BY DAMIAN PALETTA AND JANET HOOK

The federal government enters a controversial new phase of deficit cutting Friday, as an automatic trigger begins slicing budgets in some areas while leaving programs such as Medicare and Medicaid—among the largest drivers of future debt—largely untouched.

The $85 billion in so-called sequester cuts push Washington, and the nation's economy, into uncertain waters. The debate over the across-the-board reductions has added to the already-high level of acrimony between Democrats and Republicans on fiscal matters, lowered even further the public's estimation of the capital's leaders and raised consumer fears about the economy, according to polls.