May 16, 2011 / 8:34 PM / 8 years ago

REFILE-UPDATE 1-US budget deal costs $3 bln more in short term

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WASHINGTON, May 16 (Reuters) - A hard-won budget deal that was touted as the biggest domestic spending cut in U.S. history when it passed Congress last month will actually cause the government to spend $3.2 billion more in the short term, according to a new estimate released on Monday.

The deal sets the government on track to spend $122 billion less over the next 10 years, the nonpartisan Congressional Budget Office said.

But over the next several months, the amount of money spent by the government will actually rise as a $7.5 billion increase in military spending outweighs $4.4 billion in cuts to domestic programs, the CBO said. A shift in Pentagon spending activity also means more dollars out the door in the short term, it added.

The report could lead to further disappointment for Republicans who have made spending cuts a top priority since winning control of the House of Representatives last fall.

The budget deal, which set spending levels for the remainder of the fiscal year that ends Sept. 30, was the product of months of wrangling that took the government to the brink of a shutdown.

Some 59 rank-and-file Republicans refused to back it after earlier CBO estimates showed that it would deliver less in savings than the $38 billion that had been originally thought.

Reporting by Andy Sullivan; editing by Sandra Maler

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