Senate Republicans criticized the House Democrats’ deal to raise taxes on millionaires in order to offset the escalating costs in the must-past war spending bill on veterans’ benefits.

House Democratic leaders brokered a deal with fiscally conservatives Members on Tuesday night to pay for veterans’ benefits offered in the Iraq supplemental bill. The Blue Dogs forced Democratic leaders to go back to the drawing table and find money for the increased benefits.

Scratching his head, Senate Minority Whip Jon Kyl (R-Ariz.) questioned whether it was a good idea for Congress to raise taxes while energy prices are soaring and the economy is struggling, especially during an election year. He said Republicans would not be receptive to any tax increases.

“I’d be very wary of increasing taxes on the American people. There has been a lot of talk about raising taxes, but I’m not too sure if they are going to do it. It’s the last thing that you would want to do,” Kyl said.

However, Kyl would not say whether he thought Senate Democrats would seek a tax increase when the war funding bill reaches the chamber, but he added that his Democratic colleagues have “sort of been winking” at the idea.

In recent weeks, Senate Majority Leader Harry Reid (D-Nev.) has been reluctant to release details of the Democratic Senate strategy to pay for increased education and other benefits for soldiers returning from war. Reid has only said that he would wait until the House makes a decision to forge a plan.

A senior Republican aide doubted that Senate Democrats would adopt the tax increase. The aide said Democrats would not want to increase taxes during an election year, because it could cause trouble for their vulnerable Members.

On Wednesday morning, Sen. Lindsey Graham (R-S.C.), on behalf of the presumptive Republican presidential nominee Sen. John McCain (R-Ariz.), offered an amendment to the collective bargaining bill that would offer benefits to veterans.

The Graham amendment, which rivals the GI bill introduced by Sen. Jim Webb (D-Va.), came as a shock to Democrats and brought the Senate to a standstill.

Graham criticized the House plan to increase taxes, calling it a “game” and saying that he disagrees with the way Democrats seek funding.

Instead, Graham said he, like Kyl, would seek a spending cut to pay for the veterans’ benefits.

Even Senate Democrats were mum about the House tax plan.

Sen. Ben Nelson (D-Neb.), who sits on the Appropriations Committee, said he had not seen the House proposal and was unsure what Senate Democrats would do to pay for Webb’s GI bill.

Democrats intend to attach Webb’s GI bill to the Senate war supplemental at an Appropriations Committee markup Thursday.