updated 2/4/2010 12:40:02 PM ET 2010-02-04T17:40:02

Senate leaders plan to pass a jobs bill next week as key Democrats and Republicans neared agreement Thursday on a proposal to give businesses a tax break for hiring unemployed workers.

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Passage would mark a rare bipartisan achievement in a Congress that has been sharply divided along political lines.

The Senate will start work on the bill Monday, said Majority Leader Harry Reid, D-Nev. If bill is passed by the end of next week, when the Senate takes a President's Day break, it would hand President Barack Obama a badly needed political victory.

"We want to work with the Republicans and it appears to me, on the jobs program, they want to work with us," Reid told reporters. "We do believe very emphatically that we will be having a bipartisan bill."

Passage of a bill with both Democratic and Republican support would contrast sharply with the way Congress has done business for the past year, a reflection of the Democrats' diminished power since Republican Scott Brown scored a stunning victory last month in a special Senate election in Massachusetts. With Brown seated, Senate Democrats will no longer have a filibuster-proof majority in the body, meaning they will need at least some Republican support to pass legislation.

Democrats believe a jobs bill that includes tax breaks Republicans support is a good way to break the ice, while also reflecting Obama's renewed emphasis on job creation.

"We heard the message of Massachusetts," said Sen. Chuck Schumer, D-N.Y. "They said focus immediately, and don't take your focus off, jobs, the economy, helping the middle class."

The tax break for hiring unemployed workers is modeled after a proposal by Schumer and Republican Sen. Orrin Hatch of Utah. The measure is an alternative to Obama's proposed tax cut of up to $5,000 for each new worker that employers hire.

The Senate alternative would exempt companies from paying the employer's share of Social Security payroll taxes for new workers hired this year, as long as those people had been unemployed at least 60 days. It would save companies 6.2 percent of the new workers' salaries that are subject to Social Security taxes, and would cost about $11 billion over 10 years, according to updated estimates.

The bill under discussion Thursday would also extend unemployment payments for those whose benefits have run out, and would renew a program that offers the jobless a subsidy for health insurance premiums under the COBRA program. About $33 billion in popular tax breaks that expired at the end of 2009, including an income tax deduction for sales and property taxes and a business tax credit for research and development, would be extended through 2010.

Reid said Thursday morning he hopes senators will be ready to unveil all the details of a bipartisan proposal later Thursday or on Friday.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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