Moody's Warns Against U.S. Undoing of Automatic Deficit Cuts

On Tuesday, a number of credit ratings firms maintained that the recent failure of the bipartisan "super committee" to reach a deficit reduction deal will not affect their rating of U.S. debt. However, on Wednesday, ratings firm Moody's warned that if lawmakers backtrack on the $1.2 trillion in automatic deficit cuts triggered by the super committee's failure, the government's top credit ratings may be in jeopardy.

Lawmakers on both sides of the aisle have already begun discussing ways to rescind the previously agreed upon automatic budget cuts, many of which target defense and Pentagon funding. However, President Barack Obama, who was largely removed from the forlorn deficit negotiations, has vowed to veto any bill that moves to undo the cuts.

"While a change in the composition of the spending cuts would not be a major rating consideration, a reduction in the total amount that would increase the projected increase in federal debt over the coming decade could have negative rating implications," Moody's said in a statement.

In August, Standard & Poor's cut the nation's pristine AAA credit rating to AA-plus, following the partisan brinkmanship that brought government within breathing room of a default.