Updated at 2:42 p.m. ET: In the Budget Control Act of 2011, President Barack Obama and Congress created a fail-safe device intended to spur agreement on a “grand bargain” of spending reductions and tax increases. The law, enacted as part of an escape from a potential debt limit crisis, created the famous “super committee” of 12 members of Congress which was assigned the job of devising entitlement and tax reforms which would reduce deficits by $1.5 trillion over ten years.

But the law included a default option: if the committee failed in its mission, then automatic spending cuts, called “the sequester,” would begin.

Neither Obama nor most congressional Republicans were happy with the prospect of automatic spending cuts, but once the president put his signature on the bill, those cuts were built into the law. Congress, of course, was free at any point to enact a new law to undo the cuts, but so far it hasn’t done so. Now that the cuts are less than a month from beginning, Obama is again warning of their effects.

Related: Budget battle resumes

In his statement Tuesday he called them “massive automatic cuts” and “deep, indiscriminate cuts to things like education and training, energy and national security” which he said “will cost us jobs, and it will slow down our recovery.” A few minutes later for emphasis he repeated the phrase “indiscriminate cuts.”

On Saturday Deputy Defense Secretary Ashton Cater, in a speech at an international security conference in Munich, called the imminent cuts “huge and reckless” and said they would cause “devastating damage to the military.”

Nowhere in Obama’s statement Tuesday did he mention the exact dollar amount or percentage amount of the cuts that are slated to begin on March 1.

So how big are they? And are they “indiscriminate?"

To answer the second question first: in one sense, the cuts are not indiscriminate.

The Budget Control Act does in fact discriminate between entitlement programs, such as Social Security, in which benefit payments are automatically made to those people eligible for them, and what are called discretionary programs, such as the spending on the National Institutes of Health, the Federal Aviation Administration, or the National Park Service, which receive annual appropriations that can go up or down each year depending on the decisions of Congress.

For the most part, the cuts in the BCA exempt the entitlement programs: Grandma’s Social Security check is exempt, as is Uncle Pete’s veterans benefits check, but spending on NIH cancer research and on Zion National Park in Utah, for instance, is not.

As the Bipartisan Policy Center explained in a report last year, “The specified exemptions include Social Security, federal (including military) retirement programs, veterans benefits, Medicaid, and a host of other programs (mostly those benefitting individuals with low incomes). Furthermore, while Medicare would be subject to the sequester in the form of provider payment cuts, those cuts could not exceed two percent.”

But in another sense the cuts are indiscriminate in that they do not eliminate specific redundant or inefficient programs. The cuts are across-the-board to every federal department.

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Alex Wong / Getty Images

President Barack Obama makes a statement during a press conference at the Brady Press Briefing Room of the White House February 5, 2013 in Washington, DC.

How big will the cuts be in the current fiscal year?

Keep in mind that the current fiscal year, FY2013, began on Oct. 1 so Obama administration officials will have to implement 12 months’ worth of cuts in only seven months.

The Congressional Budget Office said in its annual budget forecast Tuesday that the automatic cuts will reduce spending by $85 billion in FY2013.

Even with the cuts taking effect, total federal spending will still be more than $3.5 trillion, a higher total than in FY2012. At 22.2 percent of gross domestic product in the current fiscal year, federal spending is high by the standards of the past 50 years. The 50-year spending average is 21 percent of GDP.

At the end of the Clinton presidency, a time which many people see as one of prosperity and when in fact there was a budget surplus, federal outlays amounted to only 18.2 percent of GDP. That’s partly because the economy was thriving, so the federal share of it was smaller than it would have been otherwise. When the economy is sluggish as it is today, federal spending – much of it automatic cash transfers in the form of entitlement spending – is relatively larger than it would be if the economy were flourishing.

The automatic cuts mandated by the Budget Control Act will reduce defense spending (other than spending for military personnel) by about 8 percent and non-defense discretionary spending by between 5 percent and 6 percent in FY2013, the CBO said Tuesday.

Members of Congress in both parties – especially those with military bases in their states or districts – have voiced alarm about the effect of the defense cuts. At last week’s confirmation hearing for Obama’s defense secretary nominee Chuck Hagel, Sen. Kay Hagan, D-N.C. told Hagel, “Stopping sequestration from occurring is very important to me. North Carolina -- we have seven military institutions -- installations, and we have over a hundred thousand active-duty service members in my state.”

The BCA cuts, she said, “are going to harm our national security, will impair our readiness, will defer necessary maintenance that will help keep our troops safe and delay important investments in research and procurement as well as stunt our economic recovery at this time.”

