Revised October 7, 2005


By Joel Friedman and James Horney

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The House and Senate have approved budget resolutions that assume significant tax cuts.  The budget resolution approved by the House of Representatives assumes tax cuts totaling $106 billion between 2006 and 2010, while the resolution approved by the Senate would reduce revenues by $129 billion over this five-year period.  Moreover, these budget resolutions include special “reconciliation” instructions to the tax writing committees — the House Ways and Means Committee and Senate Finance Committee.  In the Senate, these instructions cover essentially all of the tax cuts assumed in the resolution, while in the House they cover only $45 billion of the total[1]

The “reconciliation” process is a fast-track process that originally was used to facilitate the passage of deficit-reduction legislation.  The process was intended to protect hard-to-pass legislation that would reduce entitlement expenditures or raise taxes from a filibuster in the Senate, and thereby to ensure that such legislation would need 51, rather than 60, votes to pass.  In recent years, Congressional leaders have contorted the reconciliation process by using its procedural protections to make it easier to cut taxes and thereby to increase the deficit — the opposite of the way reconciliation was originally used.  Now, at a time when there is heightened concern about deficits and the Administration is proposing substantial cuts in a large array of domestic programs, the House and Senate again intend to use reconciliation to make it easier to pass further tax-cut measures.

The reconciliation process was first used in the early 1980s with the explicit goal of facilitating the passage of legislation intended to reduce the deficit.  The debate on a reconciliation bill is limited to a certain number of hours and cannot be subject to a filibuster in the Senate, which requires 60 votes to stop.  The practical result of this “filibuster protection” is that a reconciliation bill needs only a majority vote to pass in the Senate.  In the current Congress, where the majority party in the Senate holds 55 seats, the difference between needing 51 votes rather than 60 to secure passage of a bill can be substantial.

Using the reconciliation process to facilitate the passage of measures that cost money and swell deficits stands the purpose of reconciliation on its head.  Reconciliation was used to push through and enact the tax-cut packages in 2001 and 2003; as noted, Congressional leaders are now considering using it to extend those tax cuts and possibly to add new tax-reduction measures.  This is a dangerous precedent to continue to build.  If this practice continues, it may be used in the future not only to cut taxes further but also to expand popular entitlement programs.  Pressure to expand the Medicare prescription drug benefit, for example, is likely to grow once the new drug benefit takes effect and beneficiaries discover the large gaps it contains.  Reconciliation could become an obvious vehicle to facilitate such an expansion.

Using reconciliation to make it easier to pass legislation that increases the deficit is unsound fiscal policy.  When deficits were high in the past, Congress used the reconciliation rules as its most effective tool to counteract irresponsible budgeting.  The reconciliation process was originally used to help Congress “do the right thing” — to take steps that are in the nation’s best interest but are hard politically.  Now, reconciliation is being used to enhance the chances of fiscally irresponsible legislation.  At a time when Congress has decided to cut domestic programs that serve millions of Americans in the name of deficit reduction, it should resist the temptation of using reconciliation’s fast-track protections to ease the passage of tax cuts that will increase the deficit and heavily benefit those on the top rungs of the income scale.  Such misguided practices and priorities will make it increasingly difficult for the nation to get its fiscal house in order.

End Notes:

[1] Without reconciliation instructions, the remaining $61 billion of tax cuts assumed in the House budget resolution could still be considered.  They would not receive the procedural protections provided by reconciliation.

[2] See Robert Greenstein, “With Bunning Amendment, Senate Budget Would Move Up Medicare Insolvency by Four Years and Increase Deficits by More than $200 Billion,” Center on Budget and Policy Priorities, March 18, 2005.