Wall Street has suffered its worst day in two months amid fears the United States will run out of money to pay its bills in less than a week’s time.
And European markets have opened down as anxiety spreads over a possible US default.
Approval of a plan by House of Representatives Speaker, Republican John Boehner, would break the deadlock with Democrats on how to tackle the crisis. But President Obama has threatened to veto the bill and a majority of the Democratic-controlled Senate has vowed to vote against it.
White House spokesman Jay Carney said: “I mean, the Speaker’s words themselves make clear that they are not now working on a measure in the House that there is even a pretence of an attempt to create something that would get bipartisan compromise. Time is running out.”
The House of Representatives is due to vote on Thursday on the bill which links any debt increase with spending cuts. But the legislative chess game looks likely to play out until the August 2 deadline.