The US government careens toward a potentially devastating shutdown as Republicans and Democrats in Congress remain deadlocked on a budget to continue its funding.
Agencies have begun making contingency plans ahead of the October 1st deadline to pass a new funding resolution.
The Senate has passed a bill to fund the government through November 15.
But House Republicans have said they refuse to approve the bill absent a provision to strip funding from President Barack Obama’s health law.
The Senate is controlled by Barack Obama’s Democratic party, while the Republicans hold the majority in the House of Representatives.
As a result, lawmakers are at a stalemate as the deadline approaches.
Government agencies have been selecting workers considered essential should funds stop flowing.
The looming shutdown is one of two fiscal crises facing the US government. On October 17, the US treasury department’s authority to borrow money to fund its debt obligations expires unless Congress approves a rise in the so-called debt ceiling.
On Friday afternoon, President Barack Obama urged House Republicans to pass the Senate’s stopgap budget bill and to extend the debt limit, and demanded they not threaten to “burn the house down because you haven’t gotten 100% of your way”.
President Barack Obama urged House Republicans to pass the Senate’s stopgap budget bill and to extend the debt limit
Barack Obama said if the nation were to default on its debt, it would have a “profound destabilizing effect” on the world economy.
“Voting for the treasury to pay its bills is not a concession to me,” he said.
“No-one gets to hurt our economy… just because there are a couple of laws [they] don’t like.”
The president described the healthcare law as “a done deal” and said the Republican-backed repeal effort was “not going to happen”.
Barack Obama said the Senate had “acted responsibly” in passing the budget measure and that now it was up to Republicans in the House of Representatives “to do the same”.
If the government does shut down on October 1st, as many as a third of its 2.1 million employees are expected to stop work – with no guarantee of back pay once the deadlock is resolved.
National parks and the Smithsonian museums in the nation’s capital would close, pension and veterans’ benefit cheques would be delayed, and visa and passport applications would be stymied.
Programmes deemed essential, such as air traffic control and food inspections, would continue.
The defense department has advised employees that uniformed members of the military will continue on “normal duty status”, but “large numbers” of civilian workers will be told to stay home.
Last week, the US House of Representatives a bill that would maintain the US government’s funding levels through November 15 but strip funding from Barack Obama’s health law, known as Obamacare.
On Friday the Senate passed a version of the bill with the defunding provision removed 54-44, largely on party lines.
“The Senate has acted and we’ve done it with bipartisan co-operation. We’ve passed the only bill that can avert a government shutdown Monday night,” Democratic Senate leader Harry Reid said.
“This is it, time is gone.”
The House is now expected to take up that bill at the weekend. Unless the two chambers can come to a consensus and pass a bill for Barack Obama to sign, the federal government will close on October 1st.
US Treasury Secretary Jack Lew has warned that the government will reach its debt limit by mid-October unless Congress acts quickly.
The debt ceiling was last raised in January. The government can no longer borrow if it is reached.
Jack Lew said that in such a case it will be unable to meet obligations such as pensions, military salaries and Medicare payments.
The country’s borrowing limit is currently capped at $16.7 trillion.
“Extraordinary measures are projected to be exhausted in the middle of October,” Jack Lew said in a letter to House Speaker John Boehner and other lawmakers.
“At that point, the US will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day,” he said.
The cash balance at that time is forecast to be about $50 billion, which Jack Lew said, would be “insufficient to cover net expenditures for an extended period”.
The US government will reach its debt limit by mid-October unless Congress acts quickly
He said: “Operating the government with no borrowing authority, and with only the cash on had on a given day, would place the United States in an unacceptable position.”
There have been tense debates between the White House and congressional Republicans over the government’s debt ceiling, spending cuts, and other fiscal matters.
In August 2011, the Republicans and the Democrats took a hard line while debating raising the borrowing limits.
They only reached a compromise on the day the government’s ability to borrow money was due to run out.
The delay in reaching a deal at that time led ratings agency Standard & Poor’s to downgrade the US for the first time ever, which sparked volatility in the financial markets.
The compromise also included a series of automatic budget cuts known as the “sequester” which came into affect earlier this year.
However, in his letter Jack Lew argued that raising the debt limit does not increase government but “simply allows Treasury to pay for expenditures [the] Congress has previously approved”.
He warned that a delay in raising the limit “would cause irreparable harm to the American economy”.
Jack Lew explained that if investors become unwilling to loan to the US, the country could face an immediate cash shortfall.
”Such a scenario could undermine financial markets and result in significant disruptions to the economy,” he said.
US Congressional leaders have one more day to stop the threat of steep tax rises and spending cuts, known as the “fiscal cliff”, after talks ended with no deal.
Senators will continue to seek a compromise deal on Monday to send to the House of Representatives.
Failure to reach agreement by January 1 could push the US back into recession.
Earlier, President Barack Obama increased pressure on Republicans to accept a deal, blaming them for the deadlock.
He said their “overriding theme” was protecting tax breaks for the rich.
Talks ended on Sunday with no deal after a day that saw Republican and Democratic senators wrestle over detail and seek to shape a final bill.
Sticking points included the fate of expiring Bush-era tax cuts, an estate tax and steep cuts in spending known as the sequester.
If no agreement is reached on Monday, senators are expected to be given the chance to vote on a fallback plan proposed by President Barack Obama.
That would renew tax cuts on earnings under $250,000 and extend unemployment benefits, but does not address the steep spending cuts.
US Congressional leaders have one more day to stop the threat of fiscal cliff after talks ended with no deal
The current stand-off has its roots in a failed 2011 attempt to tackle the government debt limit and budget deficit. Republicans and Democrats agreed then to postpone difficult decisions on spending until the end of 2012, and imposed a threat of compulsory cuts if no deal was reached by December 31.
Analysts say that even if a deal is reached on the fiscal cliff, it will do little to reduce the original problem of the deficit and the government debt limit, raising the prospect of further political in-fighting early in the new year.
Senate Democratic leader Harry Reid and his Republican counterpart Mitch McConnell were locked in negotiations over the weekend.
The two senators appeared to admit not long before the 15:00 deadline that negotiations were at a standstill, with their two parties still divided over core ideological issues about tax and government funding.
Senator Harry Reid said the Democrats were as yet unable to make a counter-offer to an apparent Republican proposal to slow cost-of-living increases for social security recipients, known as “chained CPI”.
Meanwhile Senator McConnell said he had asked Vice-President Joe Biden for help in breaking the deadlock.
“I’m concerned with the lack of urgency here. There’s far too much at stake,” he said.
“There is no single issue that remains an impossible sticking point – the sticking point appears to be a willingness, an interest or courage to close the deal.”
In his interview with NBC’s Meet the Press, broadcast on Sunday, Barack Obama said the priority was to ensure taxes do not rise for middle-class families, saying that would “hurt our economy badly”.
“That’s something we all agree on. If we can get that done, that takes a big bite out of the <<fiscal cliff>>,” he said.
There is also debate over where to set the threshold for tax rises. Democrats say the Bush-era tax cuts should be extended for all Americans except the richest – those with annual earnings of more than $250,000.
Republicans – some of whom have pledged never to vote for increased taxes – say the deficit is a consequence of excessive government spending.
They want the tax threshold set higher, at around $400,000, and for revenue to be raised by economic growth and cuts in social security and other services states are legally bound to provide.