The Bush administration sought to break the deadlock in Congress Tuesday over economic stimulus legislation by offering to compromise with Democrats on unemployment benefits. Democrats responded favorably, but still oppose key GOP tax cuts.

Treasury Secretary Paul O'Neill was dispatched to Capitol Hill with a new offer on jobless aid that goes well beyond the limited grants to states that President Bush initially proposed, White House officials said.

Details were not immediately available, but House Republicans last week offered the 13-week extension of unemployment benefits wanted by Democrats as well as assistance for the jobless to pay for health insurance and several business and individual tax cuts.

Senate Majority Leader Tom Daschle, D-S.D., said such a proposal contained "the makings of a deal" but only if Republicans would drop their plan to accelerate income tax rate cuts in favor of a one-month holiday from the Social Security payroll tax.

"All that can be part of a plan we could agree to today," Daschle said from the Senate floor. "We don't have to negotiate with a great deal of give and take here."

Before meeting with Bush, O'Neill told reporters the administration wants to "see if we can't get over the top of the mountain and get this in place" before Congress recesses for the year.

Negotiations broke down last week amid a chorus of charges from Democrats and Republicans claiming each side is trying to kill the measure. Republicans generally want more tax cuts for business and individuals than do Democrats, who say the needs of the unemployed are paramount.

House Majority Leader Dick Armey, R-Texas, said Monday that GOP leaders would try again this week to revive the negotiations but if that failed, the House may take up a second stimulus bill that would include more jobless aid than a $100 billion plan that passed the House in October.

"We've got to see if we can get this conference back on track," Armey said. "If that doesn't work ... we in the House are prepared to put together a package that represents a general compromise with the Democrats."

Bush wants Congress to accelerate income tax cuts, approve a new round of rebate checks for low-income workers, enhance immediate tax write-offs for business purchase of equipment and give corporations relief from the alternative minimum tax.