The White House has rejected a proposal from House of Representatives Republicans to extend the debt limit and reopen the federal government.
The White House criticised what it called an attempt to appease a small group of conservatives, but praised a parallel bipartisan Senate plan.
The White House objected to the House’s proposed alterations to President Barack Obama’s “Obamacare” health law.
The US must raise its $16.7tn (£10.5tn) debt limit by Thursday or face default.
It remains unclear whether Congress can agree a deal in time to avert economic calamity in the US and across the world.
Both the Senate plan, outlined on Monday evening, and the House Republicans’ plan, revealed on Tuesday, would fund the government through mid-January and raise the debt ceiling until February, creating room for negotiators to agree a longer-term budget.
The Senate proposal would delay for two years a per-employee tax paid by companies and labour unions on workers’ healthcare plans.
The House plan, meanwhile, would delay a medical device tax used to pay for healthcare subsidies under the law and eliminate healthcare subsidies for the president, vice-president, members of the president’s cabinet, and members of Congress.
Both proposals would include income verification requirements for Americans seeking public subsidies to purchase health insurance.
On Tuesday, Obama rejected what an aide described as Republicans’ attempt to extort “ransom” while the government remained shut and the threat of a debt default loomed.
“Unfortunately, the latest proposal from House Republicans does just that in a partisan attempt to appease a small group of Tea Party Republicans who forced the government shutdown in the first place,” said White House spokeswoman Amy Brundage, referring to a faction of hardline conservatives who hold significant sway in the House.
“Democrats and Republicans in the Senate have been working in a bipartisan, good-faith effort to end the manufactured crises that have already harmed American families and business owners. With only a couple days remaining until the United States exhausts its borrowing authority, it’s time for the House to do the same.”
Later, Republican House Speaker John Boehner said both parties were trying to find a way forward.
“There have been no decisions about exactly what we will do,” he told reporters on Tuesday. “There are a lot of opinions about what direction to go.”
Obama is scheduled to meet House Democrats on Tuesday afternoon as Thursday’s debt ceiling deadline inches ever closer.
‘NOT THERE YET’
As of Tuesday morning, Republican and Democratic senators had hailed progress in the fiscal talks, which have run in fits and starts since 1 October.
“Perhaps tomorrow will be a bright day,” Senate Democratic leader Harry Reid said on Monday evening. “We’re not there yet.”
Republican Senate Minority Leader Mitch McConnell also sounded upbeat, hailing “substantial progress”.
Ahead of Thursday’s looming debt ceiling deadline, Obama warned that “defaulting would have a potentially devastating effect on our economy”.
Even if a deal is reached in the Senate, it is unclear whether Congress could act in time to pass legislation that would avert the 17 October default deadline.
Hardline conservatives such as Texas Republican Ted Cruz could use Senate rules to stonewall a vote.
In the House of Representatives, the Senate deal could meet fierce resistance from the Tea Party-aligned Republicans.
One of those conservative hardliners, Kansas Representative Tim Huelskamp, was quoted by the New York Times as labelling his upper chamber colleagues “the Senate surrender caucus”.
“Anybody who would vote for that [Senate deal] in the House as Republican would virtually guarantee a primary challenger,” he said.
Republicans have taken the brunt of blame for the latest fiscal cliffhanger to cripple Capitol Hill, according to opinion polls.
A Washington Post/ABC News survey on Monday found 74 percent of voters were unhappy with congressional Republicans’ handling of the standoff, compared with a 53 percent disapproval rating for President Obama.
Some in the party have voiced concern that the affair could damage its prospects in next year’s midterm elections.
Economists and bankers have warned for weeks of dire consequences should Congress fail to reach an agreement on raising the nation’s debt ceiling.
The US Treasury has been using what are known as “extraordinary measures” to pay its bills since the nation reached its current debt limit in May.
Those methods will be exhausted by 17 October, US Treasury Secretary Jack Lew has said.
Meanwhile, the government remains partially shut down because Congress failed to agree on funding by a 1 October deadline.
The impasse has closed a swathe of federal services and left hundreds of thousands of employees out of work.