Deficit Reduction, U.s. Debt | featured news

President Barack Obama, in a populist step designed to appeal to voters, will propose a "Buffett Tax" on people making more than $1 million a year as part of his deficit recommendations to Congress on Monday.

Standard and Poor's does not think the United States will default on its debt, the rating agency's president Deven Sharma said on Wednesday.

Could the U.S. lose its top credit rating even if a deal is reached to raise the debt limit? Market analysts and investors increasingly say yes. The outcome won't be quite as scary as a default, but financial markets would still take a blow. Mortgage rates could rise. States and cities, already strapped, could find it more difficult to borrow. Stocks could lose their gains for the year.

Talks to reach a more ambitious deficit-reduction deal effectively broke down on Saturday, House Speaker John Boehner said, as he and fellow Republicans resisted any White House attempts that could increase taxes.