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US braces for shutdown a week before budget deadline

US President Barack Obama speaks at the Ford Kansas City Stamping Plant September 20, 2013 in Liberty, Missouri.
US President Barack Obama speaks at the Ford Kansas City Stamping Plant September 20, 2013 in Liberty, Missouri.

The White House warned US federal agencies Monday to prepare for a possible government shutdown that could hobble the US economy, as Congress wrangled over a budget deadline.

The current fiscal year ends on September 30, and Congress remains bitterly split over spending, and in particular over President Barack Obama's landmark health care law.

The Republican-led House of Representatives passed a bill last week that would prevent a shutdown at the price of defunding "Obamacare," the president's health reform.

Obama has warned that this is a non-starter, and now the House and Senate are left with one week to thrash out a compromise.

If the fail, several government agencies and their programs will close their doors on October 1, placing hundreds of thousands of non-essential staff on unpaid leave.

Agencies are finalizing contingency plans.

The Pentagon said some civilian employees would be ordered on unpaid leave, and Congress would have to ensure retroactive pay for civilians required to come to work.

"Military personnel would be paid but maybe not on time," Pentagon spokesman George Little said.

US Speaker of the House John Boehner speaks during a rally after a vote September 20, 2013 on Capitol Hill in Washington
US Speaker of the House John Boehner speaks during a rally after a vote September 20, 2013 on Capitol Hill in Washington, DC.

The White House's Office of Management and Budget issued a 20-page memo on how agencies should plan for a "lapse in appropriations."

The State Department also warned its employees.

Undersecretary for Management Patrick Kennedy fired off a memo warning that such a lapse could mean that "a number of employees may be temporarily furloughed."

Under a similar threat in 2011, the White House said 800,000 of roughly 2.1 million federal employees and contractors would be affected.

The Democratic-led Senate is expected to amend the House's stopgap bill, which funds government at current levels until December 15, by removing the clause defunding Obamacare.

Senate Majority Leader Harry Reid opened what will be several days of intense debate in the chamber, and set up a likely test vote for the bill on Wednesday.

But Reid insisted he would not let a group of Republican "fanatics" achieve "take the federal government and our economy hostage to their demands."

"We're not going to bow to Tea Party anarchists who deny the mere fact that Obamacare is the law," Reid said.

US President Barack Obama speaks on the economy at a meeting in Wahsington, DC, on September 19, 2013
US President Barack Obama speaks on the economy at a meeting in Wahsington, DC, on September 19, 2013.

If Reid gets his way, and he is likely to, the chamber would then send the legislation back to the House. What Speaker John Boehner and his caucus do with it is an open question.

Americans are firmly opposed to shutting down government, polls show, even over an unpopular health law.

A new CNBC poll showed 59 percent oppose the idea, while 19 percent would support shutting down government rather than funding Obamacare.

The US government has shut down several times since the mid-1970s, sometimes for as little as three days.

The last two shutdowns happened in November and December of 1995, the second lasting 21 days, when another Democratic president, Bill Clinton, faced a Congress controlled by rival Republicans.

Parks and museums closed

The budget fight pitted Clinton against Republican House speaker Newt Gingrich, with the president ultimately vetoing a draft spending bill he saw as too austere.

But at the time Republicans controlled both chambers of Congress.

"Republicans now are in a much weaker position than they were in 1995," University of Oklahoma history professor Steve Gillon told AFP. "But they're pursuing the same strategy."

In 1995, essential services like military operations, air traffic control and border security were uninterrupted, but programs not considered essential were shuttered.

Garbage piled up in Washington. Research at the National Institutes of Health ground to a halt, and most visa processing was suspended.

One of the most visible effects was on tourism: all 368 sites managed by the National Park Service closed, as did the Smithsonian museums, disappointing seven million tourists.

When the dust settled, Clinton's stock rose and Gingrich was largely blamed for the debacle -- although he argues that the compromise resolution led to four straight years of balanced budgets.