The partisan vitriol surrounding the debt-ceiling debate was laid bare for the world to see and did not go unnoticed by either the markets or the ratings agencies. Both Standard & Poor’s and Fitch Ratings issued warnings even before the debt deal was reached that they were considering a review of the current credit rating due to the government’s continued dependence on deficit financing and the growing debt obligation.
A loss of the top rating would send shockwaves though the global markets, for stocks, bonds, and possibly other assets. The government’s cost to borrow to bridge the $1.5 trillion budget gap would increase sharply. Consumers and business would also face higher interest rates, leading to a decline in overall spending and weaker growth.