The US government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.
Federal agencies were directed to cut back services after lawmakers could not break a political stalemate that sparked new questions about the ability of a deeply divided Congress to perform its most basic functions.
After House Republicans floated a late offer to break the logjam, Senate Majority Leader Harry Reid rejected the idea, saying Democrats would not enter into formal negotiations on spending "with a gun to our head" in the form of government shutdowns.
In the hours leading up to the deadline, the Democratic-controlled Senate repeatedly stripped measures passed by the House that tied temporary funding for government operations to delaying or scaling back the Affordable Care Act healthcare overhaul known as Obamacare.
Shortly after midnight, President Barack Obama tweeted: "The Affordable Care Act is moving forward. You can't shut it down."
Whether the shutdown represents another bump in the road for a Congress increasingly plagued by dysfunction or is a sign of a more alarming breakdown in the political process could be determined by the reaction among voters and on Wall Street.
The U.S. dollar slipped 0.2 percent against a basket of widely traded currencies. The price of the 10-year U.S. Treasury note, a bedrock reference for bond markets, fell 0.3 percent.
S&P stock futures rose 0.3 percent, pointing toward a higher Wall Street open. On Monday, the S&P 500 index closed 0.6 percent lower, weighed down by defense contractors since the shutdown would likely diminish its new business.
The political dysfunction at the Capitol also raised fresh concerns about whether Congress can meet a crucial mid-October deadline to raise the government's $16.7 trillion debt ceiling.
"A technical Treasury default could follow, sending financial markets into a tailspin," wrote ING analyst Tom Levinson.
After missing the midnight (0400 GMT) deadline to avert the shutdown, Republicans and Democrats in the House continued a bitter blame game, each side shifting responsibility to the other in efforts to redirect a possible public backlash.
If Congress can agree to