Congress has missed the deadline for averting the first partial government shutdown in 17 years.
As the clock struck midnight Monday, House Republicans were demanding the Senate negotiate their demand for a one-year delay in making millions of people buy health insurance under President Barack Obama's 2010 healthcare law. Minutes before midnight, the White House ordered a shutdown.
The Democratic Senate on Monday twice rejected GOP demands to delay key portions of the Affordable Care Act — or Obamacare — as a condition for keeping the government open.
An estimated 800,000 federal workers faced furloughs, though many were told to work a half-day Tuesday. Critical functions like air traffic control and military operations will continue. Social Security benefits will be paid. National parks and most federal offices will close.
Earlier Monday night, lawmakers lobbed dead-end proposals across the Capitol and began blaming each other for their failure.
The House voted 228-201 to pass its third version of a short-term extension of government funding in the past 10 days. Each attempt linked averting a shutdown to major changes to the president's signature healthcare law, and each drew veto threats from Obama.
About an hour later, the Senate rejected that plan on a 54-46 vote, putting pressure on House Speaker John Boehner and the Republicans.
"They’ve lost their minds," said Senate Majority Leader Harry Reid, a Nevada Democrat. "They keep trying to do the same thing over and over again."
Republicans said Democrats were unwilling to negotiate, and Democrats said the House was trying to extort policy changes on a plan that would, at most, keep government open through Dec. 15.
Hours after talking by phone with Obama, Boehner urged the House to pass its latest plan. It delays by a year the mandate that uninsured individuals buy health coverage and prevents the government from making contributions to the healthcare of lawmakers, their staff, and political appointees.
'Not About Me'
"This is not about me," the Ohio Republican said on the House floor. "And it’s not about Republicans here in Congress. It’s about fairness for the American people."
It’s not clear what Boehner will do next.
Oklahoma Republican James Lankford said the House is prepared to send another volley across the Capitol. Boehner has kept his plan for the next version "close to the vest," Lankford said, adding that the House is prepared to stay in session all night.
Even as Republicans such as Rep. Peter King of New York complained about the party’s strategy, they were relatively united. On the latest proposal, 12 Republicans voted no; nine Democrats voted for the plan.
Obama Calls Boehner
Obama called Boehner Monday night and they spoke for nearly 10 minutes, Brendan Buck, a spokesman for Boehner, said in a statement. Obama also spoke to the other top three leaders in Congress, the White House said in a statement. There were few signs of progress toward an agreement.
"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 you don’t like," Obama said at the White House Monday. "Time's running out."
The Senate voted 54-46 along party lines earlier Monday to reject the House's previous plan in a move that put pressure on House Republicans, who are insisting on tying changes in Obamacare to a short-term extension of government funding after midnight Monday.
Senate Republicans floated the idea to extend by one week the funding deadline to avert a shutdown. Reid said no. Democrats urged Boehner to allow a vote on a spending bill without conditions.
"That’s not going to happen," Boehner said.
Stocks Take a Fall
Concern that a shutdown would stunt economic growth sent stocks lower, trimming the biggest quarterly gain since the start of 2012, and the yield on 10-year Treasury notes traded at an almost seven-week low.
The Standard & Poor’s 500 fell 0.6 percent to 1,681.55 at 4:19 p.m. in New York. All 10 main industries in the S&P 500 dropped, with consumer goods, oil and gas, and financial shares falling the most.
"A shutdown will have a very real economic impact on real people, right away," Obama said.
The Republican proposal included a one-year delay of the individual mandate to buy health insurance and end government contributions to coverage for lawmakers and congressional staff.
Rep. Nancy Pelosi, the House Democratic leader, compared Republicans’ focus on the health law to "hounds baying at the moon" and said she was willing to accept government funding levels she opposes.
"You and that attitude are a luxury this country cannot afford," said Pelosi.
‘Won't Be Extorted’
"We won’t be extorted now," said Sen. Charles Schumer, a New York Democrat. "We won’t be extorted two weeks from now. We won’t be extorted in December."
The fallout in U.S. government services will be far-reaching: national parks and IRS call centers probably would close. Those wanting to renew passports may have to wait, and the backlog of veterans' disability claims might increase.
The Senate passed a separate bill Monday to ensure that U.S. troops, along with some civilians and contractors, are still paid if the government shut down. The House unanimously passed the plan and it is now before Obama.
The political implications are much less clear. Democrats are painting Republicans as obstructionists who are trying to undo a law passed by Congress, upheld by the Supreme Court and ratified by Obama’s re-election in 2012. Republicans say they are trying to save Americans from the effects of the law and that Democrats won’t negotiate.
"I don’t want to shut the government down but I also want to protect my constituents from this law," said Rep. Richard Hudson, a first-term Republican from North Carolina. "So I’ll do whatever it takes."
A Bloomberg National poll conducted Sept. 20-23 shows Americans narrowly blame Republicans for what’s gone wrong in Washington, just as they did when the government closed in 1995 and 1996 — two of the 17 times U.S. funding stopped since 1977.
A CNN/ORC International poll conducted Sept. 27-29 and released Monday said 46 percent of respondents would blame congressional Republicans for a shutdown, while 36 percent would say the president was responsible.
In a government shutdown, essential operations and programs with dedicated funding would continue. That includes mail delivery, air-traffic control, and Social Security payments.
Reduce Economic Growth
A shutdown could reduce fourth-quarter economic growth by as much as 1.4 percentage points, depending on its duration, according to economists. The biggest effect would come from the output lost from furloughed workers.
Because Republicans hold a majority of seats in the House, they decide what goes into the bills that are brought up for a vote. A faction that opposes compromise with the Democrats has been pushing its leaders to keep fighting rather than bring a bill to the floor that both parties could accept.
Earlier this month, Boehner and Majority Leader Eric Cantor of Virginia initially supported a plan that would have let the Senate send a bill without policy riders straight to Obama.
Now, without enough Republican support, the only way to pass such a bill is with Democrats voting "yes." That scenario poses a risk for Republican leaders: If their decision upsets a large bloc of their membership, the next time the top jobs come up for a vote they could be pushed out.
That bloc of hard-liners could also stall other legislation, including the need next month to raise the $16.7 trillion U.S. debt ceiling.
Rep. Devin Nunes of California said opposition to the latest leadership plan was coming mostly from Republicans who want to defund the healthcare law, not just delay some parts of it.
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