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Obama On Government Shutdown: 'It Does Not Have To Happen'

WASHINGTON (CBSNewYork/AP) --  The White House's budget office said just before midnight Monday night that it was notifying federal agencies that the government will shut down Tuesday.

Sylvia Mathews Burwell, the director of the White House Office of Management and Budget, said late Monday in a memorandum to agency heads that there was no indication Congress would approve a short-term funding measure before the midnight deadline. She said federal agencies should execute their plans for an orderly shutdown.

Earlier, President Barack Obama warned that a government shutdown would have a devastating effect on the nation's economy, and would be detrimental to "all of us."

"The idea of putting America's hard-earned progress at risk is the height of irresponsibility, and it doesn't have to happen. Let me repeat this – it does not have to happen," Obama said.

He said the House only has to fund the government without including "extraneous and controversial" conditions such as delaying the Affordable Care Act.

Obama On Government Shutdown: 'It Does Not Have To Happen'

Obama noted that the provisions of the Affordable Care Act will take effect on Tuesday regardless of whether the government shuts down. He said it is already in place, and "you can't shut it down."

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He said he is always willing to work with anyone of any party to improve the economy and make government work better, but "one faction of one party in one house of Congress, in one branch of government, doesn't get to shut down the entire government just to re-fight the results of an election."

He said part of Congress' job is to fund government and keep it running, and the House needs to do so.

"You don't get to extract a ransom for doing your job," Obama said.

But if no agreement is reached, the effects will be felt by every American, Obama said.

Social Security checks will still be cut, and Medicare patients will still be allowed to see their doctors, Obama said. Mail will still be delivered, and national security will go on.

But paychecks will be delayed for troops, air traffic controllers, prison guards, and border patrol agents. Office buildings will close, services to seniors, women, children and businesses will be "hamstrung," and business owners will be furloughed, he said.

"They will be hurt greatly, and by consequence, all of us will be hurt greatly should Congress choose to shut the government down," Obama said.

He added that a shutdown would "throw a wrench into the gears of our economy as the economy is gaining traction."

Obama followed up his public remarks with phone calls to House Speaker John Boehner and the three other top leaders of Congress, telling Republicans he would continue to oppose attempts to delay or cut federal financing of the health care law.

Boehner (R-Ohio) responded a few hours later on the House floor. ``The American people don't want a shutdown and neither do I,'' he said. Yet, he added, the new health care law ``is having a devastating impact. Something has to be done.''

Not all Republicans are on board with allowing a shutdown. Late Monday, Long Island U.S. Rep. Peter King (R-N.Y.) said he would not be going along with his GOP colleagues.

"I'm gonna vote against it. I have to vote against it. All we're doing is leading ourselves into a government shutdown for no good reason," King said. "We've been hijacked by Ted Cruz, and by a segment of this party that has prevented us from keeping the government open."

Senate, House Fail To Agree

On Monday afternoon, the Democratic-led Senate rejected conditions that House Republicans attached to a temporary spending bill -- beginning a ping-pong match of negotiations that ultimately went nowhere.

The Senate voted 54-46 on Monday to strip a one-year delay in the Affordable Care Act as the Republicans requested. The Senate also stripped a provision that would have eliminated the tax on medical devices.

"If they try to send us something back, they're spinning their wheels," said Senate Majority Leader Harry Reid (D-Nev.) "We are not going to change Obamacare."

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House Republicans had added the provisions early Sunday morning in their campaign to undo Obama's signature domestic program.

"This law is not ready for prime time," Boehner said. "It's time for the Senate to listen to the American people, just like the House has listened to the American people, and to pass a one-year delay of Obamacare and a permanent repeal of the medical devices tax."

"Where, oh where, has the Senate gone?" asked Rep. Ted Poe, R-Texas.

Democratic Senators likewise expressed frustration.

