It’s beginning to look a lot like Christmas, but Democrats are increasingly worried that they will be left with nothing but lumps of coal in their stockings. [IMGCAP(1)]

With Democrats’ offer of a guns-for-butter compromise trading war funding for domestic spending spurned over the weekend with a veto threat, Democrats are now warning of a far harsher plan that would slash earmarks, omit Iraq War funding and target Republican spending priorities.

The threat from House Appropriations Chairman David Obey (D-Wis.) on Monday came as Democratic leaders appeared to be losing patience with the White House’s unwillingness to bust President Bush’s budget for as much as $18 billion in extra spending.

House Majority Leader Steny Hoyer (D-Md.) had indicated last week that Democrats were prepared to support some war funding without strings attached in an effort to reach a year-end spending deal, a move that angered liberal lawmakers and the party’s left-wing base, but seemed to offer at least a chance for reaching a deal with plenty of room to spare before Christmas.

House Democrats have been crafting a $500 billion-plus omnibus that would include about $30 billion for Afghanistan, $7 billion in additional off-the-books emergency spending and $11 billion in unrequested domestic spending for regular appropriations bills. As much as $40 billion or so for Iraq is expected be attached in the Senate, with the whole package coming back to the House before being sent to the president.

But White House budget Director Jim Nussle issued a veto threat on such a package Saturday and urged Congress to also pass a continuing resolution that would keep the government running past Dec. 14, when the current CR is set to expire.

“Instead of trying to leverage troop-funding for more pork-barrel spending, Congress ought to pass responsible appropriations bills and the funding for the troops our commanders say they need to build on their battlefield successes,” Nussle said.

Nussle’s missive put Democrats into a holding pattern as they struggled to figure out their next move.

In an Associated Press interview, Obey complained Monday that the White House continued to demand more and more war money in return for only a token amount of domestic spending, and said he wanted no part of a deal that would provide $70 billion for the wars in Iraq and Afghanistan with no strings attached.

Nussle spokesman Sean Kevelighan dismissed Obey’s latest salvo as “different hour, different Democrat in Congress changing the so-called government spending strategy. Our priorities have not changed — fund our troops in the field without strings attached and fund the federal government within the president’s reasonable and responsible spending levels.”

Whether Obey would be able to carry out his threat, even if Democratic leaders ultimately agreed to do so, remains unclear. An omnibus package that slashes earmarks and includes many deep cuts likely would pass with razor-thin margins in the House and could face a Senate filibuster.

Some Senate Republicans have been working behind the scenes to get the White House to sign off on a deal at around $9 billion in regular domestic spending above the president’s cap in return for $70 billion in war money, more than many Democrats are comfortable with.

In contrast, House GOP leaders smell total victory — convinced that Democrats will have to cave completely on war funding and domestic spending — and want Bush to hold firm.

It would be hard for Bush to veto a bill along the lines that Obey describes, because he could not claim that it contains wasteful pork or that it spends too much money because it would be under a cap Bush himself set. But it would leave some conservative Democrats worried that they were going home for the holidays without providing an extra funding cushion to prevent disruptions for the military, and others miffed that they were losing earmarks rather than enjoying the spoils of being in the majority.

Democrats already nuked the domestic earmarks in fiscal 2007 when they had to clean up unfinished bills left over from Republican rule in a continuing resolution, and Obey’s idea would mean a second straight year with slim pickings. Military earmarks already have become law as part of the Defense spending bill.

Liberal Democrats meanwhile chided their leaders for even contemplating another blank check for Iraq. One aide called it “Groundhog Day” given that Democrats were once again trading spending on the war for domestic programs.

“Instead of providing the president a blank check … we urge you to build on the $50 billion down payment on redeployment that the House passed on Nov. 14 and adhere to the assurances we were given by House Democratic leaders at that time that no more votes would be taken this session to provide additional funding for U.S. military operation in Iraq,” wrote Out of Iraq Caucus members Reps. Barbara Lee (D-Calif.), Lynn Woolsey (D-Calif.) and Maxine Waters (D-Calif.).

Given Bush’s veto threat, Democrats could end up angering their base yet again by telegraphing that they would accept a guns-for-butter deal without anything to show for it.

With much of the action expected to take place in the House this week, the Senate likely will remain in a holding pattern on spending, although Senate Majority Leader Harry Reid (D-Nev.) is expected to move a clean one-week continuing resolution.

According to Democrats and Republicans alike, how the chamber ultimately handles whatever emerges from the House likely will come down to whether Senate Minority Leader Mitch McConnell (R-Ky.) looks to cut a deal with Reid or whether he gives in to conservative pressure to pick a protracted fight with Democrats.

Although McConnell seemed eager to cut a deal last week — and had reportedly signaled that he could be prepared to push for a deal that included war funding and only $9 billion in funding over President Bush’s budget — the GOP leader this weekend stepped back from the settlement line.

In a statement released Saturday, McConnell rejected the deal reportedly cut between House and Senate Democrats, arguing that it does not provide adequate war funding and still comes in too high above Bush’s number. “While it’s certainly encouraging to see Congressional Democrats stand up to the anti-war fringe and start the process of living up to Congress’ commitment to fund the troops in harm’s way, the rest of their self-negotiated ‘deal’ described in today’s press reports remains unacceptable to Congressional Republicans. The funding levels they are reportedly prepared to offer for their 11 unfinished funding bills is too much to ask of the American taxpayer,” McConnell said.

That statement appeared to take Democrats by surprise, many of whom said they viewed McConnell as the “pragmatic” Republican leadership voice involved in negotiations. Republicans continued to take a hard line Monday.

“Republicans have been shut out and Democrats are still using the same tactic they’ve been using all year — offering so-called compromises that they know will be swatted down,” said a Senate GOP leadership aide. “They must fund the troops without tying the hands of our generals and get spending as a whole to a reasonable level. …They can tighten their belt a few notches and stop living off bacon,” a Senate GOP leadership aide said.

While liberal Democrats are worried about war funding, fiscally conservative Blue Dogs said Monday they opposed including any alternative minimum tax patch that isn’t paid for in an omnibus package. House Democrats are expected to send another AMT patch to the Senate with new offsets.

Rep. Allen Boyd (D-Fla.) said in a conference call Monday along with Rep. John Tanner (D-Tenn.) that they intended to vote against any omnibus bills that included an AMT patch without offsets if they Senate insists on including one.

“It’s amazing to me to hear reasonably adult thinkers tell you with a straight face that it’s good public policy not to pay your bills,” Tanner said, and later added: “I’m willing to stay here as long as it takes to get it done.”

Jennifer Yachnin contributed to this report.