With just three hours to go, House lawmakers passed a bill that would delay the individual mandate, which forces all Americans to buy health insurance under the new law, for a year.
“It’s a matter of fairness for all Americans,” said Republican House speaker John Boehner, who has struggled to control the riotous anti-government Tea Party faction of his caucus.
But the Senate, which must also sign off on budget measures, immediately rejected the bill.
That led House leaders, less than an hour before midnight, to move to go to conference, meaning the two chambers would appoint formal negotiators to 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 9:30 am Tuesday.
“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.
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 percent 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 percent) 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.
Polls show more Americans would blame Republicans for the shutdown than Democrats, leaving Boehner torn between his party’s wider political interests and a vocal section of his own party.
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