UPDATE 3-Tax credits, Medicare fix in Senate jobs bill

* Democrat Reid hopes to finish bill this week

* Republican McConnell sees price tag of $80 billion

* Senate bill cheaper, more bipartisan than House version (Updates with Kyl seeing no vote this week)

By Andy Sullivan and Kim Dixon

WASHINGTON, Feb 9 (Reuters) - Tax breaks for hiring workers and highway funding figure prominently in a jobs-creation bill that is on a possible Senate fast-track, according to lawmakers and a draft of the legislation obtained by Reuters.

The bill, likely to be less costly and more bipartisan than the one passed by the House of Representatives, also extends unemployment benefits and postpones a scheduled 20 percent cut in payments to doctors under the Medicare health insurance program for the elderly.

The Senate legislation, which has yet to be formally introduced, faces more than the usual procedural hurdles as a record snowstorm has paralyzed Washington and made it difficult for many lawmakers to get to work.

"We really need to finish the bill this week (and) I hope that we can," Senate Democratic Leader Harry Reid said on the floor of the chamber after he and others met with President Barack Obama at the White House.

Senate Republican Whip Jon Kyl praised what appeared to be a rare outburst of congressional bipartisanship but said he did not expect a vote this week on the jobs legislation.

"Something might be written this week to go out as a draft to everybody. But it will not be acted on this week. No way," Kyl told reporters, explaining that Republicans would need time to study the provisions.

The Senate's top Republican, Minority Leader Mitch McConnell, said the jobs legislation would carry a price tag of roughly $80 billion. That would be about half the size of the $155 billion package that Democrats in the House passed in December with no Republican support.

ELECTIONS LOOMING

Democrats, nervously eyeing congressional elections in November, hope to show voters they are doing all they can to bring down the 9.7 percent unemployment rate.

But they face a growing backlash over aggressive spending last year to lessen the impact of the deepest recession in 70 years and Democrats have lost their 60-seat supermajority in the Senate after a surprise Republican election victory in Massachusetts last month.

"I don't know of any sticking points at this stage," Reid told reporters earlier in the day. "I think we are in pretty good shape."

McConnell said Republicans were anxious to see the "parameters of the final package" before deciding whether to support it but the bill includes several provisions advanced by others in his party.

Among them is a proposal by Republican Orrin Hatch and Democrat Charles Schumer that would allow businesses to avoid paying payroll taxes on some new hires for the rest of 2010.

The bill also would expand taxable bonds, known as "Build America Bonds," that help state and local government pay for big projects.

It would also shore up the dwindling Highway Trust Fund, which funds local road and transit projects, and includes a set of non-controversial tax credits and other benefits to business worth $17 billion that expired at the end of last year.

The Senate bill will not include a permanent fix for the estate tax, which expired at the end of 2009 and is scheduled to return at a higher rate in 2011, Reid said. (Additional reporting by Thomas Ferraro; Editing by John O'Callaghan)