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Standard & Poor's has privately told U.S. lawmakers and top business groups that it might cut the U.S. credit rating if the government fails to make any of its expected payments - including Social Security checks - even if it makes all its debt payments, the Wall Street Journal reported citing people familiar with the matter.

The U.S. Treasury Department has said if the debt ceiling is not raised by Aug. 2 it will have to start prioritizing payments.

Congress has refused to raise the statutory borrowing limit until agreement is reached on cutting the fiscal deficit which was $1.29-trillion in the last fiscal year.

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Standard & Poor's had previously placed the U.S. rating on negative outlook on April 18, which meant a downgrade is likely in 12-18 months.

Earlier this week, Moody's became the first of the big three credit rating agencies to place the United States' Aaa rating on review for a possible downgrade, meaning the agency is close to cutting the country's rating.

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