting civil liberties of Americans while providing our intelligence agencies the flexibility they need,” Senate Judiciary Chairman Patrick Leahy (D-Vt.) said. “It is not wise to expand the authority of this attorney general — or any attorney general — in this regard.”

So far, both the White House and Congressional Republicans have balked at Rockefeller’s proposal, saying it creates an extra layer of bureaucracy.

“The counteroffer from the Democrats would, I think, impair the intelligence community’s ability to identify terrorists overseas,” Bond said.

With the rush to get something done this week, however, both sides say they are hopeful a deal can be reached before Congress adjourns.

Sen. John Thune (R-S.D.) blamed the Democratic leadership for making Gonzales an issue in the FISA debate but he said he thinks most of the principles involved in the current discussions are interested in getting an agreement and not a political talking point.

“The broad bipartisan middle on this agrees this needs to be fixed,” Thune said.

Both Republican and Democratic aides said they were continuing to negotiate with the White House as of press time.

“Both sides will have to give a little bit,” Senate Minority Whip Trent Lott (R-Miss.) said.

Susan Davis contributed to this report.