An attempt by Democratic leaders to bring debate to a close failed by 15 votes get the 60 necessary to prevail. Although talks were continuing, the likelihood of a deal was growing dimmer by the hour as lawmakers try to wrap up business by Oct. 11 for the fall campaigns.
"It's going to require a lot of work" to get done, said Rep. Rob Portman, R-Ohio, a close ally of President Bush. "Our goal is to end up with a department that works, or else not have a department."
Sen. Joseph Lieberman, D-Conn., said "the clock is ticking" and raised the possibility that the bill will be shelved for good if the Senate turns to a use-of-force resolution regarding Iraq.
"Will it ever emerge? I don't know," said Lieberman, chief sponsor of a Democratic version of the legislation.
Each side blames the other for the impasse, reports CBS News Correspondent Bob Fuss, but the fact is they have each painted themselves into a difficult corner.
The president is adamant he must have the authority to change work rules to make the new homeland security department work efficiently, and Senate Republicans won't allow a final vote on a bill that doesn't have that in it.
Democrats, closely allied with public workers unions, say they won't let those unions be sacrificed in the name of homeland security.
The central issue remains Mr. Bush's demands for greater authority to hire, fire and deploy the new agency's estimated 170,000 employees and to exempt them from union bargaining agreements for reasons of national security. Mr. Bush and congressional Republicans say these powers are critical to quickly deal with future terrorist threats in an agency composed of 22 existing federal entities.
"Do we really want to bring in the bad old way of doing things in our government that has produced bad results?" Sen. Fred Thompson, R-Tenn., said. "The answer is no."
Democrats who control the Senate say Mr. Bush's proposals would effectively wreck many civil service protections in the new agency and amount to an assault on union bargaining rights. Mr. Bush has threatened to veto a Democratic bill that doesn't include the powers.
They say, 'It's either our way or no way.' It's nonsense. There's no reason we can't have a compromise," said Sen. Byron Dorgan, D-N.D..
Talks to explore a possible compromise continued Monday among White House staffers and aides to Sens. Lincoln Chafee, R-R.I., John Breaux, D-La., and Ben Nelson, D-Neb. Those three moderates have offered an alternative on the labor rights issue that appears to have a slim Senate majority but is being blocked by Republicans amid opposition by Mr. Bush.
The meeting, also attended by aides to Thompson and GOP Sen. Phil Gramm of Texas, made little headway because, according to one participant, Mr. Bush continues to insist on getting 100 percent of his proposals on management flexibility and union waiver authority. The moderates' alternative sets up conditions for use of the union national security waiver that the president says take away from his current powers.
"It is unclear whether further negotiations can lead to a mutually acceptable solution," said Chafee spokesman Jeff Neal.
Democrats are also frustrated at Mr. Bush's repeated criticisms of them on the homeland security issue, particularly in speeches at political fund-raisers. They say Mr. Bush only reluctantly embraced their idea for the department after months of resistance, then has issued veto threats while blaming Democrats for the stalemate.
"We naturally feel we have been treated unfairly," Lieberman said.