CNN — President Barack Obama on Tuesday urged House Republicans to "reopen the government," saying they "don't get to hold the entire economy hostage over ideological demands" of defunding or dismantling Obamacare.
A stalemate in Congress that caused a government shutdown on Tuesday continued with Senate Democrats voting for a fourth time to reject a spending plan by House Republicans that sought to undermine Obamacare.
This time, the House proposal also included a call for a conference committee to seek a compromise, but Senate Majority Leader Harry Reid said Democrats turned down the package because it amounted to extortion by Republicans to force concessions on President Barack Obama's signature health care reforms.
Reid said the Senate wants to negotiate a budget with the House, "but not with the government closed."
"We're not going to relitigate the health care issue," Reid said after the latest Senate vote, calling for the House to now approve a "clean" spending plan to fund the government for a few months before separate negotiations on possible changes to the 2010 Affordable Care Act. "It's time for Republicans to stop obsessing over old battles."
Two GOP sources told CNN that House Republicans would meet at 1 p.m. ET on Tuesday to discuss their next steps.
A game of political chicken ended in failure in the first minutes of Tuesday, when neither side blinked, leading to the outcome nobody said they wanted -- a shutdown that will stop 800,000 Americans from getting paid and could cost the economy about $1 billion a week.
"Agencies should now execute plans for an orderly shutdown due to the absence of appropriations," the Office of Management and Budget said in a note to federal employees.
It is the first time the government has shut down in nearly 18 years. The last time it happened, during the Clinton administration, the stalemate lasted 21 days.
Now, the Republican-controlled House and the Democratic-controlled Senate will try to see if they can reconcile their two versions of the spending plan at the center of the debate. So far, each has refused to budge on how to fund the government in the new fiscal year, which started Tuesday.
The latest GOP counteroffer rejected by the Senate would have delayed Obamacare for a year and ended federally provided health care for the president, members of Congress and their staff while funding the government for 11 weeks.
In addition, the House GOP plan proposed a conference committee with the Senate to work out a compromise. Such a committee is usually the result of competing legislation from the two chambers on major issues, rather than a short-term continuing resolution intended to keep the government running for a matter of weeks.
Democratic Sen. Dick Durbin of Illinois, a leading liberal voice, told CNN that he is open to negotiations with the House on at least one specific provision of Obamacare -- a tax on medical devices that some in both party oppose.
However, Durbin echoed the position of Reid that such negotiations must be separated from the spending impasse that has shut down the government.
"The conversation should continue, but let's not do it with our government shutdown," he said, adding that Congress would have to replace the $30 billion in lost revenue over 10 years that would occur if it eliminated the medical device tax.
On the Republican side, Rep. Darrell Issa of California said he could vote to fund the government for a few days or weeks to provide time for a conference committee to work out a compromise.
"I personally would vote for 10 days, even 30 days if that was necessary so that we could resolve these differences," Issa told CNN.
'A dangerous message'
At the heart of the issue is the insistence by House Republicans that any spending plan for the new fiscal year include anti-Obamacare amendments. Senate Democrats are just as insistent that it doesn't.
Obamacare isn't directly tied to funding the government. But it's so unpopular among the Republican tea party conservatives that they want it undercut, if not outright repealed.
The health care law "is the most insidious law known to man," Republican Rep. Todd Rokita of Indiana said this week.
White House spokesman Jay Carney told CNN that such intransigence is the root of the shutdown, noting that conservative Republicans such as Rokita are the only ones pushing a political agenda for meeting the congressional responsibility of passing a budget.
Democratic Sen. Bob Menendez, the chairman of the Senate Foreign Relations Committee, said the shutdown gives the United States a black eye.
"It is a dangerous message to the world," he said. "We tell other nations that we believe that they have to have certain disciplines. And yet, we cannot ultimately keep our own budget open and the nation and its government functioning."
Amid the finger-wagging and fulminating, major components of the new health insurance law went into effect on schedule on Tuesday.
"The Affordable Care Act is moving forward. You can't shut it down," said a post on Barack Obama's verified Twitter feed.
A predictable pattern of legislative stalemate took place in the run-up to Tuesday's simultaneous start of a new fiscal year and implementation of the Obamacare private exchanges, a major component of the health care reforms tied to the individual mandate for people to obtain health coverage that conservatives despise.
The House three times sent a version of the short-term spending plan with anti-Obamacare amendments to the Senate, which stripped away the provisions it opposed and sent it back. After the shutdown began at midnight Monday, House Republicans did it again, this time adding the call for a conference committee.
Democrats insist that the House instead pass a spending measure that contains no Obamacare amendments. That position is supported by the Democratic minority and enough moderate Republicans to overcome opposition by the GOP conservative wing, both Democrats and Republicans say.
However, House Speaker John Boehner has succumbed to pressure from the tea party right to avoid a vote that would pass a clean spending resolution.
