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Obama cuts short Asia trip

President Barack Obama on Wednesday scaled down a long-planned trip to Asia.

US President Barack Obama. Picture: AFP.

WASHINGTON - US President Barack Obama on Wednesday scaled down a long-planned trip to Asia, as the US government shutdown entered its second day with no end in sight to the funding row in Congress that triggered it.

Obama is expected to leave on Saturday for summit meetings in Indonesia and Brunei.

Malaysian media quoted Prime Minister Najib Razak as saying Obama would now skip a subsequent visit to Kuala Lumpur.

His last stop, in the Philippines, also now looks in question.

The fight between Obama's Democrats and the Republicans over the government's borrowing power is rapidly merging with the standoff over everyday funding, which has forced the first government shutdown in 17 years and forced hundreds of thousands of federal employees to take unpaid leave.

The White House announcement followed a fruitless day on Capitol Hill, with Congressional Democrats and Republicans coming no closer to resolving their differences.

Obama accused Republicans of taking the government hostage to sabotage his signature healthcare law, the most ambitious US social programme in five decades, passed three years ago.

Republicans in the House of Representatives view the Affordable Care Act as a dangerous extension of government power, and have coupled their efforts to undermine it with continued efforts to block government funding.

The Democratic-controlled Senate has repeatedly rejected those efforts.

The standoff has raised new concerns about Congress's ability to perform its most basic duties and threatens to hamper a still fragile economic recovery.

SHUTDOWN IMPASSE

As police cordoned off landmarks such as the Lincoln Memorial, and government agencies stopped functions ranging from cancer treatments to trade negotiations, Republicans in the House moved to restore funding to national parks, veterans' care and the District of Columbia, the capital.

An effort to pass the three bills fell short on Tuesday evening, but Republicans plan to try again on Wednesday. They are likely to be defeated by the Democratic-controlled Senate.

The shortening of the Asia trip, designed to reinforce US commitment to the region, is the first obvious international consequence of the troubles in Washington. There was no immediate confirmation from the White House that plans had been changed.

Republicans said Obama could not complain about the impact of the shutdown while refusing to negotiate. "The White House position is unsustainably hypocritical," said Michael Steel, a spokesperson for House Speaker John Boehner.

All three bills won support from a majority of the House, but fell short of the two-thirds vote needed to pass under special rules that allow quick action.

The veterans in question had gotten in to the memorial with help from several Republican lawmakers. But they did not seem interested in taking sides.

MARKET REACTION

Stock investors appeared to take the news in stride on Tuesday, with investors confident a deal could be reached quickly. The S&P 500 closed up 0.8 percent and the Nasdaq Composite gained 1.2 percent.

But the US Treasury was forced to pay the highest interest rate in about 10 months on its short-term debt as many investors avoided bonds that would be due later this month, when the government is due to exhaust its borrowing capacity.

The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers.

The political crisis has raised fresh concern about whether Congress can meet a mid-October deadline to raise the government's $16.7 trillion debt ceiling. Some Republicans see that vote as another opportunity to undercut Obama's healthcare law.

Failure to raise the debt limit would force the US to default on its obligations, dealing a blow to the economy and sending shock waves around global markets.

A 2011 standoff over the debt ceiling hammered consumer confidence and prompted a first-ever downgrade of the US's credit rating.

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