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Budget Reconciliation: The Basics

Jan 3, 2017

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Executive Summary

Republicans might use reconciliation to push through their policy goals.

What is “reconciliation”?

Reconciliation is a tool – a special process – that makes legislation easier to pass in the Senate.

How is it different from a regular bill?

Instead of needing 60 votes, a reconciliation bill only needs a simple majority in the Senate.

Reconciliation starts with the Congressional budget. The budget bill cannot be stalled in the Senate by filibuster, and does not need the President’s signature.

If the budget calls for reconciliation, it tells certain committees to save money, and how much they need to save. Each committee writes a bill to reach the targets, and if more than one committee is told to save money, the Budget Committee puts the bills together into one big bill.

That combined bill has special status in the Senate. Like the budget, it cannot be filibustered, and only needs a simple majority to pass.

Why not use it for everything?

Other special rules, which are designed to protect the rights of the minority party, apply to reconciliation bills. Only things that change spending or revenues can be included. Senate debate time is limited, and only certain kinds of amendments can be offered. For example, the Social Security program cannot be changed in reconciliation.

Budget Reconciliation: The Basics

Republicans are likely to use budget reconciliation as a tool to enact their policy goals in the 115th Congress. This report summarizes the reconciliation process and the recent history of its use.

Overview

In its annual budget resolution, Congress sets total spending, revenues, the surplus or deficit, and the public debt. The budget may also include reconciliation instructions. These instructions direct one or more committees to change existing law affecting spending, revenues, and/or the debt limit[1]. Instructed committees can achieve savings in any of the programs under their jurisdiction.

In the Senate, the resulting reconciliation bill incorporating those proposals is considered under expedited procedures that limit debate and amendments. Like the budget resolution, a reconciliation bill cannot be filibustered in the Senate and therefore needs only a simple majority to move to a final vote. However, there are limitations on the substance of what can be included in a reconciliation bill, although a 60-vote majority in the Senate can override any objections.

How Reconciliation Works in the House

Each instructed authorizing committee drafts recommendations for spending and/or revenue changes in a manner subject to its committee rules and the rules of the House. For example, the House rule on germaneness is enforceable in committees. Committees may not adopt rules only allowing consideration of deficit-neutral or deficit-reducing amendments, even pursuant to a unanimous consent request. In meeting their reconciliation instructions, committees may choose to increase costs in some areas as well as reduce costs in others, as long as the net total of their proposal reduces deficits (through direct spending cuts and/or revenue increases, in the case of the tax-writing committees) by at least the instructed amount.

Authorizing committees submit their recommendations for spending and/or revenue changes to the Budget Committee, where the separate measures are packaged and reported to the floor (when only one committee has instructions, that committee reports its measure directly to the floor). The Budget Committee cannot make substantive changes to the recommendations, even if the committees fail to meet the targets specified in the reconciliation directive.

Amendments to Reconciliation on the House Floor

Any House Member may ask the Rules Committee to allow amendments to the reconciliation package on the House floor. The Rules Committee historically has been receptive to amendments proposed by the Chair of the Budget Committee, which generally reflect leadership views. The Budget Committee markup of the reconciliation recommendations generally includes non-binding motions offered by the minority to instruct the Committee Chair to ask the Rules Committee to make specific amendments in order on the floor. In the past, the Rules Committee has made the Budget Committee Chair’s amendment in order, sometimes incorporating it into the measure through a self-executing rule.

Under the Budget Act, amendments that worsen the deficit relative to the underlying bill are not allowed on the House floor unless the rule for the bill waives the point of order. [2] All amendments must also be germane to the underlying bill unless the rule waives the germaneness point of order.

If House Committees Do Not Comply with Reconciliation Instructions

While there are no penalties or points of order for failing to achieve the level of savings in the reconciliation directives, authorizing committees generally do make the required deficit reduction. If they do not, the House Rules Committee could make in order an amendment that achieves the required savings in a way that is counter to the wishes of the authorizing committee. Note that the budget resolution’s reconciliation targets apply to the initial recommendations from the committees and not to the reconciliation conference agreement, which may contain more or less savings.

Benefits of Reconciliation in the Senate

The reconciliation procedures in Senate committees are similar to those in the House. In the Senate, however, reconciliation bills are subject to expedited procedures during floor consideration, as well as specific limits imposed by the so-called “Byrd rule” (which is described farther below).

The first major benefit is that debate on a reconciliation bill or reconciliation conference report is limited to 20 hours, so it cannot be filibustered on the Senate floor. The practical effect is that the bill can be passed with a simple majority vote, in contrast to most legislation, which requires a 60-vote supermajority to invoke cloture and limit debate. After debate has expired, Senators may continue to offer amendments but they are not debatable. This is colloquially referred to as “vote-a-rama.” Second, amendments to a reconciliation bill must be germane, which is normally not the case in the Senate.

