Illinois Republican Senator Mark Kirk said legislation to raise the government's borrowing authority "offers the chance to save the dollar and our economy."
"If we miss this chance or if Congress sends the president a blank check," then S&P's "negative outlook" on U.S. "is a stark warning for our future," he said in a statement.
S&P didn't mention the debt ceiling among the budgetary risks it sees that affect the U.S. outlook, and it noted that the U.S. has "unique external flexibility" because the dollar is the world's most-used currency. The ratings company focused on the political calendar, saying that if current negotiations fail, it might not be possible to get an agreement until at least the 2014 budget cycle.
'Fiscal Challenges'
"We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," Treasury Assistant Secretary Mary Miller said in a statement.
She reiterated the administration's view that budget reductions are "well within our capacity as a country" and said the U.S. economy is strengthening.
U.S. President Barack Obama has proposed cutting $4 trillion in cumulative deficits within 12 years through a combination of spending cuts and tax increases. The administration is resisting Republican calls for swifter cuts, while also pushing for a set of rules to enforce spending reductions over time.
Under President Barack Obama's fiscal year 2012 budget, released in February, the total debt subject to the debt ceiling would be $20.8 trillion in 2016. The plan House Republicans approved April 15, written by Budget Committee Chairman Paul Ryan, would need a debt ceiling of at least $19.5 trillion, according to data compiled by Bloomberg Government.
The benchmark 10-year note yielded as much as 3.45% in New York before trading at 3.39%. The dollar dropped to its lowest level this month against the yen.
Credit-Default Swaps