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Five Key Points About Budget “Reconciliation”

Republican leaders indicate they’ll likely use a special legislative procedure called “reconciliation” to try to repeal the Affordable Care Act, and probably also to enact tax cuts and perhaps change other spending programs.  Here are a few key points about reconciliation from our recently updated backgrounder:

1.  It offers important advantages for enacting controversial budget legislation.  The Senate can consider and pass reconciliation bills relatively quickly and with only a simple majority, rather than the three-fifths majority often needed for controversial legislation.  That’s because reconciliation legislation isn’t subject to filibuster.

2.  It’s designed to implement tax and spending changes called for in a congressional budget resolution.  To start the process, the House and Senate must agree on a budget resolution that includes language instructing various committees to draft bills raising or cutting spending, revenues, or the debt limit by specified amounts.  Those bills are then assembled into a single package for the full House and Senate to vote on.

3.  It can be used only a limited number of times.  Under Senate interpretations of the 1974 Congressional Budget Act, each budget resolution can generate only one reconciliation bill addressing spending, one addressing revenues, and one addressing the debt limit.  If, as usually happens, a single reconciliation bill includes provisions affecting both spending and revenues, Congress can’t consider another reconciliation bill affecting spending or revenues that year — unless it adopts another budget resolution.  For that reason, Republican congressional leaders are reportedly considering taking the unprecedented step of adopting two budget resolutions next year in order to produce two reconciliation bills.

4.  It’s only supposed to be used for changes that affect the budget.  The Byrd Rule (named after its chief sponsor, the late Senator Robert Byrd of West Virginia) allows senators to block provisions of reconciliation bills that don’t change spending or revenues — or if their spending or revenue effects are “merely incidental” to their non-budgetary effects.  This and other parts of the Byrd Rule can substantially limit the scope and content of reconciliation bills, though the Senate can waive the Byrd Rule with a three-fifths vote. 

5.  It can be used to pass deficit-increasing bills.  While reconciliation is traditionally viewed as a tool to cut deficits, Congress has used it on occasion to pass tax cuts that raise deficits — most notably, the 2001 and 2003 Bush tax cuts.  When Democrats took control in the House and Senate in 2007, they adopted rules prohibiting reconciliation bills that increase the deficit.  But Republicans repealed those rules after they retook those chambers.  One relevant limit remains:  the Senate’s Byrd Rule also allows senators to block reconciliation provisions that raise deficits after the period that the budget resolution covers, usually ten years, whenever the reconciliation bill as a whole increases the deficit after that period.