WASHINGTON (Reuters) - President George W. Bush threatened on Tuesday to veto a bill to fund the war in Iraq and U.S. hurricane rebuilding after conservatives from his own party complained it was becoming bloated with special interest projects.

Bush, who has never vetoed a bill in more than five years as president, put the Republican-controlled U.S. Senate on notice that he could not go along with the $106.5 billion bill it was debating.

Democrats have been hammering away at the $3 trillion in new debt the Republican-controlled Congress and White House have presided over during the past five years. This fiscal year alone, the U.S. budget deficit could exceed $400 billion.

The administration had proposed about $92 billion in emergency funds for combat in Iraq and Afghanistan and to continue rebuilding southern states hit by Hurricane Katrina.

"If the president is ultimately presented a bill that provides more than $92.2 billion, exclusive of funding for the president's plan to address pandemic influenza, he will veto the bill," a White House statement said.

Senate Majority Leader Bill Frist, a Tennessee Republican, applauded Bush and said he "will support a veto, if necessary."

In March, Congress defied a veto threat from Bush and pushed ahead with legislation to stop a Dubai-owned firm from managing some American ports. Dubai Ports World abandoned that plan when the extent of Congress' opposition became clear.

DIVIDED OVER SPENDING

Republicans are deeply divided over spending priorities in an election year.

The Senate could take up to two weeks to debate the $106.5 billion measure that includes $67.6 billion the Pentagon says it urgently needs for the wars in Iraq and Afghanistan. About $27 billion would be added to the cleanup tab for Hurricane Katrina. Various other projects totaled nearly $12 billion.

On Tuesday, the Bush administration asked Congress to approve an additional $2.2 billion in emergency funds to strengthen levees around New Orleans. This would be in addition to almost $1.5 billion previously sought.

But the overall spending in the Senate bill is about $14.5 billion more than Bush requested and what has been approved by the U.S. House of Representatives.

Included in the added funding inserted by senators was aid for farmers who have suffered weather-related disasters, funds for the U.S. fishing industry and money to move a Mississippi railroad critics say would only help developers and casinos.

Calling it the "railroad to nowhere," Sen. Tom Coburn, an Oklahoma Republican, and some House conservatives vowed to delete the $700 million for the CSX railroad line. Before he became Bush's treasury secretary, John Snow was the company's chairman.

Senate Appropriations Committee Chairman Thad Cochran, a Mississippi Republican, defended the railroad project, saying "the future well-being of that entire coast area would be enhanced if the railroad could be relocated."

Hart said Coburn will join efforts to delete $500 million in the bill that would help Northrop Grumman Corp. offset "business disruption expenses" in its Gulf Coast shipyards, saying such losses would likely be covered by insurers and pending litigation.

"We are overweight and overspending," said Rep. Tom Feeney, a Florida Republican, referring to spending bills in recent years that have contributed to huge federal budget deficits.

It is not unusual for members of Congress, especially in an election year, to tack special-interest projects onto "must-do" legislation, such as a war-funding bill.

Bloated spending has undercut Republicans' long-standing claims they are the party of fiscal responsibility.

Rep. Jeff Flake, an Arizona Republican, said one need only look at huge federal expenditures over the past five years "if Republicans want to know why we're in the tank" with voters.