John Chambers, managing director at S&P's credit market services division and chairman of its sovereign ratings group, talked with contributing editor Michelle Lodge about S&P's downgrading of the credit rating of the U.S., as well as the profound fiscal problems facing the nation and why our government could find itself with an even lower rating if changes aren't made soon.

1. Why did S&P downgrade its credit rating of the U.S.? We lowered the long-term rating [from AAA, the highest, to AA+] because the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed. We believe that the fiscal consolidation plan that Congress and the Administration agreed to in August falls short of the amount necessary to stabilize the general government debt burden by the middle of the decade. The rising public debt burden and our perception of greater policy-making uncertainty, consistent with our criteria prompted our lowering of the rating. Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

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