By David Lawder and Susan Heavey
WASHINGTON (Reuters) - The U.S. government was on the edge of a major shutdown as Congress remained in partisan deadlock on Monday over Republican efforts to halt to President Barack Obama's healthcare reforms using a temporary spending bill.
With the law funding thousands of routine government activities set to expire at midnight, Republicans in the U.S. House of Representatives insisted that the measure to fund the government include a delay of Obamacare, knowing it would be rejected by the Democratic-controlled Senate.
With just a few hours to go, the House once again attached an Obamacare delay to the spending bill, setting the stage for a third rejection by the Democratic-controlled Senate in a week.
A shutdown would leave some essential functions like national security intact but sharply cut many regulatory agencies, furloughing up to a million federal workers.
Neither body wanted to get stuck holding the funding measure at midnight, for fear of being identified as the one that ultimately didn't pass it, leading to the game of hot potato with rival funding bills that is in its second week.
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An anticipated revolt by moderate House Republicans fizzled after House Speaker John Boehner made personal appeals to many of them to back him on a key procedural vote, said Republican Representative Peter King of New York.
"John said, 'This is going to work out. Trust me,'" said King, one of only a handful of at least two dozen House Republican moderates who rejected the appeal and voted "no."
Boehner prevailed on the procedural vote 225-204.
After Boehner made his personal appeal, House Democratic Whip Steny Hoyer called on him to permit a vote on a simple extension of federal funding of the government without any Obamacare add-ons.
"I dare you to do that," Hoyer roared, confident such a measure would win bipartisan approval. "Let democracy work."
"WRENCH INTO THE GEARS"
On Monday afternoon, Obama appeared resigned to a shutdown, stepping into the White House press room to reiterate that the shutdown would be the fault of the "extreme right wing" of the Republican Party, referring to the conservative Tea Party.
He also reassured the public that while poor people and seniors, among others, would continue to receive benefit checks in the event of a shutdown, many other functions of government would grind to a halt, throwing "a wrench into the gears of our economy."
And he taunted Republicans about Obamacare, a program aimed at providing healthcare coverage to millions of uninsured Americans. It "takes effect tomorrow no matter no matter what Congress decides to do today ... you can't shut it down."
Republicans say the launch on Tuesday of new online government health insurance exchanges will cause premiums to rise and deter companies from hiring new workers.
The White House later said Obama placed calls to top lawmakers, continuing to press the Republican leadership for six weeks of government funding, free of any "ideological riders."
Americans are split over whether funding for Obama's signature healthcare law should be linked to measures that pay for U.S. government operations, but more will blame Republicans if the government has to shut down on Tuesday, according to a new Reuters/Ipsos poll.
The duration of the "funding gap," the bureaucratic term for a partial government shutdown, would depend on when lawmakers finally approve a funding bill.
Some functions deemed essential, such as U.S. Department of Agriculture meat inspections, would continue. Other agencies, like the Environmental Protection Agency, will furlough most of their workers.
A shutdown would continue until Congress resolves its differences. That could be a matter of days, or weeks.
The standoff does not bode well for the next political battle, a far-more consequential bill to raise the federal government's borrowing authority. Failure to raise the $16.7 trillion debt ceiling by mid-October would force the United States to default on some payment obligations - an event that could cripple its economy and send shockwaves around the globe.
The U.S. dollar and Asian shares held steady in early trading in the region on Tuesday, just hours before the deadline that could see a U.S. government shutdown and crimp growth in the world's largest economy.
"People in the market are kind of interpreting this as a kabuki drama if you like, but we are little more concerned than that," said a senior trader at a foreign bank in Tokyo.
(Additional reporting by Richard Cowan, Caren Bohan, Kim Dixon and Gabriel Debenedetti in Washington and Ryan Vlastica in New York; Editing by Tim Dobbyn)