"By going along with the hard right, Speaker Boehner is like the ancient Mayans, making a sacrificial offering to the right wing gods," said U.S. Sen. Charles Schumer (D-N.Y.)

The vote came less than 10 hours before a possible shutdown and with no compromise in sight. Democrats and a few Republicans are pressing for the House to approve a straightforward spending bill with no conditions.

Late Monday, the House came up with a new proposal, delaying by one year the health care individual mandate and the exemption for members of Congress.

The Democrats likewise rejected that proposal as quickly as it was made.

House Republicans then voted a third time to restore language to that would dismantle parts of the Affordable Care Act. And for the third time, the Senate stripped the provisions, sending back to the House a "clean" stopgap spending bill.

Asked whether the House could vote any time Monday on a spending bill without the Obamacare amendments, Boehner said, "That's not going to happen," CBS News reported.

"The American people don't want a shutdown and neither do I," he said before Monday night's vote. But, he added, the new health care law "is having a devastating impact. ... Something has to be done."

Late Monday night, in a last ditch effort to end the ping-ponging between the House and Senate, House Republicans offered to setup a bipartisan conference committee to negotiate the differences between the House and Senate bills. Senate Majority Leader Harry Reid, D-Nev., rejected that proposal, saying they wouldn't negotiate "with a gun to our head" and will continue to demand a "clean" spending bill, without Obamacare-related amendments.

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"I could sit here and say, 'Well, I'm not going to vote for a budget unless you agree to pass gun safety legislation.' That's not the way this place is supposed to operate," said Rep. Frank Pallone (D-N.J.)

"Instead of working with Democrats to prevent a shutdown, House Republicans have passed two bills that have no chance of becoming law and are the 42nd and 43rd votes on undermining the Affordable Care Act," said Rep. Nita Lowey (D-N.J.)

Impact Of Government Shutdown

As Obama noted in his address, Americans would soon see the impact of a government shutdown if no compromise is reached by midnight.

About 800,000 workers would be forced off the job without pay. Some critical services such as patrolling the borders, inspecting meat and controlling air traffic would continue.

National parks, including the Statue of Liberty in New York Harbor, would close. Many low-to-moderate incomes borrowers and first-time homebuyers seeking government-backed mortgages could face delays.

In New York, 72,000 federal employees could be out of work. Nearly 54,000 local and military members and 11,500 civilian employees would have their pay delayed if the shutdown lasts more than 10 days.

Aubrey Baichu of East New York would be searching for a new job in the event of a shutdown, CBS 2's Hazel Sanchez reported.

"It does bring a lot of uncertainty, and if we're furloughed, how long would we be off from work, and how many paychecks would I be missing?" he said.

Head Start Centers could also close, affecting nearly 52,000 local children.

In Connecticut, U.S. Sen. Chris Murphy said about 9,000 federal workers, including some of his own staff, could face job furloughs.

The Democrat told reporters Monday the looming shutdown could also affect the tens of thousands of private sector workers in the state whose jobs rely on federal defense contracts.

While the work won't end, Murphy predicted it will slow down, hurting profits of major employers like helicopter-maker Sikorsky Aircraft Corp.

Social Security benefits would be sent and the Medicare and Medicaid health care programs for the elderly and poor would continue to pay doctors and hospitals. Veterans would also continue to collect benefits.

However, claims for new veterans or Social Security benefits would not be processed and 400,000 civilian Defense Department would stay home, WCBS 880's Peter Haskell reported.

The U.S. Army Corps of Engineers says Superstorm Sandy beach rebuilding efforts will continue even if the federal government shuts down Tuesday.

Corps spokesman Ed Voigt says dredging and dune rebuilding projects are already funded and the contractors will keep working.

Voigt says the federal employees who oversee the contracts are considered essential and won't be told to stay home if the government closes.

Voigt says there is enough funding in place to continue work for months.

The Corps and its contractors are working this year on fixing beaches damaged by Sandy last year. The plan is to build new dunes in many areas starting in 2014.

