South Carolina is on a list of five states facing a credit downgrade from Moody’s, one of the nation’s three top credit rating agencies. The downgrade is tied to the ongoing debate in Washington D.C. over the federal debt ceiling – which will be exceeded on August 2 unless a deal is reached between U.S. President Barack Obama and Republican leaders in Congress.

In the event Moody’s downgrades the federal government’s triple-A credit rating, South Carolina will likely be among the first states to lose its Triple-A rating, too.

The Palmetto state – along with Maryland, New Mexico, Tennessee and Virginia – has been placed on “review for possible downgrade” owing to “above average exposure to several sovereign risk factors.”

What are those factors?

Well, South Carolina relies on federal largesse to fund more than a third of its state budget – including a growing chunk of change that’s devoted to subsidizing our soaring Medicaid population.

“While all states are indirectly linked to the U.S. government to some degree, we have identified the five Aaa-rated states that are most vulnerable to changes in the U.S. government rating,” the firm said in a statement.

S.C. Treasurer Curtis Loftis says the downgrade warning should be heeded by politicians in Washington, D.C.

“I urge the Congress to conclude its current debate involving the debt ceiling and federal budget,” Loftis said. “A permanent solution must be found to balance the budget and eliminate Washington’s habitually spending beyond its means.”

We agree … but South Carolina politicians also need to recognize that federal money always comes with strings attached.

For example, South Carolina had a chance to reject new Medicaid mandates during the debate over the federal “stimulus” in 2009, but greedy “GOP” politicians chose to expose taxpayers to new long-term liabilities so that they could grab more short-term cash.