Barack Obama
Barack ObamaAFP photo

The United States Senate has rejected a budget bill passed by the Republican-led House of Representatives, with just hours to go to avert a U.S. government shutdown.

The Democratic-led Senate voted 54-46 against the bill, which would fund the government only if President Obama's healthcare law were delayed a year.

If no agreement is reached by midnight (04:00 GMT), the government will close all non-essential federal services. The shutdown would be the first in the U.S. in 17 years.

More than 700,000 federal government workers could be sent home on unpaid leave, with no guarantee of back pay once the deadlock is over. In addition, all Smithsonian Institutes, national parks, passport issuing offices, and other services funded by the government would close. 

One of the key points of contention in the political stalemate has been President Barack Obama's healthcare law, popularly known as Obamacare. After the Senate vote on Monday afternoon, the chamber's Democratic majority leader blamed Republicans for the imminent halt to all non-essential government operations. 

In addition to the threat of a shutdown, a second fiscal deadline is approaching in the coming weeks. Around 17 October, the US government will reach the limit at which it can borrow money to pay its bills, the so-called debt ceiling.  

"Our currency is the reserve currency of the world," Obama said after an Oval Office meeting with Israeli Prime Minister Benjamin Netanyahu. 

"We don't mess with that. And we certainly don't allow domestic policy differences on issues that are unrelated to the budget to endanger not only our economy but the world economy."