Hagan was one of 74 senators voting for the BCA in 2011.

At a press conference at the Capitol Wednesday at which Republican members of the House and Senate Armed Services Committees offered a proposal to avert spending cuts by means of cuts in federal civilian employee head count, Sen. Lindsey Graham, R- S.C. said, “We have our fingerprints as Republicans on this proposal, on this sequestration idea. It was the president’s idea, according to Bob Woodward’s book, but we as the Republican Party agreed to it. We got into this mess together and we’re going to have to get out together….. To the president: we bear responsibility as Republicans for allowing this to happen. Lead us to a better solution.”

Graham was one of the 26 senators who voted against the BCA in 2011.

Updated at 12:32 a.m. ET: An agreement to stave off the harshest and most immediate consequences of the fiscal cliff won approval in the House late Tuesday. President Barack Obama signed the law on Wednesday night, the battle over which foreshadowed more fights with Congress over spending.

Following a day of hectic wrangling on Capitol Hill — where the prospects for passing the bipartisan, Senate legislation regarding the fiscal cliff hung in the balance for much of New Year's Day — the House voted 257 to 167 to pass the belated compromise measure over the objections of many conservative Republicans.

The legislation takes steps toward resolving the combination of automatic tax hikes and spending cuts that took effect at midnight on Jan. 1. It preserves tax rates as they were at the end of 2012, except for those individuals earning more than $400,000 and households earning over $450,000. It also allows taxes on capital gains and dividends to go up, and extends benefits of the unemployed. Additionally, the Senate bill delays the onset of the "sequester" — the swift, automatic spending cuts — for two months. 

Fiscal cliff compromise leaves few satisfied

"Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises the taxes on the wealthiest of Americans," Obama said in remarks at the White House Tuesday, "while preventing a middle-class tax hike."

The House vote laid bare some of the internal ideological divisions to plague the GOP over the past two years. More Republican congressmen (151) voted against the Senate bill than for it (85), meaning that Democrats' support was needed to advance the final deal. House Speaker John Boehner, R-Ohio, took the rare step of casting a vote, and did so in favor of the legislation. Rep. Paul Ryan, R-Wis., the former Republican vice presidential nominee, also supported the package. But Boehner's top two lieutenants, Majority Leader Eric Cantor, R-Va., and Majority Whip Kevin McCarthy, R-Calif., each opposed the deal.

"Now the focus turns to spending," Boehner said in a statement following the House vote. "The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

While the last-minute action on Capitol Hill essentially mitigates much of the risk posed to the U.S. economic recovery by the fiscal cliff, it hardly brings resolution to the bitter and often intractable fight in Washington over taxes and spending. The first half of 2013 will feature battles in Congress over raising the debt limit, continuing basic government funding and the expiration of this two-month delay in the sequester. 

Bipartisan outrage after House skips vote on $60 billion Sandy aid bill

Obama nodded to those looming fights in his remarks Tuesday evening, renewing his call for "balance" in any solution in the coming year to address deficits and debts. But the president also sternly warned Congress against using the debt ceiling as a bargaining chip, as Republicans had in summer of 2011.

"While I'll negotiate over many things, I will not have another debate with this Congress over whether to pay the bills they have racked up," Obama said.

PhotoBlog: Deal done, Obama heads back to Hawaii with a weary wink

The fiscal cliff itself was the product of discord in Congress resolving those very issues. And the difficulty in attaining even this less ambitious piece of legislation — versus the kind of "grand bargain" Obama had first sought in talks with Republicans — offered a cautionary tale for the 113th Congress, in which the House and the Senate remain controlled by the same parties as during the past two years. 

Squabbling
And even for much of Tuesday, House approval of the fiscal legislation — which was negotiated by Senate Minority Leader Mitch McConnell, R-Ky., and Vice President Joe Biden — was far from certain. GOP leaders were forced to cajole conservatives who complained the fallback deal contained insufficient spending cuts. Only after it became clear that Republicans wouldn't have the votes to amend the Senate proposal — which the upper chamber said it wouldn't even consider — did House Speaker John Boehner, R-Ohio, bring the bill to the floor. 

The squabbling was familiar to any observers of Congress during the past two years. This divide almost resulted in a government shutdown and a default on the national debt in 2011. It again threatened Tuesday to allow the painful, across-the-board tax hikes and spending cuts to play out just as the U.S. economic recovery showed signs of accelerating.

