US President Barack Obama and congressional Republicans face even bigger budget battles in the next two months after a hard-fought “fiscal cliff” deal narrowly averted devastating tax hikes and spending cuts. The agreement  approved late on Tuesday by the Republican-led House of Representatives  was a victory for Obama  who had won re-election in November on a promise to address budget woes  partly by raising taxes on the wealthiest Americans.

But it set up potentially bruising showdowns over the next two months on spending cuts and an increase in the nation’s limit on borrowing. Republicans, angry the fiscal cliff deal did little to curb the federal deficit, promised to use the debt-ceiling debate to win deep spending cuts next time.

Republicans believe they will have greater leverage over Democrat Obama when they must consider raising the borrowing limit in February because failure to close a deal could mean a default on US debt or another downgrade in the US credit rating. A similar showdown in 2011 led to a credit downgrade.

Defence spending bill

President Barack Obama has signed into law a $633 billion US defence spending bill that funds the war in Afghanistan and boosts security at US missions worldwide.

“I have approved this annual defence authorisation legislation, as I have in previous years, because it authorises essential support for service members and their families, renews vital national security programmes, and helps ensure that the US will continue to have the strongest military in the world,” Obama said in a statement early Thursday.

The meaure was hammered out by House and Senate conferees last month after each chamber voted to approve separate versions of the bill.