The Senate Appropriations Committee planned votes Tuesday on its version of the legislation, with a showdown afterward in the full Senate.
The bill, written by panel Chairman Ted Stevens, R-Alaska, mostly follows Mr. Bush's proposal but would forbid using the money to repay deposed President Saddam Hussein's foreign debt and limit some flexibility for spending the funds that Mr. Bush sought.
The committee's top Democrat, Sen. Robert Byrd of West Virginia, said Republicans were leading "a mad rush" to push the bill through the Senate. Most of their focus was on $20.3 billion, the same amount Mr. Bush requested, for rebuilding Iraq's economy, public works and government.
"Make no mistake: This bill is the beginning of an enormous, years-long commitment to Iraq for a mission that may well be impossible," Byrd said.
Republicans defended the reconstruction funds as the best way to stabilize Iraq, so that American troops can be removed from a country where they are suffering almost daily casualties.
"It's risky, really risky," Stevens said. "But if it comes through, we will not have an Army occupation. If it comes through, we're getting more of our people home."
Republicans and Democrats alike seem ready to support the near $66 billion for U.S. military operations in both countries.
The battle over the $20.3 billion for reconstruction underscores how the issue has evolved into a highly political one. Democrats want to cast Mr. Bush as promoting an ineffective and expensive foreign policy, even as the federal deficit is about to set a new record surpassing $400 billion this year, and $480 billion in the year following.
Democrats have also targeted the reconstruction monies because Republican-connected companies have high-profile roles in the rebuilding program.
Halliburton, the firm once headed by Vice President Dick Cheney, has a contract to repair Iraqi oil fields now valued at more than $1 billion. Cheney says he has severed all ties to his former firm. But Sen. Frank Lautenberg, D-N.J., says the Congressional Research Service has determined that a person who, like Cheney, receives deferred compensation still has ties to a firm.
A new consulting firm that plans to advise companies seeking reconstruction contracts has close ties to the White House, reports The New York Times. The consultancy, New Bridge Strategies, is led by former Bush campaign director and former FEMA head Joe Albaugh. Two other Bush family associates are company executives.
Feeling some pressure over the size of the Iraq price tag, members of both parties plan to try transforming the rebuilding funds into loans Iraq would have to repay.
In a private Capitol meeting, White House budget chief Joshua Bolten and Bush national security adviser Condoleezza Rice urged GOP senators to not make the program a loan, arguing it would hurt Iraq's economy. But in an interview, Sen. Susan Collins, R-Maine, said she and others would try anyway, to lessen "the impact on American taxpayers."
The House has yet to write its version of the legislation.
As the Republican-run Congress did last spring with an initial $79 billion package for the war, the Senate GOP bill limits Mr. Bush's ability to control the funds without dealing with Congress. For example, Defense Secretary Donald Rumsfeld could shift only $2.5 billion, not the $5 billion Mr. Bush proposed, among various accounts after merely notifying lawmakers.
The move to limit Rumsfeld's discretion comes as the Pentagon's internal auditor probes whether the Defense Department tried to hide $20 million in the budget of the command that runs special operations. The St. Petersburg Times quoted what it said were internal documents revealing the attempt. Rumsfeld was liable to be questioned about the allegation during hearings Tuesday, The Washington Post reported.
The Senate bill also has an explicit prohibition against using the funds "to pay any costs associated with debts incurred by the former government of Saddam Hussein."
Administration officials have told Congress repeatedly that they oppose using any of the money to pay debts owed by Iraq's now deposed ruler. Stevens' decision to include the new provision highlights that issue's sensitivity for lawmakers.