A guide to budget reconciliation, which Democrats could use to push Biden’s agenda

A guide to budget reconciliation, which Democrats could use to push Biden’s agenda

If President Joe Biden cannot gather enough bipartisan support for his $1.9 trillion COVID-19 relief plan, Democrats will look to another way to get at least some of it through on a simple Senate majority with 51 votes.

They’ll use a process called budget reconciliation, not to be confused with talk of unity and political reconciliation. It has been used often for high-profile legislation, including massive tax cuts in 2001, 2003 and 2017 and 2010’s Affordable Care Act, also known as Obamacare.

Despite that, it’s often seen as a “black box” — what is allowed under it isn’t always clear. That’s because, according to experts, it actually isn’t clear. The limitations are vague and subject to the whims of the Senate parliamentarian, who doesn’t provide written guidance.

Below is a quick guide to reconciliation.

What is budget reconciliation?

An optional process Congress can choose to use after adopting a budget resolution that allows some types of legislation to be filibuster-proof in the Senate and thus easier to pass.

Why is it called reconciliation?

For a tool that’s been mostly used for partisan purposes for the last 20 years, its name does sound odd. It stems from the technical purpose in the law creating it, that the bills that receive protection from the filibuster are meant to “reconcile” current law and pending bills in Congress to the fiscal targets in the budget resolution.

How does it work?

First, the House and Senate have to agree to a budget resolution, something that happened regularly until the late 1990s but now only happens when both chambers are held by the same party. In that resolution, lawmakers lay out tax, spending and deficit targets for the years ahead and give instructions to specific committees to write legislation to hit those targets.

The spinoff bills — a tax bill, a spending bill (or a combined deficit-increasing or deficit-reducing bill that includes both tax and spending changes) and debt-ceiling bill — are immune to the filibuster in the Senate, meaning they can be passed with 50 votes and the vice president’s vote as the tiebreaker. But if parts of the bills stray from budget-related issues, they can get stripped out individually and require a supermajority, usually 60 votes, to retain.

What are these limits you keep mentioning? Is that the Byrd rule I keep hearing about?

In the early 1980s, Democratic Sen. Robert Byrd of West Virginia, already suspicious of anything that allowed bills to bypass normal Senate rules, was alarmed by the number of “extraneous” measures his fellow senators were trying to stuff into a reconciliation bill. (According to one expert consulted for this article, Bipartisan Policy Center Senior Vice President Bill Hoagland, it was a provision dealing with Coast Guard user fees that a senator had been previously unable to pass that drew Byrd’s ire.)

To put a stop to that, Byrd proposed a Senate rule that was later codified into law. The rule has six “thou shalt not” provisions about what cannot be included in reconciliation bills. The most prominent are prohibitions against changes to Social Security, increasing the budget deficit in the so-called out years, years beyond those mentioned in the instructions to the committees, and any changes that have only a “merely incidental” effect on revenues or spending.

So what does “merely incidental” mean?

And here’s where it gets weird. While many focus on the size of a budget impact — would a $50 million change in revenues over 10 years be “merely incidental in a $2 trillion reconciliation bill? — experts warn that the test is not just about the size of fiscal change but also its relation to the policy involved.

One expert said a Republican proposal to split the Ninth Circuit of federal courts — a long-sought goal of conservatives who see the circuit as dominated by liberal judges — was dropped after the Senate parliamentarian indicated that even though the change would have fiscal impact and include the autopilot direct spending reconciliation is used for, the budget impact would be seen as “incidental” to the policy change involved.

A related hangup is that a reconciliation change must make a change in outlays or revenues or the “terms and conditions” under which outlays are made or revenues collected, with the meaning of “terms and conditions” not always clear.

Who is this parliamentarian and why do they matter?

Elizabeth MacDonough was appointed to be the Senate parliamentarian in 2012, by then-Majority Leader Harry Reid, a Democrat. But parliamentarians are shared Senate staff and thus expected to be nonpartisan so MacDonough was retained when the chamber switched to Republican control in 2015.

When there’s a question of whether a provision would be successfully challenged on the floor via the Byrd rule, the issue is usually argued first in the parliamentarian’s office by staff from the two parties. The parliamentarian may rule then or withhold a ruling until the issue is brought up on the floor.

Either way, the process is opaque, even for the often-Byzantine Senate. No written decision is formally issued and sometimes even the staff can be unsure why the parliamentarian ruled the way they did or how much weight as a precedent a call has.

Can the parliamentarian be overruled?

Yes, and with only 51 votes, but it’s risky. First, there’s the public relations aspect — overruling the closest thing the Senate has to a neutral umpire may look bad, or even cause them to resign in protest. But also the override becomes a new precedent, which would govern future disputes.

More importantly, overruling would also likely be seen as breaking the filibuster without voting to get rid of the filibuster. If a provision can be brought into reconciliation bill, ruled out of order by the parliamentarian and then be allowed on a simple majority vote, that is no different than passing the same thing outside of reconciliation with 51 votes, the argument goes. The counterargument is overrides could still be stopped with a supermajority, making it different from scrapping the filibuster.

So what can/can’t Democrats do?

It all depends. Do the Democrats pass a budget? How is a provision structured? Does it meet the Byrd rule? But some Democratic priorities look like good candidates for reconciliation, while others don’t.

$15 minimum wage: Probably not. Mandates have a speckled history in reconciliation in general and even then the size of a minimum wage hike on the federal budget would likely make it too small to be more than “merely incidental.” A broader analysis of its economic impact could show a larger effect but that would be similar to Republicans’ failed effort to use “dynamic scoring” to show a smaller revenue loss from tax cuts in 2017.

Read more: Yellen says raising minimum wage to $15 would have ‘minimal’ impact on jobs, but nonpartisan Congressional Budget Office disagree

Immigration reform: Sort of. Some parts of a plan similar to what was proposed by a bipartisan group of senators in 2013 would squarely be within the bounds of reconciliation, experts say. But some other portions, particularly those without any revenue or spending effects, would not be, leaving the possibility of a “Swiss cheese” immigration bill with loopholes.

Infrastructure: Probably. While Biden has indicated infrastructure will not be a part of his initial package aimed at easing the economic pain caused by the pandemic, it may be in a second round of reconciliation this year. A surge of spending on infrastructure – but limited to five or ten years like the Bush tax cuts to avoid the Byrd outyear deficit prohibition – could pass parliamentary muster, if written correctly, experts say. It’s not a slam dunk, though — the nature of highway trust fund spending, which is not quite appropriations and not exactly direct spending, could be a problem.

Opinion: Biden can forge bipartisan cooperation with a bold infrastructure program

Where can I learn more?

Primers exist from a variety of sources, including Congressional Research Service, the Committee for a Responsible Federal Budget, the liberal Center on Budget and Policy Priorities and the conservative Heritage Foundation.

U.S. stocks


 closed mixed Monday, as investors kept an eye on the increasing headwinds for Biden’s proposed aid plan.

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