Obama signs bill to avert government shutdown

AAP

President Barack Obama has signed a stopgap bill funding the United States government to the end of the fiscal year but locking in $US85 billion ($A81.62 billion) in budget cuts.

Mr Obama put his signature on a measure cleared by Congress last week which averts the threat of a shutdown of federal agencies through September.

The resolution locks in automatic spending cuts mandated by the so-called sequester, a severe austerity drive initiated because Mr Obama and Republicans could not agree a more nuanced deal on deficit cuts last month.

But it does cushion the blow by providing some flexibility within the Pentagon and other departments to make more targeted, less arbitrary cuts.

Washington is already girding for the next fierce budget battle, over 2014 accounts. The Republican-run House of Representatives and the Democratic-run Senate have already passed contradictory budgets.

Mr Obama is due to unveil his own approach in the week of April 8, and is expected to call for more tax hikes on the rich which Republicans refuse to countenance while seeking big cuts in social programs favoured by Democrats.

The Senate plan seeks to gather nearly $US1 trillion in new revenue over the next decade, mostly through the closure of tax loopholes that favour the wealthy, and an equal amount in reductions to government spending.

The House of Representatives budget resolution seeks to balance the budget within 10 years through big reductions in federal spending, the overhaul of health care programs for the elderly and the repeal of Mr Obama's health care law.

All three approaches will have to be reconciled into one bill in what is likely to be a hugely contentious process in fiercely partisan Washington, before a final budget for 2014 can be agreed.

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