Reuters, citing an unnamed congressional aide, is reporting that Standard & Poor's has joined fellow "big-three" rating agency Moody's in threatening to downgrade America's top Aaa credit rating if lawmakers don't reach a deal to raise the debt ceiling. S&P, unlike Moody's, has issued its warning privately. The Wall Street Journal also has the news, writing that S&P has informed lawmakers and top business groups that it "might cut the U.S. credit rating if the government fails to make any of its expected payments--including Social Security checks--even if it makes all its debt payments." The Journal adds that while S&P's assessment contradicts the view among some Republicans that the U.S. can sidestep a disaster if it makes interest payments to bond holders but misses other payments (e.g. to government programs), a downgrade by the rating agencies--which would be unprecedented--could push "interest rates higher, stock markets lower and disrupt global financial markets." 

The Journal says S&P's warning--which echoes a threat made by the rating agency in late June--came in a meeting between S&P's managing director, John Chambers, top Senate Democrats, and officials from the U.S. Chamber of Commerce and the Financial Services Forum. Back in April, S&P branded America's credit rating with a "negative" outlook out of concern that the U.S. didn't have a plan to rein in its rising budget deficits and debt.