Meanwhile, the shutdown also had indirect effects on Wall Street. Stock prices plummeted as the deadline approached. CBS 2 Political Reporter Marcia Kramer reported the financial effect hurts New York in a big way.

"As far as the stock market, as far as business confidence, as far as investment, it will always have a uniquely bad impact on New York, New York City, and the entire region," said U.S. Rep. Peter King (R-N.Y.)

The president and congress would not miss a paycheck in the event of a shutdown.

The Budget Battle

Since the last government shutdown 17 years ago, temporary funding bills known as continuing resolutions have been noncontroversial, with neither party willing to chance a shutdown to achieve legislative goals it couldn't otherwise win.

Ironically, the issue at the core of the dispute, implementation of key parts of "Obamacare,'' will begin Tuesday on schedule, shutdown or no.

As lawmakers squabbled, President Obama urged them instead to "act responsibly and do what's right for the American people.''

"There are strongly held views on Obamacare and that's fair, of course there are," Schumer said. "But to hold people hostage unless you totally get your way is unfair."

"You're going to shut down the government if you can't prevent millions of Americans from getting affordable care,'' said Rep. Chris Van Hollen (D-Md.)

Sen. Ted Cruz, R-Texas, insisted the blame rests with Senate Democrats.

"The House has twice now voted to keep the government open. And if we have a shutdown, it will only be because when the Senate comes back, Harry Reid says, 'I refuse even to talk,''' said Cruz, who led a 21-hour broadside against allowing the temporary funding bill to advance if stripped clean of a tea party-backed provision to derail Obamacare. The effort failed.

Eyes were turning to the House for its next move. A senior leader vowed the House would not simply give in to Democrats' demands to pass the Senate's "clean'' funding bill.

"The House will get back together in enough time, send another provision not to shut the government down, but to fund it, and it will have a few other options in there for the Senate to look at again,'' said McCarthy, the No. 3 House Republican leader.

He suggested that House Republicans would try blocking a mandate that individuals buy health insurance or face a tax penalty, saying there might be some Democratic support in the Senate for that.

McCarthy wouldn't say what changes Republicans might make. He appeared to suggest that a very short-term measure might pass at the last-minute, but GOP aides said that was unlikely.

A leading Senate GOP moderate called on her fellow Republicans to back down.

"I disagree with the strategy of linking Obamacare with the continuing functioning of government -- a strategy that cannot possibly work,'' said Sen. Susan Collins, R-Maine.

Republicans argued that they had already made compromises; for instance, their latest measure would leave intact most parts of the health care law that have taken effect, including requiring insurance companies to cover people with pre-existing conditions and to let families' plans cover children up to age 26.

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They also would allow insurers to deny contraception coverage based on religious or moral objections.

'Plain And Simple Politics'

On Monday, Mayor Michael Bloomberg, an independent, weighed in on the impending government shutdown.

"This is an outrage. They cannot hold the country hostage, this is just plain and simple politics," the mayor said. "The Senate and the House have to come together and stop this. This is going to be devastating to all of Washington, it's devastating to this country in terms of we look like a third-world country. It's going to hurt our economy, it leaves businesses up in the air in terms of making investments."

Mayor Bloomberg Blasts Lawmakers For Impending Government Shutdown

He also blasted Republican lawmakers who are using the budget battle to try to derail the Affordable Care Act.

"In terms of Obamacare, if you want to call it that, look, we've for a long time had an enormous problem with health care. It's going to bankrupt us unless we figure out a way to do something about it. I don't know that this is the perfect bill, it was written by committees, I would've done some things differently. But at this point, it was passed by a majority and we should put it in and see if it works," said Bloomberg.

Since 1976, there have been 17 government shutdowns. The last one went on for 21 days from Dec. 15, 1995 to Jan. 6, 1996.

The sticking point was a disagreement over tax cuts between then-President Bill Clinton and former House speaker Newt Gingrich.

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(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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