Debt ceiling: What the deal will do

NEW YORK (CNNMoney) -- There's plenty in it for everyone to hate.

But it will be law by the end of Tuesday.

The debt ceiling deal passed by the House on Monday and by the Senate Tuesday will keep the country out of default and reduce deficits by at least $2.1 trillion over a decade.

Whether the deal might also avert a first-ever credit downgrade for the United States is not clear, since ratings agency Standard & Poor's indicated it was looking for a credible, bipartisan plan that had at least $4 trillion of debt reduction.

The plan includes no tax or entitlement reform measures up front, although theoretically it leaves the door open to both.

A debt ceiling increase of between $2.1 trillion and $2.4 trillion: The framework will raise the debt ceiling immediately by $400 billion, then by another $500 billion after September.

After deep cuts are enacted by the end of the year, it will be increased by another $1.2 trillion to $1.5 trillion.

All told, the increases should cover the Treasury's borrowing needs until 2013.

Read the legislation - Full text

At least $2.1 trillion in spending cuts: The framework will immediately cap domestic and defense spending, resulting in cuts of $917 billion over 10 years.

The framework then calls for more deficit reduction -- between $1.2 trillion and $1.5 trillion worth -- to be determined by the end of this year and imposed over 10 years.

Bipartisan debt-reduction committee: That second round of deficit reduction would be proposed by a special bipartisan joint committee of Congress. The committee has until Thanksgiving to come up with its proposals and those proposals would be guaranteed by an up-or-down vote without amendment by Dec. 23.

If the committee proposes and the Congress approves between $1.2 trillion and $1.5 trillion in cuts, the debt ceiling will be increased dollar for dollar.

If the committee deadlocks or comes up with less than $1.2 trillion in cuts, or if Congress votes down the committee's proposals, the debt ceiling will be raised by $1.2 trillion.

While it appears the committee will be free to consider entitlement and tax reform -- and dare we say it, tax hikes -- practically speaking it's more likely members would hit an impasse over these measures just as they have, oh, every other day this year.

Across-the-board cuts as trigger: If the committee deadlocks or fails to come up with at least $1.2 trillion in debt reduction, 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. (Video: U.S. is 'debt man walking')

Dumbest Moments: Debt ceiling edition

Exempt from this round of cuts, however, will be programs that aid low-income Americans, according to Democrats' fact sheets. These include Social Security, Medicaid, veterans' benefits and pensions, food stamps and Supplemental Security Income.

While Medicare would not be exempt, the framework would restrict cuts to no more than 2% of the program's cost. And the cuts that occur would not affect Medicare benefits nor would they increase seniors' costs, according to the White House fact sheet.

Required vote on balanced budget amendment: In theory, the across-the-board cuts could be avoided if instead both chambers of Congress pass a Balanced Budget amendment to the Constitution and send it to the states for ratification before the end of the year.

But for a host of reasons, political and substantive, that's very unlikely to happen.