U.S. cuts Pentagon budget to save economy

PanARMENIAN.Net - U.S. will cut $350 billion in defence spending over the next 10 years as part of the first batch of cuts.

A White House official said that Obama in principle wanted half of savings to come from defence spending but that he was not formally proposing so for the second round of cuts.

The deal would authorise an increase in the debt limit by at least $US2.1 trillion.

Spending cuts of more than $900 billion over the next decade are immediately authorised. A White House official said the figure would be between $900 billion and $1 trillion, while House Speaker John Boehner's office gave the figure of $917 billion.

The White House said the cuts would be in the form of caps on discretionary spending -- funding that is authorised at will by Congress -- and not from entitlements such as Social Security and the Medicare health care program for the elderly.

The package sets up a special committee in Congress -- to be evenly divided between members of Obama's Democratic Party and Boehner's Republican Party -- that would find $1.5 trillion in further cuts from all areas.

The committee is required to come up with proposals by November 23. Both the House of Representatives and Senate would then vote on those proposals by December 23, in an up-or-down decision in which lawmakers would not be able to make amendments.

The package calls for Congress to vote by the end of the year on an amendment to the US Constitution that requires a balanced budget, a longstanding proposal of conservative Republicans who say the country must keep its finances in order. If Congress approves the amendment, Obama would be authorised to seek another $1.5 trillion hike in the debt ceiling, according to Agence France-Presse.