Dec 7, 2010: Moody’s Says Tax Rates Won’t Lead to U.S. Downgrade. Dec 13, 2010: Moody’s says tax cut deal risks U.S. credit rating

"Moody’s Says Tax Rates Won’t Lead to U.S. Downgrade

Moody’s Investors Service Inc. said an extension of the Bush-era tax cuts
agreed upon by President Barack Obama
won’t lead to a downgrade of the nation’s Aaa credit rating.

“The extension of the current tax rates is for a temporary period of two years
and we think that if that’s all there is to it — it does not have ratings implications,”
Steven Hess, senior credit officer at Moody’s in New York, said in an interview today.

“We have a stable outlook.

We don’t feel it will get changed downward in the next year or two.”

...“We think it will be positive for economic growth in 2011 and 2012,” Hess said."

Susanne Walker

"Moody’s says tax cut deal risks U.S. credit rating

Moody’s Investors Service said in a Monday report
 that the tax-cut deal hammered out between President Obama and congressional Republicans
jeopardizes the Aaa credit rating enjoyed by U.S. Treasury bonds.

The package could add $900 billion to the national debt, if it is made permanent,
and this increases the chances the U.S. would one day default on its debt.

“From a credit perspective, the negative effects on government finance
are likely to outweigh the positive effects of higher economic growth.

Unless there are offsetting measures,
the package will be credit negative for the US
and increase the likelihood of a negative outlook on the US government’s Aaa rating
during the next two years,” Moody’s analyst Steven Hess writes.

Hess writes that the higher economic growth from the tax cuts and unemployment benefits
 might be substantial, but the effect of the growth on budget deficits
will be less than the effect of the foregone revenue and increased spending.

He notes that the Congressional Budget Office has found that the package
would raise the ratio of debt-to-gross domestic product from 61.6 percent to 68.5 percent by 2012."

Erik Wasson