Lawmakers Begin Dance on Katrina Funding

As Congress contemplates clean-up costs of Hurricane Rita (search), more Republicans joined the call Thursday for spending cuts to pay for rebuilding after Hurricane Katrina (search).

With Louisiana lawmakers saying their state alone needs $250 billion in federal aid, several GOPers led by Sen. John McCain (search), R-Ariz., said if President Bush wants to rebuild the Gulf Coast, he better find government savings to help foot the bill.

"Without the president leading the way to try to show specifics to bring a package forward, I don't know that I like the chances of us having success," said Sen. John Ensign, R-Nev.

• Click on the video box to the right watch a report by FOX News' Major Garrett

Bush said he would do what he could.

"I'm going to work with Congress to prioritize what may need to be cut," he said.

So far, GOP leaders are keeping their distance from calls for cuts, unsure if the votes will be there to pass sizable restraints in spending. Rank-and-file Republicans say the president must unite a party divided over what parts of the budget to cut.

For their part, Democrats remain united: They oppose cuts to health care spending; they support abolishing top tier tax cuts.

"We could start not by cutting Medicaid for the poorest people in America, but by cutting tax cuts -- by removing the tax cuts for the wealthiest people," said House Minority Leader Nancy Pelosi. D-Calif.

Labor groups that have given $10 million to relief efforts and set up worker placement centers throughout the region said they would oppose any attempts to cut federal spending.

"If they are going to push for another tax cut for the wealthy and for corporations, we're going to be out there against it," AFL-CIO President John Sweeney said. "I think our country would be in better financial shape if we had worked with the surplus we had and not given tax breaks to those who don't need it."

McCain says Republicans remain as united as Democrats on their stance of tax cuts.

"I think if we were going to address the issue of taxes, it would be almost a cop out. What we need to do is cut spending and waste before we ask the American people to pay more taxes," he said.

Already, Republican divisions on spending cuts are clearly visible. One conservative proposal to cut more than $100 billion from next year's budget has been labeled by some as dead on arrival.

"There may be only 30 or 40 votes in the House that you can get on something that big and that aggressive," said Rep. Bill Shuster, R-Pa., one of a group of lawmakers who have embarked on "Operation Offset" to find the savings.

Among the programs eyed for offsets is the president's prized Medicare prescription drug plan, scheduled to start in January. Many Republicans want to postpone some or all of it.

"The bottom line is that we believe, as a group, that you can go back into this budget and extract savings if you're willing to set priorities," said Sen. Lindsey Graham, R-S.C.

Another idea has been to dump special projects, known as earmarks, from this year's highway bill.

"You're looking at $24 billion worth of earmarks," said Sen. John Sununu, R-N.H.

Both these ideas cause big headaches for some. The White House adamantly opposes postponing the Medicare drug benefit, which is supposed to help seniors who some say have had to choose between food and medication each month because of the high price of prescriptions. GOP leaders indicate they fear civil war will erupt if Republicans start trying to take cherished highway projects from one another.

Even without offsets defined, Congress continues to spend. Shortly after Katrina, both chambers quickly approved $62 billion for rescue, recovery and rebuilding in the Gulf Coast region. Congressional leaders were told earlier this week that $15 billion had already been spent.

On Wednesday, the House and Senate approved a $6.1 billion tax relief package to aid Gulf Coast residents. The bill provides tax breaks and establishes special rules for the earned income tax credit and child tax credit for victims that lost jobs or were separated from their families.

Click in the video box near the top of the story to watch a report by FOX News' Major Garrett.