The final vote for approval was 85-9 and came a day after the bill cleared the House by 417-3. The swift action followed months of partisan gridlock that saw three previous House-passed versions blocked in the Senate.
"The unemployed and struggling businesses have had to wait too long for the good news," said Sen. Charles Grassley of Iowa, ranking Republican on the Senate Finance Committee.
Others complained that some of the business tax cuts would cost states $14.6 billion over the next three years, because many states base their corporate tax structures on the federal system.
"It will no doubt be hurtful to the states," said Sen. Jay Rockefeller, D-W.Va.
The Senate vote came a day after Federal Reserve Chairman Alan Greenspan presented a more upbeat economic forecast than he had a week earlier. Given the size of the U.S. economy, Greenspan told the Senate Banking Committee, the relatively modest stimulus package would have little impact on recession recovery.
"I doubt very much that the economy, if it didn't get a stimulus, would sag," Greenspan said.
The legislation would pump $51 billion into the economy this year, $43 billion next year and $29 billion in 2004, congressional analysts say. Its cost over 10 years is about $42 billion, because some tax breaks would generate government revenue in later years.
The measure would extend regular 26-week jobless benefits by 13 weeks and allow for additional automatic extensions in states with high unemployment rates.
Many lawmakers were nervous in an election year about failing to act on lengthening the benefits before Monday, six months since the Sept. 11 attacks that worsened the economic slide. Senate Majority Leader Tom Daschle, D-S.D., said about 1.6 million people have seen their unemployment benefits expire since the attacks.
For businesses, the measure provides an immediate 30 percent depreciation write-off over each of the next three years for new investments, and a more generous way to deduct losses from taxes paid in previous years. The depreciation change in particular would right away spur business activity and enable companies to hire more workers, supporters said.
The bill creates a "Liberty Zone" in the lower Manhattan section of New York in which $5 billion in various tax breaks would be available over 10 years to help the city recover from September's attacks. In addition, the bill would extend a list of popular tax breaks, most for two years, that have expired or will expire this year.
CBS News Chief Washington Correspondent Bob Schieffer reports that the vote ends months of gridlock caused by House Republicans' insistence that the additional unemployment benefits be coupled with huge tax cuts for business. Democrats considered that welfare for the rich.
Daschle said, "I am very pleased they have chosen to follow a path that many of us were suggesting long ago."
Added House Speaker Dennis Hastert, R-Ill.: "We think this is the right prescription."
Despite reaching an agreement, Democrats and Republicans traded charges Thursday over who was to blame for the bickering that stalled a compromise for five months.
Democrats contended that House GOP leaders had capitulated under pressure, finally dropping such contested proposals as accelerated income tax cuts and repeal of the corporate alternative minimum tax.
"This is a hardheaded lot we have here in the House leadership," said House Democratic leader Dick Gephardt, D-Mo. "They are always out of step with everybody else on what is moderate and sensible and reasonable to do."
Hastert told reporters it was Republican persistence that overcame inaction by Daschle and Senate Democrats.
"We did not back up, we did not wave a white flag or retreat," the speaker said.
There was some grumbling in the House that the compromise, however worthy, would worsen the federal budget picture in the next few years because the costs are not offset by either spending cuts or revenue increases.