But behind the scenes, the ratings shift looked to spur the two sides to move toward a middle ground.

In its report, S&P expressed skepticism that Republican leaders and the president, who have proposed dueling deficit-cutting plans in recent days, could come together. "The gap between the parties remains wide," S&P analysts wrote.

S&P's main rival in the debt-rating business, Moody'sInvestors Service, on Monday maintained its "stable" outlook on the nation's credit rating. Moody's analyst Steven Hess said that despite the gulf between the Obama administration's deficit-reduction plan and that of Republican leaders, "The two proposals together represent a significant shift in the U.S. fiscal debate."

The Moody's analyst called the proposals "a turning point that is positive for the long-term fiscal position of the U.S. federal government."

White House spokesman Jay Carney suggested that the warning from S&P might even serve as a useful reminder to Congress that failing to raise the debt ceiling carries grave consequences.

"I would say that any call for a bipartisan agreement on deficit reduction — fiscal reform — is a welcome one and in that context it adds to what we believe is some momentum toward that end," Carney said.

Some congressional leaders gave little indication of moving from their hard-line positions, but others said the downgrade warning was evidence of the need to resolve partisan disputes and swiftly improve the nation's fiscal outlook.

"Today's revised outlook [by S&P] shows the urgent, bipartisan action needed to put our nation on a serious path to reduce deficits," said the No. 2 Democrat in the House, Rep. Steny H. Hoyer of Maryland. "Republicans cannot hold the debt limit hostage over partisan, divisive issues."




Lisa Mascaro and Peter Nicholas in Washington and Nathaniel Popper in New York contributed to this report.