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WASHINGTON (AP) -- Senate Republicans failed Wednesday to break a tax cut for American manufacturers out of an election-year battle over the economy.

Republicans and Democrats support the bill's aid for manufacturers and expressed frustration that it had stalled. Republicans continued to fight with Democrats about how much to broaden the debate to other economic issues like unemployment insurance, overtime pay and outsourcing.

"This bill and the American manufacturing sector are being held hostage," said Senate Finance Committee Charles Grassley, R-Iowa. He said Democrats were guilty of "political games and dilatory tactics."

Democrats countered that they had compromised by paring their list of proposed add-ons from 75 to 25, despite Republican unwillingness to meet them halfway.

"What we've gotten from some on the other side is just a lot of posturing," said Senate Minority Leader Tom Daschle, D-S.D.

Late in the day, the Republican and Democratic leaders expressed optimism that they could strike an agreement early Thursday and pare the list of Democratic amendments to a level acceptable on both sides.

Republicans lost a vote earlier that day that would have forced Democrats to drop their unrelated items. The 49-48 vote fell short of the 60 votes needed to prevail. Republicans lost a similar vote in March.

The bill also changes tax rules for American corporations exporting abroad. By bringing the tax rules in line with international trade laws, the change would end a standoff with the European Union.

The EU imposed punitive sanctions on American exports that increase 1 percentage point each month until the conflict is resolved. The sanctions began at 5 percent in March and increased to 6 percent this month.

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