US cancels $4.9 bn in spending cuts

The Barack Obama administration is cancelling $4.9 billion of the $85 billion in automatic US spending cuts that took effect March 1, a move that restores some funds for defence and diplomacy, according to a White House official.

The decision came after the administration determined that, under rules governing the automatic reductions, it had cut too much from some budgetary accounts for the current fiscal year, said the official, who asked not to be identified.

About $3.7 billion will be restored to the Pentagon's budget with another $700 million going to the State Department, said the official. The remainder would be dispersed across a number of programmes at other agencies.

The change was made after the White House Office of Management and Budget completed recalculations based on legislation to fund government operations for the rest of financial year 2013 that was signed by US President Barack Obama on March 26. Defense Secretary Chuck Hagel said he's still reviewing options that may avert furloughs more than three months after the Pentagon said automatic budget cuts may require unpaid leave for as many as 750,000 civilian workers.