Debt ceiling: House GOP gets lowdown on fallout

NEW YORK (CNNMoney) -- More than 40 House Republicans on Thursday met with a top official from Standard & Poor's and representatives of other Wall Street groups to hear what could trigger a downgrade of the U.S. credit rating.

"It was a lively discussion," said the meeting's organizer, Rep. Nan Hayworth of New York, who characterized the information the lawmakers were given as "nonpartisan," "dispassionate" and "objective."

Rep. Mike Pompeo of Kansas stressed that "one of the ... messages they had for us today that was unmistakable -- that if we kick the can down the road, it's a bad outcome for U.S. Treasuries."

The other message: Raise the debt ceiling.

A week ago credit rating agency Standard & Poor's warned that there was a one-in-two chance it could downgrade the country's long-term credit rating within 90 days "owing to the dynamics of the political debate on the debt ceiling,"

U.S. credit: Raising debt ceiling is not enough

S&P further warned that it wouldn't be sufficient for Congress to simply raise the debt ceiling. Lawmakers must also pass a sizeable 10-year debt-reduction deal to preserve its otherwise sterling AAA rating, S&P said.

And, the agency added, "for any agreement to be credible, we believe it would require support from leaders of both political parties."

House Republicans have stressed repeatedly they won't agree to a debt-reduction package that has any net tax increases in it, while Democrats say taxes must be part of any package.

Earlier this week, the House passed "The Cut, Cap and Balance Act" -- a spending-cuts-only bill. President Obama has said he would veto the bill if it makes it past the Democratic-controlled Senate, which is expected to vote the measure down on Friday.

Some House Republicans have publicly questioned whether Aug. 2 is really the deadline by which Congress must raise the debt ceiling. That's the date Treasury Secretary Tim Geithner estimates he will no longer be able to pay all of the country's bills in full unless he is allowed to borrow from the markets.

The concern is that Treasury will be forced to prioritize which bills to pay and which bills to put off for the first time in the country's history. The process would be technically, legally and politically difficult and put the country at risk of defaulting on some of its financial obligations. A default would assure the country's credit is downgraded.

The Bipartisan Policy Center has estimated that the Treasury wouldn't be able to pay nearly half of the bills coming due in August and would temporarily cut government spending by 44% immediately, with adverse effects on the economy.

But some Republicans have suggested the Treasury would be able to harvest cash from various investments to make up for the shortfall in revenue.

Two members who attended Thursday's meeting on Capitol Hill seemed to suggest as much again, although they said things could get very serious by Aug. 15, when Treasury must make a large interest payment to investors and rollover a sizeable amount of debt.

"Starting August 2, I'm sure some decisions will have to be made. But it won't be catastrophic. But clearly each day will be important after that. And I think August 15 is going to be, potentially, a very serious point in time," Rep. Charles Boustany of Louisiana told CNN.

The truth is, no one can say with absolute certainty what will happen immediately after Aug. 2 and what the consequences will be if Treasury tries to sell U.S. assets.

The question for those who may be reluctant to raise the debt ceiling before Aug. 2 without a deal they find fully satisfactory is whether it's worth taking the risk to find out.

-- CNN's Xuan Thai and Lisa Desjardins contributed to this report.