Amid rising anxiety on the markets, the financial rating agency Fitch put the US on warning for a downgrade from its top-grade AAA spot.
Despite the impasse, President Barack Obama said he still expected the issue would be resolved in the end.
"My expectation is that this gets solved, but we don't have a lot of time," he told an ABC television affiliate in New York. "What I'm suggesting to the congressional caucus is to avoid any posturing ... do what's right, open the Government and make sure we pay our bills."
What was essentially a wasted day, with precious few hours to spare yesterday, unfolded as House Republicans tried to extend US borrowing authority until February 7 and reopen the partially shuttered US Government until December 15.
Several draft bills would have constrained aspects of Obama's signature healthcare law - and in effect stood no chance of passing the Democrat-led Senate.
But Boehner used the measures to try to corral the Tea Party faction and to pressure the Senate - however in the end he was unable to amass sufficient Republican votes to even put the measures on the floor.
Senate talks, which had been on hold all day pending developments in the House, were quickly resumed.
Leadership aides on both sides said they were "optimistic" that an agreement was in reach.
"We're making very, very good progress, we're not there yet, but we're getting real close," said Democratic Senator Chuck Schumer.
"I think the markets should feel pretty good about what's goingon here tonight."
The likely Senate deal would require Democrats to make a minor concession on Obamacare, but the provision would fall well short of the drive to delay or defund the historic law which prompted Republicans to launch the government shutdown strategy and to use the debt ceiling hike as leverage.
Earlier, Reid furiously accused Boehner of seeking to save his own political skin at the expense of the United States.
"Let's be clear: the House legislation will not pass the Senate," Reid said. "I am very disappointed with John Boehner, who would once again try to preserve his role at the expense of the country."
Boehner may again today be left with the unenviable choice that has come to define his speakership in Washington's divided Government.
Does he stick with the Tea Party faction of his party, and possibly save his job but risk culpability in sending the US economy into a first default of modern times?
Or does he try to pass a compromise plan acceptable to Senate Democrats and Obama with the help of minority Democratic votes - a scenario that could fritter away his party power-base and possibly cost him his job?
- AFP
Looking back at the shutdown
Storming the memorials
On the first day of the shutdown a group of World War II veterans, with a little help from Republican members of Congress, pushed past barricades to get to their memorial. The memorials have become a symbol of right-wing fury at the White House with Sarah Palin attending a rally complete with Confederate flags.
Cruz's Green Eggs and Ham speech
Although technically given before the shutdown began, Ted Cruz's 21-hour Senate floor speech against Obamacare will be remembered for its passion, eloquence and its brief diversion into the works of Dr Seuss as the Texan senator read a bedtime story to his children and exasperated opponents.
Miley Cyrus on Saturday Night Live
The 20-year-old popstar took time out from her twerking career to appear on Saturday Night Live where she gave a lascivious but genuinely funny performance as Michelle Bachmann, a Tea Party congresswoman.
Obama's endless press conference
President Obama is not known for his willingness to engage with reporters but on October 8 he appeared in the White House briefing room and basically refused to leave. Obama hung around for an hour and six minutes, taking questions from 12 different reporters before finally calling it a day.
China lecturing the US
In a humiliating moment for the world's largest economy, China delivered a lecture to the US to get its act together and avert a default. Almost as embarrassing: the purple Indonesian shirt John Kerry was forced to wear as he met Chinese officials at a summit in Bali.
The congressman's comment
In a single babbled remark to the Washington Examiner, Tea Party congressman Marlin Stutzman captured what many suspected about conservatives' plans for the shutdown: that there were none except a vague idea to stick it to Obama. "We're not going to be disrespected," he said. "We have to get something out of this. And I don't know what that even is."
- Telegraph Group Ltd
