Published: Aug 04, 2010 11:05 PM EDT
Updated: Aug 04, 2010 8:05 PM EDT

WASHINGTON (AP) - Last-minute money to save the jobs of tens of thousands of teachers and other public workers overcame a Republican filibuster Wednesday and sped toward Senate passage. The House, under pressure to help hard-pressed schools nationwide, was being called back from its summer break for an expected final vote next week.

The $26 billion measure would help states ease their severe budget problems and - advocates said - stop the layoffs of nearly 300,000 teachers, firefighters, police 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.

It's less generous than the help provided under the stimulus law and roughly half the size of the state- and teacher-aid package envisioned by Democrats earlier this year. It was still sought desperately by governors, who have already made big budget cuts because tax revenue plummeted in the recession.

"This legislation makes a difference," said Sen. Patty Murray, D-Wash. "Real people in real jobs. Real paychecks."

Obama called the breaking of the filibuster an important step toward "ensuring that teachers across the country can stay in the classroom and cash-strapped states can get the relief they need."

The Education Department estimates the $10 billion for school districts would save about 140,000 teacher jobs. The Economic Policy Institute, a liberal think tank partially funded by labor unions, estimates the $16 billion in additional Medicaid funding next year would save the jobs of more than 150,000 state employees across the country.

The timing of the package is not ideal for school districts that have already made decisions to lay off teachers.

"Getting more money is great," said Judy Kidd, president of the Classroom Teachers Association of North Carolina, where the Charlotte-Mecklenburg Schools laid off 463 teachers. "But the timing issue is rather off. We've got teachers, young teachers who had their career interrupted with a layoff. We had dedicated folks and now their confidence in the system is being shattered."

But Mike Langyel, president of the Milwaukee Teachers' Education Association, said most districts have the ability to return the laid-off teachers and wait for the funding to catch up.

Democrats had earlier sought to finance the measure by adding to the more than $13 trillion U.S. 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.

"That would have the effect of driving jobs overseas," said Sen. Lamar Alexander, R-Tenn.

Most Republicans opposed the measure, calling it a payoff to public employee unions and warning that it would make the states ever-dependent on federal funds.

A vote scheduled for Monday had been postponed after an analysis by the Congressional Budget Office showed the measure would add to the federal deficit. Snowe and Collins also had been concerned about cuts to Navy shipbuilding accounts since the Bath Iron Works in Maine is so essential to the state's economy. Majority Leader Harry Reid got rid of those proposed cuts Monday night.

Reid orchestrated other changes to close an almost $5 billion deficit gap, including adjustments to a tax credit claimed by the working poor.

Collins has been a past supporter of giving states help with their budgets and was the driving force behind an aid package enacted in 2003 that added $20 billion to the deficit.

The current measure is heavily backed by unions for teachers and public employees, key allies of the Democratic Party. The American Federation of State, County and Municipal Employees ran ads Wednesday in four Maine newspapers urging Collins and Snowe to help break the filibuster.

"It's important to be able to provide this support to the states at a very critical time," Snowe said after the vote. "I
think it also should be done with the understanding that the states are going to have to begin to make some tough decisions."