Kevin McCarthy speaker deal could see US defence spending cut by US$75 billion
- A deal to win over Republican rebels could hit the US national security budget amid heightened tensions with China and Russia over Taiwan and Ukraine.
- Such a move would not sit well with Republican defence hawks and would also require a sign-off from Democrats and the Senate
The emerging deal Kevin McCarthy is discussing to make him speaker of the House could make agreements on new defence spending impossible next year, at a time when the US is intent on backing Ukraine against the Russian invasion and growing more wary of China’s stepped up aggression toward Taiwan.
Part of the agreement being discussed would be to cap financial year 2024 discretionary spending across government at 2022 levels, according to three people familiar with the discussions.
National defence spending, which primarily funds the Pentagon, was about US$782 billion in financial year 2022 and rose US$75 billion to US$857 billion in 2023.
Lawmakers would have to contend with a US$130 billion cut to discretionary spending, including a potential US$75 billion cut to national security, if not more, as defence hawks want to increase the budget above this year’s levels.
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Shares of defence contractors declined on the news.