U.S. intelligence officials said Wednesday that the government shutdown is seriously damaging the intelligence community's ability to guard against threats. They said they're keeping counterterrorism staff at work as well as those providing intelligence to troops in Afghanistan, but that the danger would increase daily with fewer spies to track targets.

Director of National Intelligence James R. Clapper told Congress Wednesday that roughly 70 per cent of the civilian workforce — including staff from the CIA, National Security Agency and Defence Intelligence Agency — have been furloughed.

The shutdown showed no sign of ending Wednesday evening as Republicans and Democrats remained deadlocked after meeting at the White House.

Clapper told the Senate judiciary committee that he has tried to keep on enough employees to guard against "imminent threats to life or property," but may have to call more back to work if the shutdown continues.

"The risk is 75 per cent more than it was yesterday," Clapper said, when asked to quantify the damage.

"The danger here … will accumulate over time. The damage will be insidious," Clapper said of the information lost because he has fewer staffers to track targets. "So each day that goes by, the jeopardy increases," he said.

Clapper even raised the spectre of treason, saying financial stress could make his intelligence officers vulnerable to being bought off by foreign spies.

The shutdown is "a dreamland" for foreign intelligence services to recruit employees who are currently going without pay, he said. 

The U.S. government effectively shut down as of midnight Tuesday because of a standoff over the budget. House Republicans wouldn't agree to a bill to keep funding the government unless Congress and the administration agreed to stop paying for Obama's health-care overhaul law. The standoff could continue for days.

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A furloughed federal employee holds a sign on the steps to the U.S. Capitol after the U.S. government shut down last night. (Larry Downing/Reuters)

Republicans have criticized U.S. President Barack Obama for what they say is his unwillingness to negotiate on the budget. 

Business leaders, however, are siding with Obama, and not their traditional Republican allies in the House. 

On Wednesday, Obama hosted 14 chief executives from the nation's biggest financial firms for more than an hour of meetings. Moreover, the Chamber of Commerce, a business advocacy group, has sent a letter to Congress signed by about 250 business groups urging no shutdown and warning that a debt ceiling crisis could lead to an economic disaster. They say that the policy disputes over health care and spending that are separating Democrats and Republicans should be debated later.

Summing up the Wall Street message on the White House driveway Wednesday, Lloyd Blankfein, chairman and chief executive of Goldman Sachs, said: "You can re-litigate these policy issues in a political forum, but we shouldn't use threats of causing the U.S. to fail on its obligations to repay its debt as a cudgel."

The partial closing of the government and the looming confrontation over the nation's borrowing limit highlight the remarkable drop in the business community's influence among House Republicans, who increasingly respond more to Tea Party conservatives than to the Chamber of Commerce.

No progress after meeting

The stalemate showed no sign of ending after Obama met for more than an hour with congressional leaders at the White House. 

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U.S. President Barack Obama has cancelled two stops on what was to be a four-nation Asia tour due to the government's partial shutdown. (Charles Dharapak/Associated Press)

Obama "refuses to negotiate," said House of Representatives Speaker John Boehner, the top Republican in Washington, Wednesday evening upon emerging from the meeting. "All we're asking for here is a discussion and fairness for the American people under Obamacare."

​Boehner said House Republicans have sent four proposals for funding the government to the Senate, but they've all been rejected. 

Speaking for the Democrats, Senate majority leader Harry Reid said neither the president nor Democrats in Congress will accept changes in that health-care law as the price for spending legislation needed to reopen the government.

"We're locked in tight on Obamacare," said Reid. 

The White House said in a statement after the meeting that Obama had made it clear "he is not going to negotiate over the need for Congress to act to reopen the government or to raise the debt limit to pay the bills Congress has already incurred."

It added, "The president remains hopeful that common sense will prevail."

The high-level bickering at microphones set up outside the White House reflected the day's proceedings in the Capitol.

The Republican-controlled House approved legislation to reopen the nation's parks and the National Institutes of Health, even though many Democrats criticized them as part of a piecemeal approach that fell far short of what was needed. The bills face dim prospects in the Senate, and the White House threatened to veto both in the unlikely event they make it to Obama's desk.

"What we're trying to do is to get the government open as quickly as possible," said the House majority leader, Rep. Eric Cantor of Virginia. "And all that it would take is us realizing we have a lot in agreement."

Debt limit approaching

But Republican leaders and Tea Party-backed members seemed determined to press on. The House Republican leadership announced plans to continue trying to open more popular parts of the government. They planned to pass five bills to open national parks, processing of veterans' claims, the Washington, D.C., government, medical research, and to pay members of the National Guard.

The White House immediately promised a veto, saying opening the government on a piecemeal basis is unacceptable.

"Instead of opening up a few government functions, the House of Representatives should reopen all of the government," the White House said in an official policy statement.

Meanwhile, another financial showdown even more critical to the economy was looming. Treasury Secretary Jacob Lew told Congress that unless lawmakers act in time, he will run out of money to pay the nation's bills by Oct. 17. Congress must periodically raise the limit on government borrowing to keep U.S. funds flowing, a once-routine matter that has become locked in battles over the federal budget deficit.

Representative Steny Hoyer of Maryland, the second-ranking House Democrat, said Democrats would overwhelmingly accept a short-term spending measure to reopen the government and increase the nation's debt limit while other political differences are worked out.

"That would be a responsible way to go," Hoyer told CNN.

At issue is the need to pass a temporary funding bill to keep the government open since the start of the new budget year on Tuesday.

Congress has passed 87 temporary funding bills since 1999, virtually all of them without controversy. 

Some 800,000 federal workers deemed non-essential stayed home Wednesday in the first partial shutdown since the winter of 1995-96.

Budget Battle Los Angeles

A California woman protests against the government shutdown outside the federal building in Los Angeles. (Jae C. Hong/Associated Press)

Across the nation, America roped off its most hallowed symbols: the Liberty Bell in Philadelphia, the Statue of Liberty in New York, Mount Rushmore in South Dakota, the Washington Monument. Its natural wonders — the Grand Canyon, Yosemite, the Smoky Mountains and more — put up "closed" signs and shooed campers away.

The far-flung effects reached France, where tourists were barred from the U.S. cemetery overlooking the D-Day beaches at Normandy. The White House said Obama would have to truncate a long-planned trip to Asia, calling off the final two stops in Malaysia and the Philippines.

Even as many government agencies closed their doors, the health insurance exchanges that are at the core of Obama's health-care law were up and running, taking applications for coverage that would start Jan. 1.

"Shutting down our government doesn't accomplish their stated goal," Obama said of his Republican opponents at a Rose Garden event Tuesday hailing implementation of the law. He said the Affordable Care Act "is settled, and it is here to stay."

With files from Reuters