The prospect of President Barack Obama being tarred with the once unthinkable loss of the country's triple-A debt rating loomed ever closer on Thursday as politicians remained deadlocked in a battle over the deficit.

The possibility of a downgrade - of the country whose creditworthiness has heretofore been more trusted than any - was real.

David Wilson, a senior director at the Office of the Comptroller of the Currency, told lawmakers on Wednesday that 'you're right to worry' about a likely downgrade in the US rating.

"It could happen," he told the House of Representatives financial services committee.

"It could be a big thing."

Unchanged since 1917, the United States's gold-standard 'AAA' credit rating is almost as old as ratings themselves, invented by John Moody in 1909.

The idea that the country could lose it was unimaginable when Obama took office in January 2009, despite the country's recession; until recent months it was completely off the radar.

The US normally has everything one would expect of a country at the pinnacle of the world's most respected borrowers: it is the world's largest economic and military power; it has the greatest fiscal income; it controls the printing of the dollar, the global reserve currency; and claims, up until now, the deep loyalty of investors and major central banks in buying its debt.

All this keeps it in an inner circle of the best of the best in terms of creditworthiness. It is joined by Group of Seven powers such as Canada and France, and by smaller economies like Finland and Singapore.

But now it is looking like it might be booted from the club.

On Thursday the country had just five days to beat a deadline to raise the country's borrowing ceiling: on August 2 the Treasury says it could run out of money to pay its obligations, and possibly default on its debt.

US lawmakers were racing to find a compromise to raise the $14.3 trillion borrowing, but Obama's Democrats and opposition Republicans remained divided, rattling markets worldwide.

"Our sovereign analysts in their publications have highlighted that the debt burdens and the growth rate of the debt burdens is something that does need to be addressed" for the US to keep its top grade, the president of ratings agency Standard & Poor's, Deven Sharma, told the House panel.

In mid-July, S&P warned there was 'at least a one-in-two likelihood' that the United States would lose its triple-A rating in less than three months.

"The risk of a US ratings downgrade is growing," analysts at Nomura warned after all three ratings agency put the US on warning.

But one, Fitch, downplayed the overall impact of a downgrade. It predicted Treasuries would likely keep, in the short to medium-term, 'their standing as the benchmark security that anchors global fixed-income markets'.

Deutsche Bank, however, stressed the importance for lawmakers negotiating an increase in the US debt ceiling to produce convincing budgetary measures that would rein in yawning deficits.

Alan Ruskin, a bond analyst at the German bank, described the risk, if the measures disappoint the ratings agencies, of 'a multiple notch downgrade', with 'clear contagion effects' for both private and public borrowers.

That could leave Obama facing voters next year with the loss of the coverted gold standard in credit markets, and even the power of the dollar, on his shoulders.