federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.We have taken the ratings off CreditWatch because the Aug. 2 passage ofthe Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity toallow us to evaluate the likely course of U.S. fiscal policy for the next fewyears.The political brinksmanship of recent months highlights what we see asAmerica's governance and policymaking becoming less stable, less effective,and less predictable than what we previously believed. The statutory debtceiling and the threat of default have become political bargaining chips inthe debate over fiscal policy. Despite this year's wide-ranging debate, in ourview, the differences between political parties have proven to beextraordinarily difficult to bridge, and, as we see it, the resultingagreement fell well short of the comprehensive fiscal consolidation programthat some proponents had envisaged until quite recently. Republicans andDemocrats have only been able to agree to relatively modest savings ondiscretionary spending while delegating to the Select Committee decisions onmore comprehensive measures. It appears that for now, new revenues havedropped down on the menu of policy options. In addition, the plan envisionsonly minor policy changes on Medicare and little change in other entitlements,the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.Our opinion is that elected officials remain wary of tackling thestructural issues required to effectively address the rising U.S. public debtburden in a manner consistent with a 'AAA' rating and with 'AAA' ratedsovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how toachieve more balanced and dynamic economic growth in an era of fiscalstringency and private-sector deleveraging (ibid). A new political consensusmight (or might not) emerge after the 2012 elections, but we believe that bythen, the government debt burden will likely be higher, the needed medium-termfiscal adjustment potentially greater, and the inflection point on the U.S.population's demographics and other age-related spending drivers closer athand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).Standard & Poor's takes no position on the mix of spending and revenuemeasures that Congress and the Administration might conclude is appropriatefor putting the U.S.'s finances on a sustainable footing.The act calls for as much as $2.4 trillion of reductions in expendituregrowth over the 10 years through 2021. These cuts will be implemented in twosteps: the $917 billion agreed to initially, followed by an additional $1.5trillion that the newly formed Congressional Joint Select Committee on DeficitReduction is supposed to recommend by November 2011. The act contains nomeasures to raise taxes or otherwise enhance revenues, though the committeecould recommend them.The act further provides that if Congress does not enact the committee'srecommendations, cuts of $1.2 trillion will be implemented over the same timeperiod.