US President Barack Obama is prepared to offer cuts to Americans’ pensions to strike a deficit deal with Republicans, a White House official says.

In return, the Democratic president wants higher taxes on the rich. He will outline his budget plan next Wednesday.

The proposal would cut the deficit by $1.8 trillion (£1.2 trillion) over 10 years, say administration officials.

But Democrats would oppose cuts to pensions, while Republicans have refused to accept tax rises.

Under the deal trailed by the White House, Mr Obama would support lowering the inflation measure used to calculate cost-of-living increases in Social Security pensions.

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