This tool is called “budget reconciliation,” and it’s something you’re bound to hear a lot about in the coming weeks. This complicated Senate process is the vehicle by which important Democratic priorities could actually pass Congress and reach President Joe Biden’s desk.
Democrats hold 50 seats Senate. To pass bills, they will have to contend with the Senate’s unusual rules like the filibuster, a procedural requirement that bills receive 60 votes in the Senate to come up for a floor vote. The filibuster would force Democrats to get support from at least 10 Republicans to pass most legislation.
There is already debate about whether Democrats should just eliminate the filibuster altogether and pass whatever they want with a simple majority. But absent such a big step, they are left with budget reconciliation.
They can pass a reconciliation bill with just 50 votes. But reconciliation also comes with certain conditions, limiting what policies can pass through this special process, and that makes legislating a lot more complicated.
Here’s what you need to know.
1) What is “budget reconciliation,” and why should I care?
In order for a bill to become a law, it needs to pass the United States Senate.
Democrats control the Senate, the House of Representatives, and the White House, which in theory gives them the power to make laws. But while bills can pass out of the House on a simple majority, almost all bills in the Senate are subject to the “filibuster,” a Senate rule (but not a law) that requires legislation to receive 60 votes to be brought up for a final vote.
Almost all bills, but not those passed via the process called budget reconciliation. Under this special procedure, a bill can be brought up for a vote and pass with a simple majority.
Democrats’ Senate majority is as thin as can be: 50-50, with Vice President Kamala Harris available to break a tie. For most bills, they’re going to need support from at least 10 Republicans. But using a budget reconciliation bill, they can pass any bill they want, within the limitations that govern the reconciliation process.
Biden and senators from both parties are talking a good game about bipartisanship in the post-Trump, post-storming of the Capitol era. But partisan politics has a way of taking over any legislative debate.
Democrats may find that in order to pass a Covid-19 relief bill, or other major priorities on taxes, health care, and the environment, they need to muscle through a bill using budget reconciliation. But in exchange for the privilege of passing legislation with “only” 51 votes, budget reconciliation bills are subject to certain rules.
2) What can the Senate pass with budget reconciliation?
A lot of things — so long as they affect federal spending and revenue. It’s called budget reconciliation, after all. Reconciliation was established as part of the Congressional Budget Act of 1974, driven by lawmakers concerned about the growing federal deficit.
The process begins with a congressional resolution instructing committees in the House and the Senate to draw up legislation. The budget resolution sets the first parameter for what can pass via budget reconciliation: The final bill must reduce or increase the federal deficit by no less or no more than the amount specified in the resolution.
For example: The budget resolution passed by Senate Republicans in 2017 to set up reconciliation for their tax plan stipulated that the bill could increase by the deficit by $1.5 trillion over 10 years — but no more. That became the target as Republicans decided which taxes to cut and which to raise.
The provisions that are included in the reconciliation bill must then somehow change federal spending or federal revenue. Raising and lowering taxes, expanding subsidies for health insurance, and spending money on new infrastructure projects are some of the obvious, much-discussed ideas that could be included in a reconciliation bill.
3) What can’t pass with budget reconciliation?
Reconciliation was used at first in the 1980s to approve Reagan-era spending cuts, but quickly senators started to use reconciliation for policies unrelated to its original purpose. One reconciliation bill was used to reduce the number of board members on the Federal Communications Commission.
In the eyes of Senate institutionalists like Robert Byrd of West Virginia, these were abuses of the reconciliation process. So Byrd proposed and the Senate codified constraints on what can be passed through budget reconciliation, to make sure the process was actually used for matters affecting the federal budget. Those constraints are now colloquially called the Byrd Rule.
Under the rule, reconciliation bills can’t change Social Security. They can’t be projected to increase the federal deficit after 10 years. They must affect federal spending or revenue — and their effect on spending or revenue must be “more than incidental” to their policy impact.
