S&P warns downgrade on US credit possible
Standard & Poor's put the country's triple-A sovereign credit rating on negative watch, as politicians continue to spar over the debt ceiling. Treasury Secretary Timothy Geithner issued an Aug. 2 deadline for lawmakers to agree on changes to the current $14.29 trillion limit to avoid a default by the United States on its debt obligations. With that date just a few weeks away, lawmakers have yet to reach even a tentative deal. Because of the "dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood" S&P will lower its ratings on the U.S. within three months. "Since we revised the outlook on our triple-A long-term rating to negative from stable April 18, the political debate about the U.S.' fiscal stance and the related issue of the U.S. government debt ceiling has, in our view, only become more entangled," S&P analysts said. "Despite months of negotiations, the two sides remain at odds on fundamental fiscal policy issues." The credit ratings agency also put the country's short-term rating on credit watch negative, as the "current situation presents such significant uncertainty to the U.S.' creditworthiness." The political wrangling in Washington also prompted Moody's to put the nation's credit on review for possible downgrade, earlier this week. Write to Kerri Panchuk.