Frozen by shutdown, US warns of 'catastrophic' default

WASHINGTON (AFP) - President Barack Obama demanded an end on Thursday to a three-day government shutdown he decried as a reckless "farce," piling pressure on Republicans to climb down first on a budget impasse.

The US Treasury meanwhile warned of "catastrophic" consequences if there is no deal within weeks to raise the country's debt ceiling, and the IMF's chief said navigating a way out of that next crisis was "mission critical."

And late on Thursday the White House announced that because of the shutdown Mr Obama was scrapping plans to attend two summits next week in Asia - an APEC summit in Indonesia and an East Asia summit in Brunei. The tour had been designed to advance a central thrust of Mr Obama's foreign policy.

The trip had already been truncated, as Mr Obama cancelled tail-end stops in Malaysia and the Philippines.

He travelled earlier on Thursday to the Washington suburbs to lambast Republican House Speaker John Boehner, who emerged from a White House meeting late on Wednesday complaining that the president would not negotiate with him.

"Take a vote, stop this farce and end this shutdown right now," Mr Obama said during a fiery speech in the Maryland suburb of Rockville, which is home to many federal workers laid off in the shutdown.

Branding the crisis a "reckless Republican shutdown," Mr Obama said that Mr Boehner could reopen the government and get hundreds of thousands of people back to work "in just five minutes" by passing a temporary operating budget with no partisan strings attached.

"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," Mr Obama said.

The government ran short of funds on Monday, after Congress failed to pass a budget, forcing authorities to send all non-essential workers home and to close museums, monuments and national parks that are all popular with tourists.

The Democratic-led Senate had turned back repeated Republican efforts to pass a budget while defunding or delaying Mr Obama's health care law.

The law dubbed Obamacare is a centrepiece of his political legacy and reviled by Tea Party conservatives.

The talks at the White House between Mr Obama and congressional leaders made no progress, and there is no sign that the dispute will be solved before dragging into a second week.

The crisis rattled Wall Street on Thursday, where the Dow Jones Industrial Average dropped 136.66 points (0.90 percent) to 14,996.48, amid ongoing jitters from the shutdown and nervousness about a looming battle over Congress's responsibility to raise the US$16.7 trillion (S$20.8 trillion) US statutory borrowing limit.

If there is no resolution before October 17, the government could begin running out of money to pay its bills and an unprecedented US debt default could result.