NEW YORK (CNNMoney) -- The downgrade of the United States' AAA credit rating will apply even greater pressure on Congress to follow through on plans to tame the nation's debt.
Over the next few months, Washington is set to engage in a series of battles over the fiscal course of the federal government.
And that debate will largely be carried out through a new bipartisan "super committee." The 12-member panel -- six Democrats and six Republicans -- will have until Nov. 23 to propose how to cut between $1.2 trillion and $1.5 trillion in deficits.
Congress will then take an up-or-down vote on the proposals by Dec. 23.
In its downgrade announcement on Friday, credit rating agency S&P said it could "stabilize" the country's rating if the committee's work helps lead to debt-reduction measures "beyond the minimum mandated."
The committee was established by the debt ceiling deal signed by President Obama this week. The law put caps in place on domestic and defense spending, resulting in cuts of $917 billion over 10 years.
According to the Budget Control Act of 2011, Congress must appoint members to the committee in the next couple weeks.
Members will be tasked with finding ways to cut the deficit while navigating tough issues that have festered in Washington for decades: taxes, along with cuts to entitlements, defense and discretionary spending.
The members of the committee will face intense pressure from lobbyists and special interest groups, as well as their fellow lawmakers -- who have to run reelection campaigns and want their views represented.
A dispute has, of course, already erupted over whether the committee will tackle taxes, and which baseline should be used to measure cuts.
While the committee -- once appointed -- faces a series of tough choices, they also have a powerful incentive to finish their work on time, and on budget.
The committee's goal is to cut at least $1.5 trillion in debt. If it fails to do that or deadlocks, the sword of Damocles will fall on most forms of spending in the federal budget.
Specifically, as much as $1.2 trillion in across-the-board cuts would kick in -- evenly divided between defense and non-defense spending.
The battle over 2012: The super committee won't be the only budget game in town. Lawmakers will also have to decide on agency spending levels for fiscal year 2012, which starts Oct. 1.
As part of the debt ceiling deal, Congress decided to cut spending for the year, but not which programs and agencies will receive less money.
The deadline for making those tough choices is just around the corner.
The debt ceiling law sets discretionary spending levels for 2012 at $1.043 trillion and at $1.047 trillion for 2013 -- or an accrued total of $10 billion below current levels.
Congress has made little progress on the normal appropriations process, and faces the risk of starting the year with a short-term stopgap spending plan, called a continuing resolution.
That sounds an awful lot like what happened with the fiscal 2011 budget, when the process degenerated into a protracted battle that brought the government to the edge of a shutdown.
Congress passed seven continuing resolutions over the course of six months.
Of course, short-term spending bills are nothing new. Congress has enacted at least one every year for all but three of the past 30. But seven in one year was unprecedented, and indicative of partisan gridlock.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.07%||4.28%|
|15 yr fixed||3.18%||3.26%|
|30 yr refi||4.05%||4.21%|
|15 yr refi||3.17%||3.18%|
Today's featured rates:
|Latest Report||Next Update|
|Home prices||Aug 28|
|Consumer confidence||Aug 28|
|Manufacturing (ISM)||Sept 4|
|Inflation (CPI)||Sept 14|
|Retail sales||Sept 14|