PhotoBlog: See images of Congress working overtime to avoid fiscal cliff

And this deal just approved by Congress in the waning hours of 2013's first day all but ensures that much of the coming year will be dominated by similar battles in Washington. Republicans are hopeful they might be able to extract more spending cuts and entitlement reforms with the government up against other deadlines, like the one needed this spring to authorize more government borrowing. 

That could complicate Obama's already-ambitious second term agenda. The president said just this past Sunday on NBC's "Meet the Press" that he will seek comprehensive immigration reform legislation and new laws to address gun violence.

In the debate over how to avoid going over the “fiscal cliff” of tax increases and spending cuts, much rhetoric has focused on what President Barack Obama is proposing to do on income tax rates, but that’s just a part of the overall revenue total the president proposed raising from higher-income earners in his budget blueprint.

Obama wants the top two marginal income tax rates to be 39.6 percent and 36 percent, instead of the current 35 percent and 33 percent.

Susan Walsh / AP

President Barack Obama speaks at the Rodon Group, which manufactures over 95 percent of the parts for K'NEX Brands toys, Friday, Nov. 30, 2012, in Hatfield, Pa.

But increasing the tax rates that apply to upper-income people is only a part -- less than a third -- of his longer-term tax proposal.

In the short run, Obama is urging the House to take up a one-year tax measure which the Senate OK’d earlier in the year on July 25.

“The Senate has already passed a bill to keep income taxes from going up on middle-class families,” Obama said in his weekly radio address on Saturday. “Democrats in the House are ready to do the same thing. And if we can just get a few House Republicans on board, I’ll sign this bill as soon as Congress sends it my way.”

He said once that bill is signed, then “we’ll have more time to work out a plan to bring down our deficits in a balanced way – including by asking the wealthiest Americans to pay a little more.”

That Senate-passed bill which Obama wants the House to pass would do the following for one year, 2013:

• Extend income tax rates enacted in 2001 for individual taxpayers making less than $200,000, for heads of households making less than $225,000 and for married couples filing a joint tax return who make less than $250,000 a year.
• Raise the top income tax rates on taxpayers above those thresholds to 36 percent and 39.6 percent.
• Increase the tax rate from 15 percent to 20 percent on dividend income and capital gains income for taxpayers whose income exceeds the threshold amounts above.
• Extend for a year the American Opportunity tax credit, a temporary tax break to offset college expenses which was enacted in the 2009 stimulus law, and extend for a year several tax breaks for low-income people which were part of the 2009 stimulus.
• Extend for one year the $1,000-per-child tax credit.

Altogether, the Senate bill would reduce tax revenues by about $250 billion, compared to the amount that would be collected if the current tax law expires as scheduled at the end of the year.

But as Obama said Saturday, he wants to enact longer-term tax changes.

And his most detailed public offer on tax policy can be found in his Fiscal Year 2013 budget proposal and the July update of that proposal.

If Congress were to enact the Obama tax rate proposal, that is, reinstate the 36 percent and 39.6 percent income tax rates for single taxpayers making more than $200,000 and for married couples making more than $250,000, the president's Office of Management and Budget says it would reduce cumulative budget deficits over 10 years by nearly $430 billion.

To put that $430 billion in perspective, the deficit for fiscal year 2012 was $1.1 trillion. So the ten-year total of revenue gained from raising income tax rates on higher-income people -- $430 billion  -- wouldn't eliminate one year's deficit, much less the deficits for the next ten years.

The Obama budget proposal calls for a much bigger tax increase on single people over $200,000 and couples over $250,000 -- a grand total of $1.4 trillion in deficit reduction over the ten-year budget period.

The tax rate increases account for only about 30 percent of the $1.4 trillion in revenue that the OMB says would be gained from Obama’s proposed tax increases on higher-income people.

Where would the rest of the $1.4 trillion come from? From limiting deductions and other tax preferences for upper-income people and from increasing taxes on dividends and capital gains.

Obama would limit the ability of married taxpayers filing a joint return with income over $250,000 and single taxpayers with income over $200,000 to benefit from a wide assortment of tax breaks: not only itemized deductions but also tax-exempt interest, employer-sponsored health insurance, and retirement contributions to 401-k and other retirement accounts.

If more revenue is the goal, could this same principle – limiting tax preferences – also apply to taxpayers who make less than $250,000? Many Congressional Democrats – especially those who represent states such as New York with high state and local taxes -- are opposed to that idea. For taxpayers in such states the ability to deduct state and local taxes is an especially valuable tax break.

