ELLISON: The big difference is that with the fiscal -- fiscal cliffs on New Year's Day, you'd have high-income people who already have a lot of discretionary income seeing taxes go up. That's not going to hurt the economy. This thing is going to put 600,000 people out of work, and we're talking cops, we're talking teachers, pink slips will be going out on...
ELLISON: This is why we need to negotiate this thing and not just say it's going to be sequester or our way.
COLE: We've actually...
ELLISON: Oh, come on.
COLE: ... legislation twice.
CUTTER: ... remember why we did this in the first place. We did this not because we wanted these cuts to go into place. Nobody wanted these cuts to go into place.
ELLISON: That's correct.
CUTTER: This was an enforcement mechanism for Congress to come together, finally come together to pass balanced deficit reform, deficit reduction. These across-the-board cuts is not going to get us there, because it's going to strangle our economy, slow growth, which will increase the deficit.
COLE: It won't get us there until we deal with entitlements.
CUTTER: And the -- the choices that people are making here are an across-the-board cut, which could be 10,000 teachers, or asking oil companies to pay their fair share. That's what...
WALLACE: ... are not the victims -- the victims of the sequester. It's so funny to hear Democrats cry about the sequester. Democrats control the executive branch, they control the Senate, and they're in a position to negotiate with Republicans who have put out two packages of alternative cuts. So...
ELLISON: Two take-it-or-leave-it packages.
WALLACE: Well, Democrats haven't come to the table...
COLE: ... something in the Senate and respond. That's not take-it-or-leave-it. That's, like, the process. They haven't been able to pass anything. The president hasn't proposed anything. We're three weeks away. We acted in May of last year. We acted again in December...
STEPHANOPOULOS: And Senator Reid is now saying that he is going to pass a budget out of the Senate this year, but -- and I want to bring this back to Jon Karl, because when you look at the sequester coming in on March 1st, it seems like even the bigger hammer is three-and-a-half weeks later, March 27th, the entire government runs out of money. The last time that happened, the government shut down was 1995. That did backfire on the House Republicans.
KARL: Yeah, we face -- we face a government shutdown, and then not long after that, we have to deal with the debt ceiling yet again. So it seems to me that the real battle -- you know, like I said, there's zero chance that the sequester deal will happen before March 1st. Those automatic spending cuts will go into effect. You still start probably seeing notices going out from the federal government on furloughing employees, being on notice that they may be furloughed, but the real battle will be over the funding of the government, and that's a chance for those automatic cuts to be re-jiggered.