What is Budget Reconciliation?

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 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 Senate’s so-called “Byrd rule.”
• The budget reconciliation process has been used a number of times to enact significant legislation, including 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.

How does the reconciliation process work?

• The process begins with both chambers of Congress adopting a budget resolution for a fiscal year that contains reconciliation instructions for committees to draft legislation that achieves the stated fiscal goals in terms of spending, tax revenues, the deficit, and/or the debt limit. 
• While a traditional budget resolution is intended to serve as a fiscal blueprint for the next decade, the reconciliation instructions in a budget resolution that’s being used to trigger the reconciliation process are the primary focus of the resolution.
• Once the budget resolution is adopted, the committees draft their components of the reconciliation bill itself pursuant to the fiscal instructions in the resolution. Those committees then send their bills to the Budget Committee, which combines them into a single omnibus bill that goes to the floor for consideration.
• When the Senate considers both the initial budget resolution and the subsequent reconciliation bill, it holds an open-ended “vote-a-rama” on amendments in which senators can force votes on as many amendments as they want to bring forth. Vote-a-ramas have historically lasted for hours, sometimes all night, and feature dozens of votes (the record for vote-a-rama roll call votes is 44).
• In some cases, the House and Senate may pass different versions of a reconciliation bill, in which case they can form a conference committee to produce what’s known as a conference report that contains compromise legislation negotiated by the two chambers. Debate on a reconciliation conference report is limited to 10 hours in the Senate.
• A budget resolution can technically be revised after adoption with new reconciliation instructions. However, the Senate’s parliamentarian found that the chamber would be required to move the revised budget resolution through the Budget Committee and go through a new vote-a-rama on the floor. Further, the parliamentarian found that the reuse of a budget resolution for reconciliation should only be used in “extraordinary circumstances and not for things that should have been or could have been foreseen and handled” previously.

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. 

— Eric Revell

(Photo Credit: iStock.com / Douglas Rissing)