By Richard Cowan and John Crawley

WASHINGTON (Reuters) - Fresh from defeat over their latest economic stimulus plan, Democrats in the Senate pushed ahead on Friday with another proposal to create jobs -- a $60 billion infusion to rebuild aging infrastructure.

The effort was already defeated once by Republicans, when they blocked it as part of a $447 billion job creation plan unveiled last month by President Barack Obama.

Republicans have complained that financing the new spending by raising taxes on the wealthy would actually kill jobs.

Under the Democrats' latest plan, set for a Senate vote the first week of November, the construction projects would be paid for with a 0.7 percent surtax on people with incomes above $1 million a year, starting in 2013.

"This legislation would create hundreds of thousands of construction jobs," Senate Majority Leader Harry Reid told reporters. "There is no reason to block this bill."

After Obama's comprehensive bill was killed by Republicans, despite broad public support, Democrats vowed to break it into pieces in a challenge to Republicans who face casting multiple votes against jobs legislation.

Democrats and Republicans are expected to wage their fight over how best to tame a 9.1 percent unemployment rate through the November 2012 presidential and congressional elections.

Getting a jump on what is expected to be a tough re-election campaign, Obama has been traveling through the United States to tout his job creation plans.

Reid unveiled the latest proposal less than a day after Senate Republicans blocked a $35 billion plan to create or maintain 400,000 jobs for teachers, firefighters and police officers. It would have been financed with a 0.5 percent surtax on the rich.

The infrastructure plan would invest $50 billion for road, rail, air and bridge projects and $10 billion to create a national infrastructure bank that would leverage seed money for the largest initiatives. Infrastructure bank proponents say it is a good way to attract private investment.

Obama has had no traction in Congress with an ambitious infrastructure agenda beyond $48 billion in his 2009 economic stimulus package that has been spent.

"Two years after spending tens of billions of dollars on 'shovel ready' projects in his first stimulus bill, President Obama famously admitted that those projects weren't as shovel- ready as he thought they were," said John Ashbrook, a spokesman for Senate Republican leader Mitch McConnell.

"It would be the height of irresponsibility to make the same mistake twice," Ashbrook said.

The administration's $50 billion plan for highway, bridge, and rail upgrades to boost the economy went nowhere in 2010 when both the House of Representatives and Senate were controlled by Obama's fellow Democrats.

Washington already funnels $42 billion to states for transportation infrastructure upgrades as part of annual budgeting, a number that proponents of increased investment are fighting to maintain in an era of high deficits and an emphasis on cutting government spending.

(Editing by Deborah Charles and Peter Cooney)