US President Barack Obama
Photo: AFP
US military aid to be reduced by $150M
Sources in Washington update Finance Minister Steinitz that US budget cuts will be reduced from 8% to 5%, meaning aid to Israel will decrease by smaller amount than previously estimated
Sources in Washington updated Finance Minister Yuval Steinitz on Thursday morning that the across-the-board spending cuts in the United States budget will be reduced from 8% to 5%, meaning that the military aid to Israel will be decreased by $150 million in the coming year rather than by $250 million as previously estimated.


In addition, the cuts are expected to have an immediate impact on the income of Israeli companies supplying products and services to the US government, including military industries, Israeli high-tech companies and Israeli offices of international companies.


The smaller budget cuts will moderate the damage to the Israeli economy and the State's income tax.

ברק אובמה, החוב הלאומי של ארה"ב מאלץ אותו לקצץ (צילום: רויטרס)

Obama. Forced to cut due to national debt (Photo: Reuters)


On Wednesday, legislation easily passed the House of Representatives to avert another partisan budget battle and a possible government shutdown, as US President Barack Obama also opened new lines of communication with Republicans.


By a vote of 267-151, the House passed a measure to fund government programs up until the end of the fiscal year on September 30. The Democratic-controlled Senate is expected to pass a similar bill next week.


Without such legislation federal agencies would run out of money on March 27.


As recently as February, Republicans were threatening to use the bill to fund the government, called a "continuing resolution," to extract spending cuts from the White House.


Instead, the bill they fashioned, which passed on Wednesday, embraced the $85 billion in automatic spending cuts that were triggered last Friday, while providing some additional spending flexibility to the military and other security operations.


The cuts are across-the-board and apply to all federal government spending, including the military aid to Israel, which totals $3.1 billion a year.


As the aid is given to Israel in the form of a budget to purchase equipment from American companies, the cuts will also affect the income of companies in the US and the American economy's growth.


Reuters contributed to this report 



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