The fourth day of all-party debt deficit talks in Washington has reportedly ended stormily.
Barack Obama is said to have rejected a Republican call for a short-term plan based on spending cuts.
The President is said to be willing to consider cuts if they are matched by tax rises for the rich. But the Republicans say this will stifle growth and investment.
Moody’s has said it may cut the government’s AAA credit rating, alluding to a small but increasing risk that it will default on its debt.
The review has been prompted by the fear that the 14.3 trillion dollar debt ceiling may not be raised in time.
The continuing impasse is unsettling Wall Street which has so far behaved as if a raising of the ceiling was a foregone conclusion.
If Moody’s were to lower its rating, the US would have to honour payments to its creditors before social security payments are made to Americans.