Bush wants $88 million to continue developing a "bunker-busting" bomb designed to destroy deeply buried targets such as those in Iran.
And in case there were doubts about the Democrats' position, Senate majority whip Richard Durbin introduced legislation Thursday that would require Bush to seek congressional approval before taking any military action in Iran.
Standing behind him are antiwar groups, which have expanded their activities to include protests against a potential war with neighboring Iran.
"Every day now, it seems that the confrontational rhetoric between the United States and Iran escalates," said Senator Robert Byrd, chairman of the Senate Appropriations Committee.
"President Bush needs to understand that the Congress will not be kept out of the loop while his administration plots another march to war," said Byrd, Democrat of West Virginia.
Regardless of Bush's intentions, denouncing a war before any shots are fired offers political benefits for Democrats. Democrats have proved unable to pass vetoproof legislation that would order troops home from Iraq and are looking for other ways to retain the support of a war-weary public.
Bush administration officials say that the latest penalties against the Iranian military - the first targeting the armed forces of another country - are part of a diplomatic strategy and not a prelude to war.
"While the president doesn't take any options off the table, we do have economic ways that we can go after this. And we're doing precisely that," Secretary of State Condoleezza Rice told the House Foreign Affairs Committee.
Several leading Democrats, including House Speaker Nancy Pelosi and Representative Tom Lantos, say they support the financial punishment.
But others, including Byrd, said it seems to portend more aggressive steps.
The White House also has played down its request to continue development of a bomb that can destroy hardened concrete bunkers and tunnels deep underground.
Included in Bush's $196 billion request for war spending in 2008 is $83.5 million to continue development of a 30,000-pound conventional bomb called the massive ordnance penetrator, and $4.2 million to modify the B-2 bomber to carry it.
