Washington (CNN) -- House GOP leaders announced their intention Wednesday to pass a bill this week that would only keep the government running after September 30 if President Barack Obama's health care reform law is fully defunded.
The decision sets up a high stakes game of political chicken over the next 12 days, as Democrats have repeatedly rejected any attempt to undo the president's signature legislative achievement.
"We're going to continue to do everything we can to repeal the president's failed health care law," said House Speaker John Boehner, R-Ohio. "The law is a train wreck."
"We aim to put a stop to Obamacare before it costs one more job or raises a family's out-of-pocket expenses one more dollar," said House Majority Leader Eric Cantor, R-Virginia.
The House bill, which would keep the government running through mid-December, also locks in overall funding levels at $986 billion, preserving Washington's so-called "sequester" -- forced across-the-board spending cuts that have been criticized by leaders on both sides of the aisle.
Most congressional Democrats, opposed to further cuts in non-defense spending, have expressed their strong opposition to such a move.
In addition, the GOP bill states that Social Security and disability payments need to receive top priority if Congress and the president are unable to raise the federal debt ceiling by mid-October.
A failure to extend the nation's borrowing limit and pay bills already incurred risks an unprecedented national default.
Obama and other Democratic leaders have warned they will not cave to GOP demands for new spending cuts in exchange for a hike in the debt limit.
"I'm happy to negotiate with (congressional Republicans) around the budget, just as I've done in the past," Obama told business leaders on Wednesday.
"What I will not do is create a habit, a pattern, whereby the full faith and credit of the United States ends up being a bargaining chip to set policy. It's irresponsible."
The president told his audience to "flip the script for a second and imagine a situation in which a Democratic speaker said to a Republican president, 'I'm not going to increase the debt ceiling unless you increase corporate taxes by 20 percent. And if you don't do it, we'll default on the debt and cause a worldwide financial crisis.'"
"That can't be a recipe for government," he said.
A less confrontational strategy initially backed by GOP leaders unraveled last week.
Numerous House Republicans threatened to defeat a temporary spending measure proposed by their leadership because it did not directly link continued government funding with a ban on money for the new health care law.
Conservative groups such as Tea Party Patriots and Heritage Action for America praised the harder line now adopted by Boehner and other GOP leaders.
"Senate Democrats and President Obama must make a decision: shut down the government to protect a destructive, unpopular law or acknowledge Obamacare has failed and cannot be salvaged," said Michael Needham, communications director for Heritage Action.
One Republican, Nebraska Rep. Lee Terry, told CNN that conservative activists had been strongly engaged with House members on the issue in recent weeks.
I "absolutely heard from a lot of our conservative groups over the (summer) break about defunding Obamacare," Terry said. "The pressure was absolutely there ... (though) I didn't feel like it was pressure per se because I agreed we need to do away with Obamacare."
Another Republican, freshman Rep. Trey Radel of Florida, predicted the White House will eventually give in to at least some GOP demands.
"I think the president will negotiate with us," he said.
Other Republicans seemed less sure.
"We can't let the government shut down," said Rep. Peter King, R-New York. "We can't be kamikazes and we can't be General Custer."
A top Senate Democrat warned House Republicans they were playing a losing hand.
"Republican leaders in the House have decided to give the hard right their day in the sun, and decided to pursue an agenda that they know will never, ever be signed into law," New York's Chuck Schumer said.
"Reasonable Republicans, stop these zealots in your party from driving our economy off a cliff."
Meanwhile, with a potential government shutdown less than two weeks away, the White House budget office directed federal agencies on Wednesday to prepare for a potential shutdown.
Sylvia Burwell, director of the Office of Management and Budget, told federal agencies to update their plans in the event no agreement is reached before September 30, the end of the fiscal year.
"Prudent management requires that agencies be prepared for the possibility of a lapse," Burwell wrote.
CNN's Jim Acosta, Adam Aigner-Treworgy, Dana Bash, Gabriella Schwarz, Paul Steinhauser, and Deirdre Walsh contributed to this report