Lawmakers, administration officials, journalists and much of official Washington will begin using the term “budget reconciliation” over and over during the first few days of the 115th Congress—and will probably continue doing so until the last days of 2017.
Congress established the “budget reconciliation” process, often shortened to simply “reconciliation,” in the 1974 Congressional Budget and Impoundment Act. The new law set up a fast-track budget process designed to come at the end of the calendar year to allow Congress to better meet its budget targets. The law envisioned the following:
- The House and Senate would pass a budget resolution, not a law, that would set top-line spending and deficit targets for the fiscal year beginning on October 1. After Congress completed its appropriations process and any mandatory and tax legislation, the Congressional Budget Office (CBO) would provide updated spending and deficit data for the second time in the year, typically in September, with the first being at the beginning of the calendar year.
- If the CBO stated that the budget deficit targets were below what Congress set as a goal in the budget resolution, Congressional leaders could use a fast-track legislative process (i.e., reconciliation), to cut spending and raise taxes in order to meet the deficit targets set earlier in the year.
- The bill would (typically) include provisions from several different Congressional committees with jurisdiction over mandatory spending, fee collection and taxes. (In the House, much of the deficit reduction has taken place in the Ways and Means and Energy and Commerce Committees; in the Senate, the Finance Committee has been the lead deficit reduction committee in this process.)
President Carter signed the first reconciliation bill in 1980. Since then, Congress has tweaked the law, legislating changes designed to force Congress to make tough decisions on meeting the deficit targets, although such changes have been largely unsuccessful.
Application of the baroque parliamentary rules governing the reconciliation process has changed since the 1980s, and new parliamentary rules have been adopted, most notably the so-called “Byrd Rule,” designed to ensure that the reconciliation process remains focused on budgetary by providing a point of order against material defined to be “extraneous” to budgeting, i.e., a provision that is not about spending (outlays) or taxing (revenues) or is “merely incidental” to budgeting. If a provision violates the Byrd rule, it can be removed on Senate floor unless 60 Senators vote to keep it.
Then there is the Senate parliamentary rule that reconciliation bills do not have to reduce the deficit at all. The so-called Bush tax cuts in 2001 increased the deficit but were considered under the fast-track reconciliation process. Congress, however, provided a sunset for these tax cuts after 10 years.
Basically, the reconciliation process is now used to implement a budget, spending and tax deal supported by the Congressional majority leadership.
President-elect Trump and the Republican majority in Congress will now be able to use this process to repeal or change the Affordable Care Act, cut taxes, increase infrastructure spending and, potentially, increase tariffs outside the normal legislative rules of Congress. In practical terms, this process only alters the way the Senate considers reconciliation legislation; the House can pass any legislation with a majority vote, regardless of whether it is in reconciliation form or not.
The 2017 reconciliation process allows the Senate majority to do the following:
- Pass legislation changing mandatory spending, fees and taxes with only 50 votes in the Senate, not the 60 typically required for all other legislation. This means that the Senate leadership does not need the votes of any Democrats to pass this legislation and they can even lose two GOP votes and still be successful.
- Divide up spending and tax legislation into more than one reconciliation bill, allowing Congress to consider unrelated measures separately, to avoid loading up disparate legislation (e.g., health care, taxes, infrastructure spending, etc.) into one massive omnibus package, something that many House Republicans have protested in the past.
- Limit Democratic amendments to strictly “germane” amendments. If amendments do not meet this standard, 60 votes will be needed to pass them. In other words, if the first reconciliation bill does not contain provisions changing Medicare, any amendment offered by a Democrat on Medicare would need 60 votes to pass.
- Prevent a filibuster of any part of the reconciliation process, including procedural votes like motion to proceed, appointing conferees, going to conference, etc.
House Democrats have no power to stop the reconciliation process—and can’t even do much legislatively to protest it.
Senate Democrats have limited powers to delay the Senate and offer politically difficult amendments for the majority to be forced to vote against, but in the end, without three Republican defections during part of this process, the congressional GOP leadership should be able to enact its agenda on spending and taxes.
The Senate Democrats have the following limited power:
- They can offer dozens of amendments to the budget resolution, which creates the reconciliation process, and to the actual reconciliation bills themselves. Some of these could be substantive and bipartisan but most will likely be designed to force Republicans to vote against something popular in the ACA or in the tax code.
- They can try to knock out extraneous provisions in the reconciliation bills that do not “score” and thus are Byrd Rule violations. If they find Byrd Rule violations, and the Parliamentarian agrees, they can strike them from the bill unless the GOP can muster 60 votes to overcome the violation.
- They can also obstruct and delay other legislation, nominations, committee meetings and committee hearings. This can cause the Senate GOP leadership headaches and scheduling problems, but cannot stop the inevitable, a reconciliation bill that 50 GOP senators support.
So when it comes to budget and taxes, the majority will rule without the threat of a filibuster.