Boehner, speaking in the early minutes of the shutdown, said he hoped Senate Democrats would agree to negotiate.
Asked if he had a message for the 800,000 furloughed employees -- or if he has a plan to restore back pay to them -- Boehner responded, "The House has voted to keep the government open, but we also want basic fairness for all Americans under Obamacare."
He then walked away from the podium.
A blow to the economy
The shutdown of the federal government -- the country's largest employer -- isn't happening all at once.
Federal employees who are considered essential will continue working. Those deemed non-essential -- more than 800,000 -- will be furloughed, unsure when they'll be able to work or get paid again. Most furloughed federal workers are supposed to be out of their offices within four hours of the start of business Tuesday.
The shutdown could cost the still-struggling U.S. economy about $1 billion a week in pay lost by furloughed federal workers. And that's only the tip of the iceberg.
While many agencies have reserve funds and contingency plans that would give them some short-term leeway, the economic loss would snowball as the shutdown continued.
The total economic impact is likely to be at least 10 times greater than the simple calculation of lost wages of federal workers, said Brian Kessler, economist with Moody's Analytics. His firm estimates that a three- to four-week shutdown would cost the economy about $55 billion.
Initial market reaction around the world was muted.
Lisa Buckley, who co-owns the Denver-based American Automation security firm, counts on government contracts for 60 percent of her business. She's worried about how she'll pay her employees if the shutdown drags on.
"It's quite irresponsible how the government has been running the country," Buckley said. "If I ran my business like Congress has been handling the budget, I'd lose my job."
Troops will still get paid
Congress actually managed to come together to pass one bill -- unanimously, at that.
The Senate approved a House-approved measure Monday to ensure members of the military would continue to get paid during the shutdown. Obama signed off on it.
But it's uncertain how the shutdown will affect military veterans, including the 3.3 million who are disabled.
If the shutdown stretches into late October, the Veterans Affairs Department -- meaning disability and pension checks could stop for elderly and ill veterans.
"That's what they need to pay rent, to pay food," said Tom Tarantino of the Iraq and Afghanistan Veterans of America. "It's not their total income, but it is a significant part of it."
Congressional paychecks also safe
Some conservatives led by GOP Sen. Ted Cruz of Texas call for House Republicans to pass other limited spending plans for specific government departments like the one guaranteeing military pay in a shutdown.
Although much of the federal workforce will go without pay, checks will keep coming to the 533 current members of Congress.
Why? The 27th Amendment prevents any Congress from changing its own pay.
The president too will get paid. His salary -- $400,000 -- is considered mandatory spending.
On Monday, Attorney General Eric Holder said he would take a pay cut equal to the Justice Department employees most severely impacted by a shutdown.
Obamacare still focus
Democrats have pressured Boehner to give up a losing fight over Obamacare forced by tea party conservatives.
Noting that the 2010 Affordable Care Act has been upheld by the Supreme Court, they say it is settled law that voters endorsed last year by re-electing Obama over GOP candidate Mitt Romney, who campaigned on repealing it.
"They are fixated on embarrassing our president, the president of the United States," Reid said.
Some Republicans too expressed frustration Monday with the tactics of their congressional colleagues. Veteran GOP Sen. John McCain of Arizona noted that any attempt to repeal Obamacare would fail because of Obama's veto, which would require a two-thirds majority in the Senate to overcome.
GOP Rep. Peter King of New York said the problem is tea party conservatives driving the Republican agenda in the House.
"We have people in the conference, I believe, who'd be just as happy to have the government shut down," King said. "They live in these narrow echo chambers. They listen to themselves and their tea party friends. That keeps them going, forgetting that the rest of the country thinks we're crazy."
To former GOP Sen. Olympia Snowe of Maine, the Republican tactics are hurting the party she represented in Congress.
"This isn't a party that I recognize and the party I joined when I first enrolled, and that's regrettable," Snowe told CNN.
According to a CNN/ORC poll, 68 percent of Americans think shutting down the government for even a few days is a bad idea, while 27 percent think it's a good idea.
And it appears most Americans would blame congressional Republicans for a shutdown: Sixty-nine percent said they agreed with the statement that the party's elected officials were acting like "spoiled children."
Democrats, however, weren't far behind: Fifty-eight percent of respondents said they, too, were acting like spoiled kids.
Another poll showed public support for Congress at record low levels -- at 10 percent.
"Things like this can have such a big impact on people that aren't in the limelight. You know, people that are out working hourly positions" said Quinn Agard, who works on Liberty Island, the home of the Statue of Liberty.
More than 21,000 national park employees will be furloughed. Thousands more -- like cleanup crews and concession employees -- will be left without pay.
"This whole island will be shut down. So that's a ton of different positions that people wont be working and won't be getting paid for," Agard said.
The island draws up to 4 million visitors a year. And at $17 per adult ticket, it's also a big money maker.