Negotiators hoped to seal agreement on President Barack Obama's economic stimulus package soon after making good progress in the first rounds of closed-door talks.
Obama's negotiating team insisted on restoring some lost funding for school construction projects as talks began on Tuesday in hopes of striking a quick agreement, but by late in the day it appeared resigned to losing up to $40 billion (Dh146bn) in aid to state governments.
Earlier, the Senate sailed to approval of its $838bn economic stimulus bill, but with only three moderate Republicans signing on and then demanding the bill's cost go down when the final version emerges from negotiations.
Negotiators were working with a target of about $800bn for the final bill, lawmakers said.
"That's in the ballpark," Senate Finance Committee Chairman Max Baucus, said of the $800bn figure.
Baucus had said earlier that $35.5bn to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would be cut back. There was also pressure to reduce a Senate-passed tax break for new car buyers, according to Democratic officials.
Within hours of the 61-37 Senate vote, White House Chief of Staff Rahm Emanuel and other top Obama aides met in the Capitol with Democratic leaders as well as moderate senators from both parties whose support looms as crucial for any eventual agreement.
Despite the tight timetable, Emanuel said, the bill could still be finalized this week. "You are in the legislative branch," he said. "Anything is possible."
He added: "Everybody knows the seriousness of the economic crisis."
House Democratic leaders promised to fight to restore some of $16bn for school construction cut by the Senate. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress.
The moderate senators – Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania – are demanding that the final House-Senate compromise resemble the Senate measure.
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