The US Senate has rejected a budget bill passed by the Republican-led House of Representatives, with just hours to go to avert a US government shutdown. The Democratic-led Senate voted 54-46 against the bill, which would fund the government only if President Obama's healthcare law were delayed a year.
If no agreement is reached by midnight , the government will close all non-essential federal services.
The shutdown would be the first in the US in 17 years. More than 700,000 federal government workers could be sent home on unpaid leave, with no guarantee of back pay once the deadlock is over.
One of the key points of contention in the political stalemate has been President Obama's healthcare program, popularly known as Obamacare. Republicans in the House of Representatives - and their allies in the Senate - have demanded the law be repealed or stripped of funding as a condition for continuing to fund the government. Major portions of the law, which passed in 2010 and has been validated by the US Supreme Court, are due to take effect on Tuesday.
After the Senate vote on Monday afternoon, the chamber's Democratic majority leader blamed Republicans for the imminent halt to all non-essential government operations.
"It will be a Republican government shutdown, pure and simple," said Senate Majority Leader Harry Reid of Nevada, referring to the Republicans as "bullies".
"We are not going to negotiate on this. We have done everything we can to be fair and reasonable."
Following Mr Reid's pledge, Republican House Speaker John Boehner told reporters his chamber would re-evaluate the proposal on Monday evening. But he said a budget bill that did not include the provision to delay the health law was "not going to happen".
In addition to the threat of a shutdown, a second fiscal deadline is approaching in the coming weeks. On or about October 17th, the US government will reach the limit at which it can borrow money to pay its bills, the so-called debt ceiling. House Republicans have demanded a series of policy concessions - notably on the president's health law and financial and environmental regulations - in exchange for raising the debt ceiling.
Although there were no reports that negotiations over either the budget or the debt ceiling were underway on Monday, Mr Obama said he was "not at all resigned" to a government shutdown.
"Our currency is the reserve currency of the world," Mr Obama said after an Oval Office meeting with Israeli Prime Minister Benjamin Netanyahu.
"We don't mess with that. And we certainly don't allow domestic policy differences on issues that are unrelated to the budget to endanger not only our economy but the world economy."
The Republican leadership in the House are not stupid. But they are dominated by their radicals.
Any backing away from confrontation could brand John Boehner an Obama-loving apostate, and cost him his job. The same goes for his members who don't want to be deselected in primary elections.
This is not about ideology. The Republicans in the House are all conservatives, all hate "Obamacare" and think government spending is irresponsibly out of hand.
This is about strategy. It is an argument between those Republicans who want to rush to the barricades and go down in a blaze of glory and those who think it is a pointless charge but don't want to be labelled traitors or cowards. Also, as usual, they are gunning for the man and any legislation he may support, instead of being focused on the financial stability of their country and the world.