Democrats cracked a GOP filibuster on Wednesday, and the House was being called back from its summer break for an expected final vote next week to help cash-strapped states and school districts.
The $26 billion measure would help states ease their severe budget problems and, advocates said, stop the layoffs of perhaps 300,000 teachers, firefighters, police officers and other public employees. Though scaled back, the bill also would salvage a victory for Democrats who have been unable to deliver most of the jobs help they and President Barack Obama promised.
The legislation advanced by a 61-38 tally that all but ensured it would pass the Senate on Thursday. House Speaker Nancy Pelosi said she would call the House back into session next week to approve the measure to get it to Obama for his signature before most schools reopen.
Many Republicans objected to the expense at a time of record budget deficits, but moderate Republican Sens. Olympia Snowe and Susan Collins of Maine cast the key votes to break the filibuster - as they did last month in helping Democrats pass a six-month extension of jobless benefits.
Wednesday's bill would extend programs enacted in last year's economic stimulus law.
The measure comes on the heels of successful efforts to extend unemployment insurance for the long-term jobless and to provide a payroll tax credit this year to businesses that hire the unemployed.
But the total jobs package has been significantly trimmed from earlier, ambitious designs to boost "green jobs," provide new funding for roads, bridges and other infrastructure projects, pay for a summer jobs program for disadvantaged young people and renew health insurance subsidies for the jobless.
The $26 billion package would provide $16 billion to states to help pay their Medicaid bills - preventing budget cuts and layoffs elsewhere - and $10 billion for grants to school districts to forestall teacher layoffs.
"This legislation makes a difference," said Sen. Patty Murray, D-Wash. "Real people in real jobs. Real paychecks."
Democrats had earlier sought to finance the measure by adding to the more than $13 trillion national debt. Pressure from deficit hawks in both parties ultimately forced Democratic leaders to pay for the measure by cutting other programs and raising taxes.
Among the pay-fors chosen by Senate Majority Leader Harry Reid, D-Nev., was a $12 billion cut to food stamps that would cost a family of four $59 a month beginning in early 2014, and a tax increase that limits the ability of some U.S.-based multinational companies to use foreign tax credits to reduce their U.S. taxes.
Most Republicans oppose the measure, calling it a payoff to public employee unions and warning that it would make the states ever-dependent on federal money.