The Senate voted 53-44 in favor of the bill but 60 votes were required to overcome a filibuster mounted by the GOP, which called the bill an exercise in politics, The Washington Post reported.
Republicans objected to a move by Majority Leader Harry Reid, D-Nev., to block votes on amendments to the bill, the newspaper said.
The development came as Democrats and Republicans came up short of agreement on how to deal with legislation to extend income tax cuts enacted during the administration of Republican former President George W. Bush. Republicans favor extending the tax cuts for all income, while President Barack Obama proposes extending current rates only on annual income of $250,000 or less.
Sen. Charles Schumer, D-N.Y., said Republicans carried out the filibuster Thursday "for no other reason other than that they think passing it might help the president and help the economy."
Minority Leader Mitch McConnell of Kentucky accused Democrats of blocking votes for partisan political reasons.
"Here's the Democrat-controlled Senate, blocking votes, blocking debate, and hosting private meetings with the president's political advisors on political strategy instead of working on serious, bipartisan solutions," McConnell said.