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Politics

U.S. Government Shutdown Begins amid Budget Row

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U.S. Capitol

The US government has begun a partial shutdown after the two houses of Congress failed to agree a budget. The Republican-led House of Representatives insisted on delaying Mr Obama’s healthcare reform - dubbed Obamacare - as a condition for passing a bill.

More than 800,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over. It is the first partial shutdown in 17 years.

The economic impact will depend on how long the deadlock lasts, but Goldman Sachs estimates a three-week shutdown could shave as much as 0.9% from US GDP this quarter.  With less than one hour to go before midnight, the Republican-led House called for a conference - a bipartisan committee with the Senate - to try to thrash out a deal, but Democrats said it was too late to avoid a shutdown.

The White House’s budget office began notifying federal agencies to begin an “orderly shutdown” as midnight approached.  One of the first casualties of the shutdown was the Twitter account for the US Capitol.

Earlier it had warned that the Capitol’s visitors’ centre would be closed if the shutdown went ahead, and all tours would be suspended.

Shortly after midnight, President Obama tweeted: “They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget.”

House Speaker John Boehner told reporters he hoped the Senate would accept an offer of conference with the House “so we can resolve this for the American people”. “The House has voted to keep the government open but we also want basic fairness for all Americans under Obamacare,” he said.

The Senate is to meet again at 09:30 (13:30 GMT) on Tuesday, Democratic Senate Majority Leader Harry Reid said.  The BBC’s Mark Mardell in Washington says the divide in US politics has grown so bitter that government itself cannot function.

On Monday afternoon, the Democratic-led Senate voted 54-46 against a bill from House Republicans that would have funded the government only if President Obama’s healthcare law was delayed for a year.

The US stock market dropped amid fears of political deadlock, although analysts say serious damage to the economy is unlikely unless the shutdown lasts for more than a few days.

Early on Monday evening, President Obama went on national television to criticise Republicans for trying to refight the last election.  A shutdown would have “a very real economic impact on real people, right away,” he said, adding it would “throw a wrench” into the US recovery. “The idea of putting the American people’s hard-earned progress at risk is the height of irresponsibility, and it doesn’t have to happen.”

After the Senate vote, the chamber’s Democratic majority leader blamed Republicans for the imminent halt to all non-essential government operations. “It will be a Republican government shutdown, pure and simple,” said Harry Reid, referring to the Republicans as “bullies”.

The defence department has advised employees that uniformed members of the military will continue on normal duty, but that large numbers of civilian workers will be told to stay home.

The House then passed another bill on Monday evening to fund the government - but with a one-year delay to one of the health law’s primary elements not due to begin on 1 October, the individual mandate.  The Senate again rejected the Obamacare provisions with less than three hours before the deadline.

Major portions of the healthcare law, which passed in 2010 and has been validated by the US Supreme Court, are due to take effect on Tuesday regardless of whether there is a shutdown.

Under the shutdown, national parks and Washington’s Smithsonian museums will close, pension and veterans’ benefit cheques will be delayed, and visa and passport applications will go unprocessed.

Programmes deemed essential, such as air traffic control and food inspections, will continue.  On Monday evening, President Obama signed legislation ensuring that military personnel would be paid.

The US government has not undergone a shutdown since 1995-96, when services were suspended for a record 21 days.

Republicans demanded then-President Bill Clinton agree to their version of a balanced budget.  After weeks of negotiation, they reached a compromise similar to what was discussed prior to the shutdown.

As lawmakers grappled with the latest shutdown, the 17 October deadline for extending the government’s borrowing limit looms even larger.  On that date, the US government will reach the limit at which it can borrow money to pay its bills, the so-called debt ceiling.

House Republicans have also demanded a series of policy concessions - including on the president’s health law and on financial and environmental regulations - in exchange for raising the debt ceiling.

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