Senior Democrats say they will back a plan worth $780bn, instead of the $900bn sought by the president, in order to gain vital Republican support.
President Barack Obama has become angry with delays to the bill, which mixes big spending plans and tax cuts.
The Senate is now due to hold a vote in the coming days.
The new $780bn plan is composed of 42% tax cuts and 58% new government spending, Democratic Senator John Kerry said, according to Reuters news agency.
Other details of the slimmed-down package are sketchy, but one Democrat told Reuters that the homebuyer tax credit and car tax credit were still in the bill.
The Democrats need to persuade two Republicans to vote in favour of the bill for it to gain the necessary 60 Senate votes.
However, the Senate minority leader, Republican Senator Mitch McConnell, said that “most of us are deeply sceptical that this will work”.
And his Republican colleague, John McCain, defeated by Mr Obama in last year’s presidential election said: “You can call it a lot of things but bipartisan isn’t one of them.”
Now the fun begins….watch the new talking points on all the media circus….The partisan word fest is far from over…..the game is a foot! Just sit back and watch the fun.