The US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget. Republican-led House of Representatives insisted on delaying President Barack Obama's healthcare reform, known as Obamacare, as a condition for passing a bill. This means that more than 800,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over.
This is the first shutdown in 17 years and the dollar fell early on Tuesday.
Goldman Sachs estimates a three-week shutdown could shave as much as 0.9% from US GDP this quarter. The Republican leadership looks and feels trapped now, as they made demands that they knew wouldn't be met rather than be accused of weakness and betrayal by their own hardliners.
The White House's budget office began notifying federal agencies to begin an "orderly shutdown" as the midnight deadline approached.
"The House has voted to keep the government open but we also want basic fairness for all Americans under Obamacare," he said.
The Senate is to meet again at 09:30 on Tuesday.
The BBC's Mark Mardell in Washington says the divide in US politics has grown so bitter that government itself cannot function.
Lets cover who and what departments will be affected:
State department will be able to operate for limited time
Department of defence will continue military operations
Department of education will still distribute $22bn (£13.6bn) to public schools, but staffing is expected to be severely hit
Department of energy - 12,700 staff expected to be sent home, with 1,113 remaining to oversee nuclear arsenal
Department of health and human services expected to send home more than half of staff
The Federal Reserve, dept of homeland security, and justice dept will see little or no disruption
US Postal Services continue as normal
Smithsonian institutions, museums, zoos and many national parks will close
Shortly after midnight, President Obama tweeted: "They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget."
As lawmakers grappled with the latest shutdown, the 17 October deadline for extending the government's borrowing limit looms even larger.
On that date, 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 also demanded a series of policy concessions - including on the president's health law and on financial and environmental regulations - in exchange for raising the debt ceiling.