As the two $500 billion cuts (one in national defense, one in domestic spending) known as sequestration loom on the horizon, both parties in Congress are still refusing to budge from their current positions.
Because of a deal reached at the last minute on January 1, 2013, the Bush tax cuts were made permanent for all but the highest income brackets (over $400,000 for an individual/$450,000 for a couple) but the debate on spending reductions was postponed until March 1, 2013 to allow time for debate and compromise from both sides. However, visible progress in reaching a deal has been slow at best.
The debates have even moved from the Capitol Building and the White House to Twitter, where the President and Speaker Boehner have both promoted their own plan while criticizing the opposing approach. Even when agreeing on a potential revenue source - in this case, closing tax loopholes on corporations - they disagree on the specifics.
A total of about $1 trillion needs to be cut in total to stop the sequester permanently, although a smaller package could also delay the March 1 across-the-board cuts, but that looks unlikely. During the last session, the GOP-controlled House of Representatives passed two bills which primarily on spending reductions - both of which were dead in the Senate, which wants both increased revenue and reduced spending. Just last week the Democrat-controlled Senate proposed a combination package of $55 billion in spending cuts and $54 billion in increased revenue - this bill should be taken up by the full Senate after the return from recess on February 25.
One thing is for sure, if an agreement of some kind can't be reached before March 1, the repercussions will last for many years to come.