WASHINGTON -- The Senate yesterday gave final approval to a $39.7 billion package of spending cuts that will make significant changes to Medicaid, Medicare and student loan programs over the next five years in a 51-50 vote in which Vice President Dick Cheney broke the tie.

Republicans said the measure was a critical step toward reducing the nation's $331 billion deficit by reining in the costs of healthcare entitlement programs, which are expected to rise dramatically over the next decade.

All 44 Democrats along with five Republicans and the Senate's lone Independent voted against the bill stating that the savings come at an unfair cost to low-income Americans and will be essentially wiped out when Congress extends the president's tax cuts early next year. The House approved $94.5 billion in tax cuts generally benefiting businesses and wealthier taxpayers, which will have to be reconciled with the Senate's $59.6 billion tax package.

Despite their defeat, Democrats temporarily prevented the measure from going to President Bush's desk for a signature by raising an objection to a technical point. Their procedural move will require the House to vote on the bill again, though it is not clear when that might be; the House passed the spending cuts around dawn on Monday with a vote of 212-206.

Pennsylvania Sens. Rick Santorum and Arlen Specter voted for the spending cuts, with Mr. Specter delivering a critical swing vote to the Republicans. The five Republicans voting against the bill were Lincoln D. Chafee of Rhode Island, Olympia J. Snowe and Susan Collins of Maine, Mike DeWine of Ohio, and Gordon Smith of Oregon.

Ms. Snowe said the package goes beyond "reasonable reforms" by altering welfare programs, "drastically cutting student aid and dramatically increasing Medicaid co-payments." The legislation, she said, "seems to protect everyone but those needing the greatest protection."

But Mr. Santorum, who was heavily involved in negotiations to add to the bill a program aiding small dairy producers as well as programs promoting marriage and fatherhood, argued that senators were responding to Americans' calls to cut back on unnecessary spending.

"We've made some changes ... that make those programs better, more efficient and more targeted to the people in need," Mr. Santorum said. "It's exactly what the American public says that we want to accomplish -- and that is to make changes to programs to make sure that the money is wisely spent."

Substantial savings come from changes that will affect older people who rely on Medicaid, the federal-state health care program for low-income Americans, and Medicare, the federal program providing health care to seniors. And those cuts could have significant impact in Pennsylvania, which is second only to Florida in its percentage of older residents.

In a major policy shift recommended by a bipartisan panel of governors from both parties, states will now be able to charge premiums and higher co-payments from Medicaid recipients for services such as doctor's visits and prescription drugs.

Co-payments by Medicaid recipients are currently limited to $3, but the legislation allows states to charge some Medicaid recipients a co-pay of up to 10 percent. The change would apply to those at the poverty line or just above -- which translates to a couple with an income between $12,800 and $19,200, according to an analysis by the Center on Budget Policy and Priorities.

A couple covered under Medicaid that makes more than $19,200 could be charged co-payments as high as 20 percent.

The Congressional Budget Office has estimated that thousands of people would drop out of the Medicaid program because they could not afford the premiums or higher co-payments. But the nonpartisan Congressional Budget Office has not yet completed its analysis of the final 700-page House-Senate package, and since many Medicaid changes will be at the discretion of the states, the impact is not yet clear.

Another change affecting older Americans is the decision to tighten eligibility requirements for seniors who apply for long-term care -- such as nursing home coverage -- under Medicaid.

Under current law, government analysts determining whether a person qualifies for long-term care under Medicaid review the applicant's financial transactions over the previous three years to determine whether the person gave away cash or assets to family members or friends to shelter money from Medicaid.

If some transactions are deemed improper, the applicant can be penalized. For example, if the applicant gave away $10,000 to a family member, the analyst could determine that $10,000 would have paid for two months of nursing home care and then delay the person's coverage for that period of time.

The new budget package would extend that so-called "look-back period" to five years.

Groups like the AARP argue the provision could unfairly target older Americans who were generous to family members and did not anticipate an immediate decline in their health.

"We're afraid in some instances you're going to see people being treated like ping-pong balls where they're discharged to hospitals for whatever the penalty period is and then sent back to the nursing home," said Kirsten Sloan, chief health lobbyist for the AARP.

But Republicans supporting the change argue that it prevents abuse of the system and Mr. Santorum said he couldn't understand the objections.

"You have to have an attempt to defraud," Mr. Santorum said. "I don't know how the AARP defends that."

Ms. Sloan said AARP is also concerned about a new provision that would prevent an applicant with a home worth more than $500,000 from qualifying for Medicaid. Under current law, the worth of an applicant's primary residence is not factored into eligibility.

AARP and a number of liberal policy groups also object to a change that will stave off a drop in payments to physicians who provide Medicare visits, because it will result in an increase in Medicare Part B premiums, which cover doctor's visits.

Democrats also objected to $12.7 billion cut to student loan programs, which would require parents to pay higher interest rates. The Associated Press reported that the interest rate for parent loans would increase to a fixed rate of 8.5 percent in July. It is now a variable rate and had been set to move to a fixed rate of 7.9 percent. The interest on student loans also would move to a fixed rate of 6.8 percent in July, up from its current variable rate of 4.7 percent. But that change was already set to occur under law, and the deficit-reduction bill does not alter that. Student groups tend to support a fixed rate as a protection against unstable, rising interest rates.

Grants for students who agree to study math and science were increased and there are $3.7 billion in new grants for low-income, high-achieving students who study science, math, technology or foreign languages critical to national security.

The final bill did not include controversial proposed cuts to the food stamp program, but did include a cut of $1.5 billion in child support enforcement programs.

Mr. Santorum highlighted several smaller programs that he believes are key improvements. He negotiated increased coverage within Medicare for colonoscopy screenings. And he also was involved in a bitter fight to get a two-year extension of a program to aid small dairy producers. The Milk Income Loss Contract program will be extended at a cost of $998 million over five years. Several Western lawmakers fought the provision because it primarily benefits smaller dairy producers, who dominate the industry in Pennsylvania, and not larger producers in their states.

The new marriage initiative Mr. Santorum pushed will parcel out $100 million a year for five years to promote marriage through counseling and educational programs in communities with high rates of out-of-wedlock birth. About $50 million would be set aside for each year over five years for the initiatives encouraging fatherhood.

The president said the Senate vote to reduce entitlement spending was "a victory for taxpayers, fiscal restraint, and responsible budgeting -- and it will help keep us on track to cut the deficit in half by 2009."