Latest word from a buddy of mine who works for a Congressman is this:
Earliest you can cut the budget is FY2012, which is the end of Sep. Total discretionary budget is approx $1.4T, but it can't be cut sooner than Sep. and can't cut $2T in one year ($1.4 is theoretical max). So, what will happen is we'll raise the debt limit $2T and then spread the $2T in cuts over several years. The real sticking point right now is over HOW MANY years. That said, by definition, there will be cuts that will have to occur after the 2012 election.
Even the optimistic of holdouts should finally start to realize we aren't serious about getting our financial house in order.