Moody’s Says Obama Tax Deal Is Negative for U.S. Credit Rating

Moody’s Investors Service Inc. said President Barack Obama’s agreement to extend tax cuts raises the chance of a negative outlook for the U.S.’s Aaa credit rating unless offsetting measures are enacted.

While the compromise package is likely to boost economic growth in the next two years, it will “adversely affect” the budget deficit, Senior Credit Officer Steven Hess wrote in a note today. Obama’s deal with congressional Republications, announced Dec. 6, calls for a two-year extension of tax rates in return for extending long-term jobless benefits for 13 months and cutting the payroll tax for $120 billion for a year.