(Obama walk-in, Boehner walk-out, back to Obama)

Despite 11th-hour talks at the White House, President Obama and top Republicans are still deadlocked on the deficit -- and blaming each other for deep, automatic spending cuts that now ARE going ahead.

SOUNDBITE (English): President Obama: (11:40 a.m.)

"It's unnecessary. And at a time when too many Americans are still looking for work, it's inexcusable."

(Obama cutaways)

And he says it's all 'cause Republicans won't scrap a single tax break for the rich.


But THEY say TAXES aren't the problem. It's HIS binge spending.

SOUNDBITE (English): John Boehner, House Speaker, R-Ohio:

"The president got his tax hikes on January 1st. This discussion about revenue in my view is over."

(B-roll Pelosi holding up furlough notices - 12:42 p.m.)

So with that, furlough notices like the ones Democrats were brandishing are going out to tens of thousands of government workers.

(B-roll money )

The $85 billion in cuts won't hit right away...

(B-roll military, TSA screening, Head Start classes)

... but ultimately could slash training and weapons programs ... force delays for air travelers ... and keep thousands of pre-school kids out of Head Start.

(Back to Obama)

And no, says Obama, he's not hyping it. Jobs will be lost and businesses will close.

SOUNDBITE (English): President Obama: (12:03 a.m.)

"We're not making that up. That's not a scare tactic. That's a fact."

Nor, he says, is it his fault if the GOP won't flinch.

SOUNDBITE (English): President Obama: (11:57 a.m.)

"Somehow, you know, do a Jedi mind-meld with these folks and convince them."

(To Binder)

So are there any political winners in this?

SOUNDBITE (English): Sarah Binder, Congressional expert, Brookings Institution: (101747)

"I think the public generally looks back on this and says a pox on both your houses, right."

(Congress B-roll)

If there IS some good news it's that BOTH sides seem ready to extend the agency spending authority that's set to run out at month's end.

SOUNDBITE (English): John Boehner, House Speaker, R-Ohio:

"I'm hopeful that we won't have to deal with a government shutdown."

(Obama walk out)

Cold comfort, though, for Americans still facing -- as Obama puts it -- a "slow grind" of spreading economic pain.

SIG-OUT: Mark Smith, Associated Press, White House