Pakistan's defense spending is currently about $2.5 billion a year.
The car carrying the bomb set off near the US embassy in Pakistan belonged to a driving school. The car contained four women and it is suspected that the bomb was secretly placed in the car and detonated by remote control. Radical Islamic groups oppose women driving cars.
In Kashmir, police arrested two rebels who were planning to build and detonate bombs. The men were caught with weapons and bomb making equipment. Rebels also attacked a group of Hindu religious pilgrims and killed two of them.