Who's Next on S&P's Chopping Block?

States and local governments could face repercussions following S&P’s downgrade of U.S. debt.

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Many questions remain about the future of the global financial system, now that U.S. debt no longer commands the coveted AAA rating. While it seems the immediate fallout may be a temporary market selloff, the United States may face longer-term effects as well, which could further hobble an already stumbling economy.

[See What a Ratings Downgrade Would Mean for Investors.]

"When we look out a couple of years, the downgrade will have had an impact by ultimately raising borrowing costs," McBride says. "The additional money going toward interest payments [will be] money not being spent elsewhere in the economy."

Twitter: @mmhandley

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