Senate Democrats claim they struck an "agreement" that would head off the looming sequestration cuts, but since the deadline is 14 days away and Congress is in recess for the next ten, you probably shouldn't hold your breath.
It doesn't help that the plan—which includes a mix of tax increases and spending cuts—has no Senate Republicans on board, let alone the House, which is even less likely to go for it. (Even a lot of Senate Democrats aren't that gung-ho about it.) They admit that it's more of an opening position for a negotiation, but with so little time left to negotiate, the hope that the $85 billion in automatic spending cuts can be avoided is fading pretty quickly.
Both Senate leaders Harry Reid and Mitch McConnell say they will have alternative legistlation to present when Congress reconvenes on February 25, four days before the cuts are set to kick in. At the moment, there are actually four different plans of varying size and length, that would delay or replace the sequester for a few months, or as long as a year, None of them would come close to any kind of grand solution that would permanently solve our budget woes, but perhaps that's for the best. The economy seems to be doing okay because of Washington's inaction, not despite it. "Kicking the can" in a series of never-ending temporarily delays isn't the worst idea in the world, since a massive deficit reduction package would look more like European austerity than economic booster rocket.
That's exactly what the U.S. doesn't need right now. But it also doesn't need Congress to do nothing and allow the cuts that no one want kick in. So hope for a quiet 10 day recess followed by a week of furious can-kicking and another last minute deal that somehow "barely" avoids disaster.