In other words, the primary purpose of the provisions in a reconciliation bill must be to affect the federal deficit; those budgetary effects can’t simply be a byproduct of trying to achieve some other policy aim. To borrow an example that came up a lot during the recent health care debates, changing insurance regulations might not comply with the Byrd Rule. While those changes would surely affect federal spending (the government spends money subsidizing health insurance, so changes to its cost would alter federal outlays), their main policy purpose would be to affect what kind of health coverage people receive.
4) Who decides what can be included in a budget reconciliation bill?
Unelected bureaucrats. Kidding — sort of. There are two important referees in the reconciliation process: the Congressional Budget Office and the Senate parliamentarian.
The CBO produces projections on how any legislation, including reconciliation bills, will affect the budget. Ordinarily, those projections have been the guidepost for whether a bill is meeting its reconciliation targets. If CBO says your bill costs $1.5 trillion, and the budget resolution passed to set up reconciliation said the bill was supposed to cost no more than $1 trillion, then you need to cut $500 billion out of the bill.
That may not necessarily be an ironclad rule, however: When Senate Republicans were using budget reconciliation to pass the tax bill in 2017, there was speculation they could use their own estimates if the CBO’s were not to their liking. (They ended up not needing to take such a drastic measure, though they still attacked the Senate’s nonpartisan experts and said the estimates were undervaluing how much their tax bill would spur the economy.)
And the CBO can be circumvented in other ways. In their 2017 bill, Senate Republicans allowed some tax breaks for individuals to expire so that their bill wouldn’t increase the federal deficit outside the 10-year budget window. However, no one at the time actually believed Congress would let those tax cuts sunset — i.e., hike taxes on people — when that deadline comes. It was a gimmick, plain and simple.
Aside from CBO, the Senate parliamentarian plays an important role in determining which provisions can be included in a reconciliation bill. The current parliamentarian is Elizabeth MacDonough, who has held that position since 2012 and is the first woman in the job.
There is usually one recurring gray area when making those calls: Is a policy’s budgetary impact “incidental” or not? If it is, under the Byrd Rule, it must be struck from the bill. Traditionally, the parliamentarian makes the final decision after they have heard arguments from both sides about the provisions in question. (It’s called a “Byrd Bath.”)
5) Does the Senate have to listen to the parliamentarian?
This is the subject of debate. Traditionally, the parliamentarian’s decision has indeed been final. But that is a norm, not a divine command. Republicans once fired a parliamentarian whose decisions they disagreed with. (The story, in brief: In 2001, Senate Majority Leader Trent Lott was reportedly annoyed that Parliamentarian Robert Dove blocked Republicans from passing more than one reconciliation bill in a year, and so Lott ousted Dove.)
Some activists and even some lawmakers have also pointed out that the vice president, who presides over the Senate, has the ultimate authority over what is permissible under budget reconciliation. The parliamentarian technically offers only guidance to the presiding officer. But the vice president hasn’t overruled a parliamentarian since 1975, when Nelson Rockefeller pushed through a change to the Senate filibuster rules against the advice of the parliamentarian.
Some Democratic priorities would seem to be in a Byrd Rule gray area — such as a $15 minimum wage and DC statehood, to name two — and Senate Democrats may face pressure to overrule the parliamentarian if she is standing in the way of achieving those goals.
But Democrats who are more reluctant to dramatically change Senate procedure might object to that plan. They would argue it sets a precedent that would break the budget reconciliation process forever; any future Senate could simply circumvent the parliamentarian, too, removing the guardrails that are supposed to govern the process.
6) Why can’t the Senate use budget reconciliation for every bill?
There is a technical answer and a “real” answer.
Technically, it’s because a budget reconciliation bill starts with a budget resolution, and Congress passes one budget resolution for any given fiscal year.
The budget resolution can, in theory, set up three separate reconciliation bills: one for taxes, one for spending, and one for the federal debt limit. However, in practice, most reconciliation bills have combined taxes and spending into a single piece of legislation. That’s the reason that, historically, the Senate has usually been limited to passing only one budget reconciliation bill in a given fiscal year.
