The Obama administration was waging an aggressive two-front battle against America's worst economic crisis since the Great Depression in the 1930s.

After more than a week of private negotiations and intense public debate, Senate on Tuesday approved the massive stimulus package, which President Barack Obama and his Democratic supporters called crucial to pull the US economy out of its downward spiral.

Meanwhile, Treasury Secretary Timothy Geithner unveiled a new financial bailout package that could top US$1.5 trillions to restore the ailing financial system.

Tough process

The Senate voted 61 to 37 to pass the massive bill, which the Congressional Budget Office now says would cost US$838 billion over the 10 years.

Tuesday's approval, a significant victory for Obama, came after more than a week of private negotiations and intense public debate.

With job losses soaring nationwide, the White House, Senate Democrats and some key Republicans reached a tentative agreement of US$780-billion package last week.

Democratic Senator Ben Nelson said the negotiators had gone over the proposed package "line by line, dollar by dollar."

"We trimmed the fat, fried the bacon and killed the sacred cow," he said. The US$838-billion version was smaller than the original roughly US$935-billion package. Many Republican senators have said they want the total package's cost down to about US$800 billion.

Among the US$110 billion in spending cuts: US$40 billion from a US$79-billion fund aimed at helping states preserve school funding as they try to balance their budgets.

And negotiators also cut in half US$15 billion in "incentive grants" for states that meet certain goals for their initial education allotment."

Obama, who was addressing a gathering in Fort Myers, Florida, a city suffering a lot from the economic crisis, hailed the passage immediately.

"That is good, that is good news," Obama told the audience. "It is a good start."

Supporters of the stimulus package said the bill would be able to stop the downward spiral in the economy, spur a recovery and avoid a prolonged deflationary period.

"Throughout our history, the federal government has catalyzed a good idea, invested in the ingenuity and entrepreneurship of the American people, and let the private sector flourish," said Senate Majority Leader Harry Reid.

"Faced with an economic crisis today, we have an opportunity to make similar investment that will help our country prosper in the years to come," he added.

Former Trade Representative Carla Hills also welcomed the package. "I think what we should do is to give our economy a jolt, and importantly, give our consumers and our businesses a vote of confidence, so consumers come back to the market, and the businesses are able to produce for that market," she told Xinhua.

Earlier Tuesday, Geithner announced an ambitious plan which includes a public-private partnership of over US$1 trillion to help strengthen banks.

Added to the congressional stimulus plan, which aims to get Americans spending again, the total of the combined efforts could easily pass US$2 trillion.