|Political brinkmanship over US debt and budget continues, Fitch flags possible credit downgrade
US House Republican efforts to pass legislation averting a US debt default and ending a partial government shutdown collapsed and a top ratings firm warned of a possible downgrade in the creditworthiness.
Just hours after unveiling it, Republican leaders _ apparently lacking votes from their own rank-and-file _ pulled legislation to reopen the government and raise the amount of money the Treasury can borrow to pay the bills, AP reports.
The wrangling in the House had imposed a day-long freeze on Senate negotiations on a bipartisan compromise that had appeared ready to bear fruit a day earlier.
Shortly after the House efforts fell apart, aides said Senate leaders had renewed talks to reopen the government and prevent a default.
House Republican leaders had unveiled a bill to allow the Treasury to borrow normally until February 7 and to reopen the government with sufficient funds to carry it to December 15.
A spokesman for House Speaker John Boehner had said it would be put to a vote Tuesday night. But the bill had been stripped of key conservative demands related to President Barack Obama's health care plan, and Boehner soon pulled it.
The New York Stock Exchange fell 133 points after rising a day earlier when optimism spread that a deal might be at hand.
Fitch Ratings announced after the markets closed that it was putting the government's AAA bond rating on watch because of uncertainty over the debt limit.
Fitch, one of the three leading US credit ratings agencies, said it expects the debt limit will be raised soon, but added, “the political brinkmanship and reduced financing flexibility could increase the risk of a US default.''
The partial shutdown began 15 days ago after House Republicans refused to accept a temporary funding measure to provide the money to run the government unless Obama agreed to defund or delay his signature health care reform. House Republicans also refused to move on needed approval for raising the amount of money the Treasury can borrow to pay the nation's bills.