Deadline missed, US slides into government shutdown

Washington

The United States lurched into a dreaded government shutdown Tuesday for the first time in 17 years, after Congress failed to end a bitter budget row after hours of dizzying brinkmanship.

Ten minutes before midnight, the White House budget office issued an order for many government departments to start closing down, triggering 800,000 furloughs of federal workers, and shutting tourists out of monuments like the Statue of Liberty, national parks and museums.

Prospects for a swift resolution of the mess were unclear. And economists say the struggling US economic recovery could suffer if the shutdown drags on for a matter of weeks.

Only workers deemed essential will be at their desks from Tuesday onwards, leaving government departments like the White House with skeletal staff.

Vital functions like mail delivery and air traffic control will continue as normal, however.

Ugly rhetoric

On a day of dysfunction and ugly rhetoric in the divided US political system, Republicans had repeatedly tied new government funding to attempts to defund, delay or dismantle President Barack Obama's signature health care law.

But each time their effort was killed by Obama's allies in the Democratic-led Senate, leaving the government in limbo when its money ran out at the end of the fiscal year at midnight Monday.

"This is an unnecessary blow to America," a sombre Senate Majority Leader Harry Reid said on the Senate floor two minutes after the witching hour.

Obama, heralding the first government shutdown since 1996, told US troops in a video that they deserved better from Congress, and promised to work to get the government reopened soon.

The president's team sent out a tweet from his official account soon after the shutdown went into effect reading "they actually did it, a group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget."

Sylvia Mathews Burwell, Obama's budget director urged Congress to swiftly pass bridge financing that would allow the government to open again.

"Agencies should now execute plans for an orderly shutdown due to the absence of appropriations," she said in a memo.

Obama had earlier accused Republicans of holding America to ransom with their "extreme" political demands, while his opponents struck back at his party's supposed arrogance.

House Speaker John Boehner rebuked Obama in a fiery floor speech after an unproductive call with the president.

"I didn't come here to shut down the government," Boehner said. "The American people don't want a shutdown, and neither do I."

Good faith

Republicans accuse Obama of refusing to negotiate in good faith, but the White House says Obamacare is settled law and says there is no way to stop it from going into force, with a goal of providing affordable health care to all Americans.

The crisis is rooted in the long running campaign by "Tea Party" Republicans in the House to overturn or disable Obamacare -- the president's principal domestic political achievement -- key portions of which also come into force on Tuesday.

More broadly, the shutdown is the most serious crisis yet in a series of rolling ideological skirmishes between Democrat Obama and House Republicans over the size of the US government and its role in national life.

"One faction of one party in one house of Congress in one branch of government doesn't get to shut down the entire government just to re-fight the results of an election," Obama said, referring to his own re-election.

"You don't get to extract a ransom for doing your job, for doing what you're supposed to be doing anyway," he said, in a stern televised statement at the White House.

With its legislative manoeuvre repeatedly blocked by the Senate, the House, led by Boehner tried a new gambit, minutes before midnight.

The majority party called for a conference with the Senate, in which formal negotiators would thrash out a budget deal.

That process was already showing signs that it would take hours to coordinate, and Reid sent the Senate into recess until Tuesday morning.

"We said we'd go to conference if they wouldn't shut the government down, but they're shutting the government down," number two Senate Democrat Dick Durbin told AFP.

Swift end

Conferences designed to meld duelling legislation passed by the House and the Senate can often take days or weeks to play out, so the prospects of a swift end to the shutdown seemed uncertain.

Obama warned that a government shutdown could badly damage an economy which has endured a sluggish recovery from the worst recession in decades.

"A shutdown will have a very real economic impact on real people, right away. Past shutdowns have disrupted the economy significantly," Obama said.

Consultants Macroeconomic Advisors said it would slow growth, recorded at a 2.5 per cent annual pace in the second quarter.

A two-week shutdown would cut 0.3 percentage point off of gross domestic production.

It would also have a painful personal impact on workers affected -- leaving them to dip into savings or delay mortgage payments, monthly car loan bills and other spending.

Stocks on Monday retreated as traders braced for the shutdown. The Dow Jones Industrial Average was down 128.57 points (0.84 per cent) to 15,129.67.

Markets are likely to be even more traumatized if there is no quick solution to the next fast approaching crisis.

Republicans are also demanding Obama make concessions in the health care law to secure a lifting of the current $16.7 trillion debt ceiling, without which the United States would begin to default on its debts for the first time in history by the middle of October.