Will the rating agencies force a 'grand bargain'?

Like a homeowner plugging a leak in the bathroom when the entire roof is about to cave in, the Washington political establishment has been myopically obsessed with the Aug. 2 debt-ceiling deadline. To be sure, the debt limit must be raised to accommodate the deficit spending for which Congress has already voted. With a so-called “grand bargain” on the debt unlikely, the operating assumption in Washington is that the parties will strike a small deal now, fight it out during the 2012 elections and pick up debt negotiations sometime in 2013.

Yet the major bond rating agencies could force the issue a lot sooner, regardless of whether the debt limit is raised by Aug. 2.