But the House adjourned Friday, meaning members would have to return to Washington to vote on any new deal crafted by the Senate.
Senate Republicans were preparing for a shutdown as conditions worsened throughout the day Thursday, and the situation appeared unimproved Friday morning. But any damage could build quickly if the closure is prolonged.
Leaders of both parties blamed each other for the showdown.
The Defense Department on Friday issued guidance that read: "Military personnel on active duty, including reserve component personnel on federal active duty, will continue to report for duty and carry out assigned duties".
In the absence of such an authorisation, functioning of the federal government would come to a standstill, with hundreds and thousands of its employees forced to stop work. They said by opting not to support the bill passed by the House, he was effectively voting against the six-year extension of CHIP.
But a shutdown would also be problematic for 10 Democratic senators who are up for re-election this year in states won by Mr Trump.
Four Republicans voted in opposition. Didn't that lead to major political punishment for the GOP, then-House Speaker Newt Gingrich and 1996 Republican presidential nominee Bob Dole? Each party expressed resolve in its position - and confidence that the other would suffer the wrath of voters. This is the behaviour of obstructionist losers, not legislators.
Democrats balked on the measure in an effort to pressure the White House to cut a deal to protect "Dreamer" immigrants - who were brought to the country as children and now are here illegally - before their legal protection runs out in March. Reporter: With just hours to go until a shutdown, a beaming democratic leader chuck Schumer walked out of the west wing and returned to capitol hill.
President Donald Trump waves after he returned to the White House January 17, 2018 in Washington, DC.
Senate Majority Leader Mitch McConnell will need 60 votes to pass the CR, requiring Democratic support.
If there's a government shutdown, much of the news coverage of it will be more about the politics of it than the effect it has on people.
In the hours before the vote, President Trump sounded pessimistic, tweeting that it was "not looking good for our great Military or Safety & Security on the very unsafe Southern Border". Lawmakers who wanted to negotiate over a "big deal" on immigration and spending ultimately wound up haggling over how many more days they needed to talk.
Earlier, Trump held a last-minute meeting with Schumer to avert a government shutdown due to lack of funds.
Still, 56% overall say approving a budget agreement to avoid a shutdown is more important than continuing the DACA program, while just 34% choose DACA over a shutdown. Cheeseburgers and chats at the White House could not yield lasting progress.
"I guess the bottom line is we're working to make sure there is no shutdown, but if the Senate or the House can't get together to finalize a deal, we'll be ready", Mulvaney said.
The chiefs of staff for each man - John Kelly for Trump and Mike Lynch for Schumer - also attended the meeting, reported CNN.
Trump had been an unreliable negotiator in the weeks leading up to the showdown. "He accepts bipartisan overture on one day, only to reject them on the next". His disparaging remarks about African and Haitian immigrants last week helped derail further negotiations.
"Shutdown coming?" Trump tweeted, seeming to revel in the chaotic, high stakes brinksmanship.
Schumer wants to "hold the entire country hostage", McConnell said.