A side note: Sometimes, they do have wiggle room. In early 2017, Republicans passed one resolution for fiscal year 2017, which was halfway over, and then another for fiscal year 2018, giving them two shots at reconciliation in quick succession. (They used the first bill to try to repeal the ACA and the second for their tax bill.) The Center on Budget and Policy Priorities points out Democrats could conceivably pull the same trick this year.
Regardless, the real issue is some senators are very skittish about getting rid of the filibuster — that 60-vote requirement for bringing up most bills for a final vote on the Senate floor — and having reconciliation allows them to avoid it. They can pass some policies with a simple majority without opening the door for any and all bills to be subject to a mere 50-vote threshold.
7) This sounds complicated. Wouldn’t it be easier for Democrats to just get rid of the filibuster?
The problem is political. Eliminating the filibuster requires 50 votes. Democratic senators from conservative states don’t necessarily want to be asked to take the tough votes again and again. The filibuster gives them protection, by all but mandating that a bill must get at least some bipartisan support before it comes up for a vote.
Senators who support keeping the filibuster would also say it also helps encourage deliberation and compromise, which are supposed to be the cardinal virtues of the Senate.
In practice, the filibuster has largely served as an obstructionist tool for the minority. That’s why now-Senate Minority Leader Mitch McConnell has been insisting on keeping it while negotiating a power-sharing agreement with incoming Senate Majority Leader Chuck Schumer. But Democrats are holding off on making such a promise. Even Democrats from red states, like Jon Tester of Montana, have said they don’t want to give up the leverage of possibly eliminating the filibuster down the road if Republicans prove unwilling to work with the new majority.
Whether Senate Democrats would actually be willing to end the filibuster for legislation is one of the big questions looming over the next two years. The threat to do so could bring Republicans to the negotiating table.
But whatever they decide on the larger filibuster question, they will get a chance to pass a major bill without any Republican votes, through reconciliation.
8) What are some previous examples of budget reconciliation bills?
President Bill Clinton’s welfare reform bill was passed via reconciliation, as were George W. Bush’s tax cuts. Since 1980, 21 reconciliation bills have become law, most of them of the tax and spend variety.
Reconciliation was critical to the Affordable Care Act’s passage. The House and Senate, both controlled by Democrats in 2009, had passed separate bills for health care reform but not yet come up with a final compromise when Republicans won a special Senate election in Massachusetts to replace the late Ted Kennedy. Democrats lost a 60-vote supermajority, and suddenly it looked impossible to finish health care reform through regular order.
To get their plan to President Obama’s desk, House Speaker Nancy Pelosi passed the Senate version of health care reform (the ACA), and Congress then used a reconciliation bill to make some technical changes to the plan, which otherwise would have been made in the conference negotiations between the House and Senate.
After Donald Trump’s election, Republicans tried to repeal and replace Obamacare via reconciliation but couldn’t find 50 votes for their proposals. They did succeed in passing their tax bill through the process in the next fiscal year.
9) Are Democrats going to use reconciliation now? And if so, to do what?
We don’t know! Senate Democrats had begun to write a new Covid-19 relief plan that would pass reconciliation muster, but President Biden is urging them to at least try to reach a deal that would win some Republican support.
Still, they may end up finding that the GOP isn’t willing to play ball. If Democrats fail to reach a deal with Republicans on Covid-19 relief, it sounds like they will first use reconciliation to pass a pandemic-focused bill.
“The objective of both House Democrats and the administration is to get this done as quickly as possible in whatever we need to do,” Rep. John Yarmuth, chair of the House Budget Committee, told reporters. “We haven’t made a decision yet to use reconciliation, but we are prepared to move very quickly if it looks like we can’t do it any other way.”
Then the question would be whether Democrats try to pass a second reconciliation bill, following the Republican playbook from 2017. Other candidates could include a package featuring tax reform and health care provisions. They may try to pass an infrastructure plan through reconciliation if they can’t win any Republican support on that issue.
This will be among the most important decisions the new Democratic majority makes. Unless they decide they are willing to eliminate the filibuster, budget reconciliation would represent their best chance to achieve some of their big legislative goals.
But they will have to navigate this byzantine set of rules and norms to make it happen.
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