Concern over the nation's mounting debt could snarl the passage of President Barack Obama's proposal to provide more aid to state and local governments.

Mr. Obama on Saturday sent a letter to lawmakers calling for swift action to help small businesses and state and local governments facing budget cuts following the economic downturn. He didn't specify in the letter where funds would come from, but he said he had called for a three-year freeze in non-security discretionary spending.

"It...