The White House and Congress are struggling to regroup after the Senate rejected President Obama's proposal to jump start the country's job creation.
The move came despite weeks of cross-country campaigning by the president.
The $447 billion plan died Tuesday on a 50-49 vote, falling well short of the 60 votes needed to keep the bill alive.
Several Democrats joined Republicans to oppose the plan's stimulus-style spending and new taxes for the wealthy.
The tally had been 51-48 but Majority Leader Harry Reid, D-Nev., switched his vote to "nay" to reserve the right to force a re-vote.
Sen. Tom Coburn, R-Okla., is recovering from surgery and did not vote.
However, both the White House and Congress know they have to produce results for a discontented public as the 2012 campaign prepares to heat up.
They must work together to find another way to target the nation's painful 9.1 percent unemployment rate.
"Tonight's vote is by no means the end of this fight," Obama said in a statement after the vote.
"Because with so many Americans out of work and so many families struggling, we can't take 'no' for an answer," he said.
But some of the bill's provisions -- like tax deductions -- enjoy bipartisan support and might be approved by Congress.
"Now it's time for both parties to work together and find common ground on removing government barriers to private-sector job growth," House Speaker John Boehner, R-Ohio, said after the vote.