Republican in-fighting over deficit reduction is turning financial market jitters into full-blown pessimism and stalling a possible compromise in Congress that would prevent the US defaulting on its debt.
The rift came to a head yesterday when a frustrated House Speaker, John Boehner, reportedly snapped at his unruly caucus to ''get your ass in line'', while elder statesman John McCain blasted Tea Party Republicans for blocking Mr Boehner's plan to raise the debt ceiling and cut America's deficit.
Senator McCain accused the rebellious rump, many of whom were elected only last November, of ignoring political reality by insisting they would not vote for a bill that did not contain a balanced budget amendment.
Democrats, who control the Senate, have rejected that demand as an unnecessary shackle on government.
''This is not fair to the American people,'' Senator McCain said, adding that the Republicans were ''doing a disservice to voters'' by being unwilling to compromise. ''It's unfair. It's bizarro,'' he told the Senate.
The White House and US Treasury both insist that failure to raise America's $US14.3 trillion ($A12.97 trillion) debt ceiling by next Tuesday would risk default, confirming the markets' worst fears and undermining the recovery.
Washington needs more room to borrow funds to continue paying its bills. ''People keep looking for off-ramps. They don't exist,'' White House spokesman Jay Carney told reporters, adding that the government would be ''running on fumes'' alone should Congress miss the deadline.
Mr Boehner's plan, recast to remedy accounting blips identified by the non-partisan Congressional Budget Office, involves two separate increases in the borrowing limit matched with slightly bigger spending cuts over 10 years.
Party leaders were preparing to put the Boehner blueprint to the House early today, determined to brush aside Tea Party and conservative opposition that threatened its chances of securing the necessary 217 votes. As well as insisting on a balanced budget provision, opponents remained wary that unresolved elements of the plan could leave open the prospect of increased tax revenues down the road.
There were tentative signs of a shift, with Texas representative Blake Farenthold telling CBS that Mr Boehner's pitch had convinced him. ''I moved from a lean no, to an undecided, to a lean yes,'' he told the network. ''We just have to get what we can get from a Democrat White House and a Democrat Senate.''
However, the Boehner plan is certain to be blocked in the Senate, where 53 of the 100 senators - 51 Democrats and two left-leaning independents - signed a letter stating their opposition.
Democrats oppose the plan's initial, $US900 billion extension of the debt ceiling because they say it risks plunging Congress into a similarly torrid debate in December that could disturb financial markets afresh. It would also push negotiations further towards the 2012 election cycle.
''Let's figure out during Christmas whether the US is going to go into default,'' Mr Carney sneered. ''Brilliant.''
The impasse could yet be broken if elements of an amended plan drafted by Senate Majority Leader Harry Reid - which cuts spending by $US2.2 trillion in return for a similar rise in the debt ceiling - can be melded with the Boehner legislation, specifically its one-step increase in the borrowing limit that would fund the government until 2013.
Barack Obama has indicated he will veto any bill that does not provide for a long-term extension.
With the countdown to a default down to just five days, Wall Street share prices suffered their hardest fall in two months as investors took flight to safer havens, although analysts mostly expect some sort of compromise will be reached in time.
Similarly, executives of credit ratings agencies told a congressional panel that they did not believe a default was likely. However, they declined to specify the extent of any deficit reduction necessary to avoid the US losing its AAA credit rating in coming weeks.)