Although it doesn’t seem to be part of the current bargaining between Obama and GOP Congressional leaders, there’s another tax increase on upper-income people that the president will get on New Year’s Day: the new broadened Medicare tax which will raise $20 billion in 2013 and nearly $40 billion by 2019.

DES MOINES -- Presumptive Republican presidential nominee Mitt Romney returned to Iowa on Tuesday, hammering President Obama for feeding a "debt and spending inferno," and warning of the dangers of a "nightmare mortgage" of debt that could swamp generations of Americans if tough decisions can't be made to cut government spending.

"This debt is America's nightmare mortgage. It's adjustable, no-money down, and assigned to our children," Romney said. "And politicians have been trying to hide the truth about this nightmare mortgage for years -- just like liar-loans. This is not just bad economics; it is morally wrong and we must stop it."

Appearing in the Hawkeye state for the first time since the Jan. 3 caucuses -- where Romney was briefly declared the winner before revised results showed Rick Santorum had won -- Romney stood in the very same ballroom in which he held his caucus night party and used stark imagery to warn of a debt and spending crisis he claimed was sweeping across the country like a prairie fire.

"The people of Iowa and America have watched President Obama nearly four years now. Much of that time, with Congress controlled by his own party. And rather than putting out that spending fire, he’s been feeding it. He has spent more and borrowed more," Romney said. "The time has come for a president, a leader, who will lead. I will lead us out of this debt and spending inferno. We will stop borrowing unfathomable sums of money we can’t even imagine from foreign countries we’re never even going to visit. I will work with you to make sure we put out this spending and borrowing fire."

The former Massachusetts governor's speech was directed toward driving a wedge between President Obama and independent voters by labeling the president yet again as an "old liberal," to the left of more centrist "new Democrats" like former President Clinton.

"Even a former McGovern campaign worker like President Clinton was signaling to his own party that Democrats should no longer try to govern by proposing a new program for every problem. President Obama tucked away the Clinton doctrine in his large drawer of discarded ideas, along with transparency and bipartisanship," Romney said in prepared remarks. (In his actual speech, Romney inadvertently said "McCain" instead of McGovern.). "It’s enough to make you wonder if maybe it was a personal beef with the Clintons. But probably that -– it runs much deeper than that."

"What President Obama is doing is not bold; it's old. As president, I will make the federal government simpler, smaller, smarter," Romney said, summing up his arguments.

But while Romney's speech today touched on entitlement reform and his oft-repeated pledge to cut programs, it glossed over how Romney would pay for his 20 percent across-the-board tax cuts, or his plans to expand military spending without creating even more debt, upon which President Obama's campaign quickly seized.

"While President Obama has put forward a plan to reduce the national debt by more than $4 trillion over the next decade, Mitt Romney refuses to say what spending cuts or tax increases he’d make to cover the cost of giving $5 trillion in tax breaks to the wealthiest Americans," Obama campaign spokeswoman Lis Smith said in a statement. "Mitt Romney simply wants to return to the same policies that caused the crisis and weakened the middle class: budget-busting tax cuts for the wealthiest Americans and letting Wall Street write its own rules. Loading the country up with debt while giving tax breaks to the wealthy—America can’t afford Romney Economics.”

The focus on debt and spending -- not job-creating and economic growth more broadly -- was notable here in a state with an unemployment rate of 5.2 percent, nearly three percentage points better than the national average and near full employment. For Romney to return Iowa to the Republican column in November, he'll have to overcome not just an economy that has comparatively thrived in the last four years, but also a significant organizational advantage to the Obama campaign, which boasts eight offices in the state -- including one here in Des Moines in the same location Romney used as his Iowa campaign headquarters during the caucuses.

"The Romney campaign will aggressively compete across Iowa and together with the Republican Party, we will have a bigger presence in Iowa than any previous Republican candidate for President," Romney spokesperson Rick Gorka said in a statement.

Despite the apocalyptic imagery of flames and nightmares, there was some levity in Romney's speech. Employing a metaphor for the inefficiencies and cronyism he sees in Washington DC, Romney, who once said President Obama was employing a "pay phone strategy" in a "smart phone world" described an imaginary scenario in which the federal government was the sole provider of cell phones in America.

"First of all, they'd still be under review, alright, you'd be listening to hearings in Congress on cell phones. When they were finally approved, the contract to make them would go to an Obama donor.  And of course they'd come out looking about the size of a shoe, with a collapsible solar panel attached to power it," Romney joked. "And of course campaign donors would be lining up see who could get appointed to be the App-Czar, alright."