What Can Democrats Use Budget Reconciliation For?

What’s the story?

• The Democratic majorities in the House and Senate are starting the process of drafting a budget resolution that will allow them to prepare a coronavirus (COVID-19) relief package through the budget reconciliation process, which will give them the option of passing legislation without Republican support if bipartisan negotiations break down.
• The reconciliation process allowed the two previous administrations to work with their party’s majorities in the House and Senate to adopt what became signature legislative achievements: the Affordable Care Act (aka Obamacare) during the Obama administration in 2010 and the Tax Cuts and Jobs Act during the Trump administration in 2017.

What is budget reconciliation?

• Budget reconciliation is a fast-track process Congress can use to enact policies related to spending, tax revenues, the deficit, and/or the debt limit based on the fiscal goals included in a congressional budget resolution. 
• The process begins with both chambers of Congress adopting a budget resolution that contains reconciliation directives for committees to produce legislation that achieves the stated fiscal goals. Those committees then send their bills to the Budget Committee, which combines them into a single omnibus bill. 
• The primary advantage of a reconciliation bill is that it’s exempt from the legislative filibuster in the Senate, so it only needs a simple majority for approval rather than needing to clear a 60 vote threshold.
• However, budget reconciliation bills can’t contain “extraneous” provisions that don’t directly relate to fiscal policy, which are prohibited by the so-called “Byrd rule.”

What is the “Byrd rule”?

• Named after the late Sen. Robert Byrd (D-WV), who led the adoption of the rule in 1985 in response to Congress using reconciliation for non-fiscal policy items, the Byrd rule prohibits the inclusion of extraneous, non-germane policies in reconciliation bills.
• Under the Byrd rule, a provision is deemed extraneous if:

1. The provision doesn’t change spending or tax revenues;
2. Increases in spending and decreases in revenues aren’t in compliance with committee instructions;
3. A provision is outside the committee’s jurisdiction;
4. Spending or revenue changes are incidental to non-budgetary parts of a provision;
5. The deficit would increase beyond the “budget window” covered by the bill (the budget window includes the current fiscal year and has to cover at least the four following years, but may cover 11 or more total fiscal years); and
6. It makes changes to Social Security.

• Violations of the Byrd rule are determined by the Senate parliamentarian and Senate Budget Committee staff in a review process known as the “Byrd bath” ― while senators can raise a point of order against provisions they believe to be non-compliant. Lawmakers can remove provisions that violate the rule (known as “Byrd droppings”) from the final bill, or they can vote to waive the rule which requires 60 votes in the Senate. 

What can Democrats use reconciliation for?

• Democrats will have up to three opportunities to use budget reconciliation in the 117th Congress if they manage to adopt budget resolutions for the ongoing FY2021, plus FY2022 and FY2023.
• Currently, Democrats are considering using budget reconciliation for the $1.9 trillion COVID-19 relief plan proposed by President Joe Biden. The House and Senate are expected to consider a FY2021 budget resolution that directs committees to draft reconciliation legislation around the plan, although it’s possible they may instead pursue a bipartisan bill through the normal legislative process.
• In the House rules package for the 117th Congress, Democrats exempted provisions related to the COVID-19 pandemic and climate change from reconciliation requirements that provisions do not increase deficits outside of the budget window covered by the reconciliation bill. That may make it easier for Democrats to pass a package through the House, given their thin majority, but the package would still need to comply with the Byrd rule to clear the Senate.
• Democrats have also indicated that they may turn to reconciliation for legislation regarding climate change, infrastructure, or tax reform after they complete work on the COVID relief package.

— Eric Revell

(Photo Credit: iStock.com / Douglas Rissing)