Democrats in Congress are attempting to pass a $3.5 trillion economic plan that would allocate funds for climate initiatives, the expansion of the child tax credit, as well as the expansion of Medicare. Since the plan has already been approved by the U.S. House of Representatives, all eyes have once again turned toward the U.S. Senate. In the Senate Chamber, Democrats are using budget reconciliation to pass their economic plan without Republican support.
Budget reconciliation is a special process used by Congress to pass legislation that makes specific and limited adjustments to spending or revenues.
It allows both legislative chambers to direct committees to make specific and limited policies that adjust spending or revenue. This special process was created in the Congressional Budget Act of 1974 and policymakers have enacted it a total of 21 times and has been used to both increase and cut taxes.
The process starts when Congress provides reconciliation instructions to committees in their annual budget resolution.
In both chambers, though not necessarily simultaneously, each instructed committee drafts recommendations in a way that is consistent with the rules of the committees and their respective chambers. Committees then submit their recommendations to their Budget Committee’s to be packaged and reported to the floor. This is where the benefits of reconciliation in the Senate matter: debate on the bill or conference report is limited to 20 hours, so no filibuster is possible. This also means the vote threshold is lowered to a simple majority since there is no need to invoke cloture and limit debate, which requires a 60-vote supermajority. Amendments may be offered, but they are not debatable and must remain germane.
There are limits to this special process, however, since it allows senators in the majority party to disregard the minority party.
The process itself limits the subject of reconciliation to spending, revenues and the debt limit, which must be addressed in a single or multiple bills if each bill addresses each subject separately. It also cannot be used more than three times per year per budget resolution, nor can it increase deficits.
Additionally, the Byrd Rule allows senators to block provisions that are “extraneous.”
The Byrd Rule generally treats any provision of a budget reconciliation that doesn’t change the level of spending or revenues as extraneous. This includes measures that are outside the jurisdiction of the committee, measures that produce an incidental budgetary effect to a non-budgetary policy, and measures that recommend changes in Social Security. Senators may raise “points of order” against extraneous provisions and the Senate Parliamentarian decides if there is a Byrd Rule violation. Recently, the immigration policy changes within the $3.5 trillion bill were ruled to be a Byrd Rule violation.
The reconciliation process can still end in failure for the majority party if they do not have a majority of votes at final passage.
The most recent example of this was Congressional Republicans’ attempt to repeal the Affordable Care Act in 2017. Sen. John McCain, the Republican from Arizona, cast the decisive “no” vote that ensured the reconciliation bill’s failure. This outcome is also possible for the Democrat’s majority today with Senator’s Krysten Sinema and Joe Manchin voicing potential opposition to this process.
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