Third, with only a few exceptions, amendments to a reconciliation bill on the Senate floor cannot increase the deficit; they must either lessen the deficit or be deficit-neutral. One exception is that amendments striking an entire provision are always in order, even if the provision being removed saves money. In the Senate, if the reconciliation bill fails to meet a committee’s savings target there is a procedure to allow non-germane floor amendments to bring the bill into compliance with the reconciliation instructions.

Limitations of Reconciliation in the Senate – the Byrd Rule

Named for Senator Robert Byrd, the Byrd rule (Section 313 of the Congressional Budget Act) was first adopted in the mid-1980s to limit extraneous provisions from inclusion in reconciliation bills. Because reconciliation bills are considered using expedited procedures in the Senate, the Byrd rule is aimed at preventing using reconciliation to move a legislative agenda unrelated to spending or taxes, and to some extent protects the intended purpose of reconciliation as a tool to reduce the deficit. The Byrd rule prohibits the inclusion of “extraneous” measures in reconciliation, and defines the following items as extraneous:

  • measures with no budgetary effect (i.e., no change in outlays or revenues);
  • measures that worsen the deficit when a committee has not achieved its reconciliation target;
  • measures outside the jurisdiction of the committee that submitted the title or provision;
  • measures that produce a budgetary effect that is merely incidental to the non-budgetary policy change;
  • measures that increase deficits for any fiscal year outside the reconciliation window; and
  • measures that recommend changes in Social Security.

Any Senator may raise a point of order against an extraneous provision in the reconciliation bill, amendments, or the conference agreement. The Senate Parliamentarian decides whether there is a Byrd rule violation, and provisions struck through a Byrd rule point of order cannot be offered later as amendments. However, Byrd rule points of order can be waived by a vote of 60 Senators.

In addition to the Byrd rule limitations, just as in the House, amendments that worsen the deficit relative to the reported reconciliation bill are not allowed in the Senate.[3] Reconciliation bills are subject to other Senate points of order, like the Senate PAYGO rule, that apply to all legislation.

Reconciliation Conference Agreement Procedures

As noted above, a reconciliation conference agreement is not bound by the original reconciliation instructions. Technically, neither the House reconciliation bill nor the Senate bill is bound by the targets, but the threat that the Budget Committees or someone else could propose floor amendments bringing the bills to their targets has historically given authorizing committees the incentive to meet the targets themselves. That threat does not apply to conference agreements, which cannot be amended on the floor.

However, even though a conference agreement cannot be amended, it is still subject to Byrd rule requirements in the Senate. Thus, although the Byrd rule does not apply in the House, it constrains what can be included in the reconciliation conference agreement. A provision violating the Byrd rule can be struck from the conference agreement on the Senate floor unless 60 senators vote to waive the point of order. Stripping a provision due to a Byrd rule violation does not mean the conference agreement is defeated, just that the agreement will be sent to the House without the stripped provision.

Recent History

In January 2016, the House approved a reconciliation measure (H.R. 3762) to dismantle the Affordable Care Act (ACA) and prohibit funding for Planned Parenthood. President Obama vetoed this legislation, and Congress failed to override the veto.

Prior to that, reconciliation was used in 2010 to enact the final parts of the ACA[4] and changes in student loan programs. In May 2012, House committees produced legislation pursuant to reconciliation directives in the Republican House-passed budget resolution. Provisions were packaged by the Budget Committee and the bill passed on the floor, although it was known at the time that the bill would not be considered as a reconciliation bill by the Senate since it was not pursuant to a budget resolution conference agreement.

In total, Congress has used reconciliation 24 times since 1980 – 4 bills were vetoed and 20 enacted – primarily for legislation that reduced the deficit through cuts in mandatory spending or increases in revenues. However, beginning in the early 2000s, Republican Congresses began to routinely use reconciliation to increase the deficit, enacting major tax cuts without offsetting the revenue loss in 2001, 2003, and 2006. [5]

 

[1] The 2016 budget resolution conference report included a point of order in the Senate against using reconciliation bill to raise the debt ceiling.

[2] Even if the underlying bill achieves greater savings than the budget resolution instructed, amendments that worsen the deficit are not permitted in the House.

[3] Section 3206 of the 2016 budget resolution conference agreement includes a provision applying the House rule to the Senate.

[4] The vast majority of the ACA became law outside the reconciliation process, when the House passed the Senate health reform bill without amendment and the President signed it. The reconciliation bill consisted of limited, targeted changes to the underlying law sought by the House.

[5] See archived Congressional Research Service Report RS22098, “ Deficit Impact of Reconciliation Legislation Enacted in 1990, 1993, 1997, and 2006 .”