US Shutdown: Deadline Passes Without Deal

A bitterly divided Congress has plunged the US into a partial government shutdown – the first in almost two decades – that puts some 800,000 workers on unpaid leave and closes museums and national parks.

A deadline to fund government spending passed without agreement, and the shutdown went into force at 12.01am.

The Democrat-dominated Senate and Republican-controlled House of Representatives refused to back down in a clash over President Barack Obama's controversial healthcare law, known as Obamacare.

The deadlock means non-essential services, including some of America's most famous tourist attractions, are forced to close.

Workers classified as essential government employees, such as air traffic controllers or Border Patrol agents, continue to work.

Shortly after midnight, Mr 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."

The last shutdown took place under President Bill Clinton

It is the first US shutdown in 17 years, with analysts concerned about its potential impact on Wall Street and global markets.

Mr Obama warned of the possible risks to the economy, saying a shutdown would have "very real economic impact, right away".

David Cameron said: "It is a risk to the world economy if the US can't properly sort out its spending plans."

It is "a reminder to all of us that we need to have properly planned public-expenditure systems, properly planned tax, properly planned arrangements for getting our deficit down", the British Prime Minister said.

New York's Statue of Liberty and the National Zoo in Washington, as well as Yellowstone and other national parks, are among the tourist attractions the shutdown affects.

Republican opposition to the new healthcare law has been fierce

The Internal Revenue Service is suspending audits and taxpayer services, programmes for children are halted and up to 800,000 government employees are furloughed. More than a million others could be asked to work without pay.

The military's 1.4 million active duty personnel remain on duty and Mr Obama signed a law on Monday to ensure they would receive their pay on time.

The Pentagon is looking for ways to ways to expand the number of Defense Department civilians who are exempt from furloughs, Defense Secretary Chuck Hagel said.

Mr Obama said he had been willing to negotiate, and placed the blame on Republicans, especially the hard-line Tea Party conservatives.

"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 refight the results of an election," Mr Obama said.

"Keeping the people's government open is not a concession to me."

The Republicans had sought to tie passing the government spending bill to a delay in major elements of the Obamacare reform.

They insisted the fault rested with Democrats who had refused to negotiate any changes to the healthcare law.

House Speaker John Boehner, who spoke to the president before the midnight deadline, claimed "the Senate has continued to reject our offers".

Some of America's most iconic landmarks will be affected by the shutdown

Mr Obama's healthcare law was passed by Congress and signed into law in 2010, despite opposition by the Republican Party, especially from within the Tea Party.

Some elements of the scheme - which aims to provide greater access to affordable health insurance for poorer sections of society - take effect today despite the shutdown because they operate with money that is not subject to the budget wrangling.

Market reaction was muted following stock market falls across the board on Monday in anticipation of the shutdown.

Japan's Nikkei rose slightly while in Europe the FTSE 100 share index was flat in early trading following the previous day's 0.8% drop.

Dow Jones Futures pointed to a rise on opening in New York.

The dollar dropped slightly against the pound while there was also a move towards safe havens as gold values rose by up to 0.5%.

A protester voices her dissatisfaction outside the Capitol building

London-traded Brent Crude fell by 0.4% to $107 a barrel as the shutdown was seen as potentially damaging to US economic growth prospects.

Much of the shutdown's economic impact will depend on how long it takes politicians to find a solution.

The last shutdown, under the Clinton Administration, lasted 21 days between December 1995 and January 1996.

The political dysfunction at the Capitol also raised fresh concerns about whether Congress can meet a crucial mid-October deadline to raise the government's $16.7trn debt ceiling.

This would force the country to default on its obligations, dealing a potentially painful blow to the economy and sending shockwaves around global markets.

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