LONDON, England - December 13, 2010 - The deal reached by U.S. lawmakers to extend tax cuts and unemployment benefits will spur economic growth, but brings the country’s vaunted triple-A credit rating one step closer to the chopping block.

Moody’s Investors Service, Inc. on Monday warned the proposed package will worsen the country’s already stretched finances. That deterioration increases the likelihood that the rating agency will change its outlook on the U.S. rating to negative over the next two years, it said. Such a shift would signal that a downgrade lies ahead.

The U.S. rating isn’t in imminent danger, but the caution from Moody’s is a sign that the country’s triple-A status is far from guaranteed and will face pressure sooner than expected.

Anxieties over the implications of the tax package rippled through bond markets last week as investors welcomed the prospect of stronger economic growth but worried that the U.S. was once again deferring tough decisions on the deficit.

The tax deal is “the definition of kicking the can down the road,” said Dan Greenhaus, chief economist at Miller Tabak & Co. A more effective move would have been to pair a short-term boost for the economy with a medium-term plan to trim the deficit, he said.

With a price tag of between $700-$900 billion, the tax package will swell the nation’s already considerable deficit. At the same time, a deeply divided Congress appears unlikely to make significant progress in cutting spending or raising revenues.

Those two factors together have “shortened the time-frame” for a possible change in Moody’s outlook on the rating, said Steven Hess, the firm’s lead sovereign analyst for the U.S.

Mr. Hess noted that the package would produce some positive effects on government revenues via stronger economic growth, but emphasized that such impacts would be swallowed by the overall costs of the deal.