As negotiators in the debt-ceiling talks sputtered and raged, the chill reality of an imminent government default crept up Wednesday and made a mockery of their gamesmanship. Two major rating agencies warned that a once-unthinkable downgrade of the nation’s credit rating would be at hand if this crisis was not immediately defused.
That finally punctured the careless notion, popularized by Tea Party lawmakers like Michele Bachmann and Louie Gohmert, that default would be a minor inconvenience. Standard & Poor’s said a downgrade could occur if any required payments were missed, even if bondholders were paid first. Moody’s said a new process for dealing with the debt ceiling was needed. Although the bond markets have yet to be roiled, there are fresh indications that China and other investors are beginning to get nervous.