Moody's warns U.S. not to back off automatic deficit cuts

Moody's Investors Services warned on Wednesday that it could downgrade the U.S. government's top credit rating, if Congress backs off $1.2 trillion in automatic deficit cuts scheduled over the next decade.

The credit rating agency said in a statement it will not immediately lower the nation's rating on long-term debt after a special congressional panel failed this week to reach agreement on alternative cuts to the deficit.

The impasse triggered the automatic cuts, which are scheduled to begin in 2013. Moody's said any effort to reduce those cuts could force the agency to downgrade its rating. Some Republicans are vowing to block the cuts slated to occur in defense programs, which amount to about half of the total. More...