Washington Still Running after Cuts Take Effect

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The sequester budget cuts are in effect, and yet after months of dire warnings, the federal government is still functioning. Politicians admit that, at least for now, no one's feeling much pain.

Both Democrats and Republicans continue to blame the other for the automatic spending cuts that hit on March 1.

But the $85 billion across-the-board cuts may be the wakeup call Washington needed. Both parties have promised to look at ways to end the automatic cuts by making hard choices to reign in the runaway deficits.

The White House signaled it might be ready to explore a compromise. President Obama raised the issue of cutting entitlements like Medicare and Social Security as a way out of the budget cuts.

"Well, I'll tell you this: he's reaching out to Democrats, who understand we have to make serious progress on long-term entitlement reform, and Republicans, who realize that if we had that type of entitlement reform, they'd be willing to have tax reform that raises revenues to lower the deficit," Gene Sperling, director of the National Economic Council, said.

Republicans have long argued that entitlement reform is the best way to tackle the budget deficits long term.

"What I would like to see happen is that the president and Republicans and Democrats re-engage where they left off with (House Speaker John) Boehner," Sen. Lindsey Graham, R-S.C., said.

"That we, as Republicans, put $600 billion of new revenue on the table by flattening the tax codes, eliminating deductions and exemptions, (and) take that money to pay down debt and lower rates," he continued. "And then we go to where the real money is over time, entitlement reform, to save us from becoming Greece."

If no alternative is found for the cuts that are now in place, the $85 billion in spending cuts must be carried out by Sept. 30, which is the end of the fiscal year.

"I've been here for 22 years and I've watched presidents from both parties," Boehner said. "I've watched leaders from both parties kick this can down the road, then kick it down the road, then kick it down the road. We're out of road to kick the can down."

All of this comes ahead of a March 27 deadline that could mean a government shutdown and a debt-ceiling battle in May.

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