US Govt grinds to budget halt over impasse on healthcare

Photo / AP

An extended closure could cause serious damage to the slowly recovering economy.

The US Government's move to shut down for the first time in 17 years came after President Barack Obama refused to bow to Republican demands that he roll back his signature healthcare law.

Around 800,000 federal workers will be placed on indefinite unpaid leave after a game of intense political brinkmanship failed to yield any deal between Democrats and Republicans in Congress.

In a series of votes Republicans insisted they would only fund the federal Government in return for a one-year delay to the health reform law known as Obamacare, key parts of which go into force today.

Obama held firm to his own position, accusing Republican leaders of shutting down the Government to "save face after making some impossible promises to the extreme right wing of their party".

"You don't get to extract a ransom for doing your job; for doing what you're supposed to be doing anyway; or just because there's a law there that you don't like," Obama said.

The result was a political stalemate and at 11.59pm (4.59pm NZT) the deadline passed to avert the first shutdown of the federal Government since President Bill Clinton faced down congressional Republicans in early 1996.

While most of the US Government will continue to function, around 800,000 "non-essential" public workers - about a third of the federal workforce - will be ordered to remain at home. Nasa will be almost entirely closed, pay will be delayed and passport applications will go unprocessed.

Minutes before the deadline, the White House's Office of Budget and Management officially ordered government agencies to "execute plans for an orderly shutdown due to the absence of appropriations".

As government websites and Twitter feeds began to close, Obama released a pre-taped message to America's soldiers, telling them "Congress has not fulfilled its responsibility" to fund the Government.

The federal Government is the single largest employer in the US and an extended closure could wreak serious damage on an American economy that remains fragile five years after the 2008 financial crisis.

The political showdown now enters a new and critical phase as both political parties wait to see whom the American public will blame for the shutdown. A vote to reverse the shutdown could come at any time but will need one side to blink first.

Obama and his Democrat allies believe that Republicans will face the bulk of the public's anger and are gambling that conservatives will crack under public pressure.

A CNN/ORC poll found that 46 per cent of Americans would hold congressional Republicans responsible for a closure, compared with 36 per cent who would blame Obama. About 69 per cent said they believed Republicans on Capitol Hill were acting "mostly like spoiled children" while 47 per cent said the same of the President.

John McCain, the 2008 Republican presidential candidate, also predicted his party would cave eventually. "We can't win," he said. "Republicans will be perceived as blocking and as shutting down the Government."

The Government was shut down for 21 days in late 1995 and early 1996 when Republicans tried to force Clinton to cut public spending. The tactic backfired and Clinton was easily re-elected later that year.

The latest closure came after 10 hours of frenetic political activity on Capitol Hill, with legislation bouncing back and forth between the Democrat-controlled Senate and the Republican House of Representatives.

At each stage of the vote, Harry Reid, the Democrat leader in the Senate, and John Boehner, the Republican Speaker of the House, traded angry insults from their respective chambers.

"We are not going to be bullied," Reid said in one of a series of outbursts against Republicans.

"This law is not ready for prime time," said Boehner as he demanded that the Senate "listen to the American people" by delaying the law.

On Twitter Reid said: "I need to remind everyone that Obamacare is THE LAW and it has been found CONSTITUTIONAL. We are not re-litigating this."Telegraph Group Ltd