President Barack Obama laid the blame for the U.S. government's partial shutdown at the feet of House of Representatives Speaker John Boehner on Thursday, escalating a confrontation that is running the risk of a potentially damaging clash over the country's borrowing authority.

The Treasury Department warned that a deadlock over raising the nation's debt limit could touch off a new recession even worse than the last one that Americans are still recovering from. Worry about prospects for resolving the debt question within the next two weeks deepened as the shutdown standoff dragged into a third day.

House Republicans adamant about cancelling, delaying or watering down President Barack Obama's signature health-care reform legislation have refused to pass spending measures without anti-Obamacare provisions. Senate Democrats insist that the Affordable Care Act, as it's formally known, was passed into law long ago and isn't up for reconsideration.

With 800,000 federal government employees forced into taking leave, some agencies have almost entirely shuttered, including NASA, the Commerce Department and the Environmental Protection Agency. The partial closure is also disrupting everyone from farmers who can't cash their paycheques to Statue of Liberty tourists.

Late Thursday, the White House announced that Obama was abandoning an already abbreviated trip to Indonesia and Brunei next week in the face of the shutdown. White House spokesman Jay Carney said Secretary of State John Kerry would travel instead.

The Republican-controlled House has tried to push piecemeal legislation to fund individual departments and programs, but most Democrats, including Obama, want a comprehensive resolution that would reopen the whole government, not just bits of it.

Obama Budget Battle

U.S. House Speaker John Boehner, seen talking to the media outside the White House on Wednesday, could end the government shutdown by allowing a simple vote, President Barack Obama says. (Pablo Martinez Monsivais/Associated Press)

The shutdown showdown grew more personal Thursday.

Speaking at a construction company in Washington's Maryland suburbs, Obama cast the House speaker as a captive of a small band of conservative Republicans who want to extract concessions in exchange for passing a short term spending bill that would restart the partially shuttered government.

"The only thing preventing people from going back to work and basic research starting back up and farmers and small business owners getting their loans, the only thing that is preventing all that from happening right now, today, in the next five minutes is that Speaker John Boehner won't even let the bill get a yes or no vote because he doesn't want to anger the extremists in his party," Obama said.

Boehner answered by batting blame back toward Obama and his "my-way-or-the-highway approach." Boehner said that if the president would negotiate to fix flaws in "Obamacare," the shutdown could end.

"The president's insistence on steamrolling ahead with this flawed program is irresponsible," said Boehner, a Republican from Ohio.

Eric Cantor, the Republican majority leader in the House of Representatives, said the House would continue on its course of passing separate bills to remedy "situations that are in critical stages" because of the partial government shutdown that began Tuesday.

The House was expected to vote to for more money for National Guard and Reserves and for veterans programs during the day, and officials said legislation to help some social programs could soon be drafted, as well.

No reopening on piecemeal basis

Senate Democrats made clear they will not agree to reopen the government on a piecemeal basis. "You can't fall for that legislative blackmail or it will get worse and worse and worse," said Senator Chuck Schumer of New York.

Senate Democrats and Obama said the House must send them a measure that would restart all of government with no strings attached.

"Take a vote," Obama urged Boehner in his speech. "Stop this farce and end this shutdown right now."

It might not be so simple, however. Moderate Republicans have said they think they could provide enough votes to join with minority Democrats and push a bill through the House reopening the government with no restrictions on the health care law.

But under pressure from House Republican leaders, they failed to join Democratic efforts on Wednesday aimed at forcing the chamber to consider such legislation.

In the Senate, Republican Leader Mitch McConnell of Kentucky said the problem was "Democrats' refusal to apply simple fairness when it comes to Obamacare."

Competing proposals blocked

Democratic and Republican leaders in the Senate blocked each other's proposals for addressing the stalemate Thursday. Democrats rejected GOP proposals to reopen the national parks, speed up processing of veterans' claims and restart some medical research that's been put on hold. Republicans stymied a Democratic plan to bring the entire government back to work.

"Obviously tea party Republicans don't really want a way out of this government shutdown. They like it the way it is," said Senate Democrat Majority Leader Harry Reid of Nevada.

Republicans who initially sought to defund the health care law in exchange for funding the rest of government have scaled back their demand, but say they need some sort of offer from Obama.

A meeting between Obama and congressional leaders at the White House Wednesday evening offered no glimmer of progress.

"All we're asking for here is a discussion and fairness for the American people under Obamacare," Boehner said after the meeting.

The White House said Obama would be happy to talk about health care — but only after Congress moves to reopen the government.

If the shutdown dispute persists it could become entangled with the even more consequential battle over the debt limit. The Obama administration has said Congress must renew the government's authority to borrow money by Oct. 17 or risk a first-ever federal default, which many economists say would dangerously jangle the world economy.

Treasury's report Thursday said defaulting on the nation's debts could cause the nation's credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket.

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The U.S. Capitol looms in the background of a sign on the National Mall reminding visitors of the closures to all national parks due to the partial government shutdown. (Kevin Lamarque/Reuters)

For now, Republicans planned to continue pursuing their latest strategy toward the shutdown: muscling bills through the House that would restart some popular programs.

Votes were on tap for restoring funds for veterans and paying members of the National Guard and Reserves. On Wednesday, the chamber voted to finance the national parks and biomedical research and let the District of Columbia's municipal government spend federally controlled dollars.

Some services still open

As the politicians battled, mail continued to be delivered, air traffic controllers remained at work and payments were being made to recipients of Social Security, Medicare, Medicaid and unemployment benefits.

Taxes were still due, but lines at IRS call centres went unanswered.

Halted were most routine food inspections by the Food and Drug Administration. Some loan approvals for many low- and middle-income borrowers were thrust into low gear by the Housing and Urban Development Department. National parks were closed.

Workers were furloughed based on how essential their jobs were to the nation: Only 3 per cent of NASA employees were kept on, while 86 per cent at the Homeland Security Department were working.

With files from CBC