A day after Republicans blocked a Democratic proposal that would have extended Bush-era tax cuts for the middle class but not the rich, leading Senate figures on both sides suggested a breakthrough was now imminent.

Democrats are expected to yield to Republican demands to extend tax cuts for the rich, but only for a few years and on the condition that unemployment insurance for jobless Americans whose benefits are expiring is prolonged.

"I'm optimistic we'll be able to come together.... I think we're going to get there," Mitch McConnell, the top Republican in the Senate, told NBC's "Meet the Press".

As expected on Saturday, Democrats in the 100-seat Senate fell short of the 60 votes necessary to renew low tax rates only for individuals earning up to 200,000 dollars and for families with 250,000 dollars or less of income.

The measure, backed by the White House, would have let rates on higher earners rise at the beginning of next year to where they were before cuts enacted by former president George W. Bush's administration in 2001 and 2003.

In a rare weekend session that followed days of stormy debate, Republicans blocked the legislation on a procedural vote, complaining the measure failed to extend low tax rates for wealthier Americans.

Republicans argue that many small business owners occupy that upper threshold and that raising their taxes would run contrary to efforts to lower an unemployment rate hovering stubbornly at just under 10 percent.

"We need to redouble our efforts to resolve this impasse in the next few days to give the American people the peace of mind that their taxes will not go up on January 1st," Obama said on Saturday. "It will require some compromise, but I'm confident that we can get it done."

It is possible a final deal could include a Republican commitment to vote this year on the ratification of a landmark nuclear arms control treaty signed in April in Prague by Obama and Russian President Dmitry Medvedev.

Obama has pleaded with the Senate to ratify the new START treaty, warning that failure to do so leaves the world unable to verify Russia's huge nuclear arsenal and could badly damage America's credibility in future negotiations.

The accord, a key part of Obama's efforts to "reset" relations with Moscow, restricts each nation to a maximum of 1,550 deployed warheads, a cut of about 30 percent from a limit set in 2002, and 800 launchers and bombers.

The agreement, which has broad US public support, would also return US inspectors who have been unable to monitor Russia's arsenal since the agreement's predecessor lapsed in December 2009.

Assuming all 58 members of the Senate Democratic caucus vote for the treaty, Obama needs to find nine Republicans to back it.

But Republicans are unwilling to grant Obama what would amount to a major foreign policy victory -- 42 signed a letter last week saying the Senate must first sort out the Bush-era tax cuts and how to fund an omnibus spending bill.

But Richard Lugar, the top Republican on the Senate Foreign Relations Committee, who has been a lone voice urging his party comrades to back the treaty, was more upbeat on Sunday about its chances.

"I'm more optimistic presently," Lugar told CNN. "We're on the threshold (of)... debating the START treaty. I hope we will. And I think if we do, the votes are there."

Obama will find passing the legislation he wants much harder come January when Republicans take up midterm election gains that gave them control of the House of Representatives and trimmed the Democratic majority in the Senate.

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