Administration officials calculated that relief efforts were running close to $700 million a day, and the total federal cost could reach as high as $100 billion.
That would be many times the cost of any other natural disaster or even the $21 billion that was allocated for New York City after the terrorist attacks of Sept. 11, 2001.
The expenses would come just as Mr. Bush and Republican leaders are trying to push through spending cuts for programs like Medicaid and student loans, extend about $70 billion in expiring tax cuts, and reduce the federal budget deficit.
Though it is still too early for accurate estimates, the costs are all but certain to wreak havoc with Mr. Bush's plans to reduce the federal deficit and possibly his plans to extend tax cuts.
Congressional Democrats are already using the hurricane as a reason to block Republican tax and spending plans.
"Katrina could easily become a milestone in the history of the federal budget," said Stanley Collender, a longtime budget analyst. "Policies that never would have been considered before could now become standard."
"We can afford $100 billion - one time," said Douglas Holtz-Eakin, director of the Congressional Budget Office. "What we cannot afford is $100 billion in additional spending year after year."
The problem is that, even without the hurricane, the federal government's underlying fiscal health is in poor shape, the New York Times reports.