The Budget Reconciliation Process

What it Is and Is Not

Senators Franken And Murphy Discuss The Affordable Health Care Act
Senators Franken And Murphy Discuss The Affordable Health Care Act. Drew Angerer/Getty Images

With the loss of their 60-vote, filibuster-proof majority in the Senate, congressional Democrats have hinted they may use the "budget reconciliation" process to pass some or all of the health care reform measures proposed by President Obama in his bipartisan "Health Care Summit" held on Feb. 25, 2010. What is budget reconciliation and how does it work?

What Budget Reconciliation Is

Budget reconciliation is a process that temporarily modifies the legislative process in the U.S. Senate by eliminating the possibility of a filibuster against a bill.

Under the traditional rules of the Senate, debate on bills has no time limit and 60 votes are required to overcome a filibuster, thus ending debate on a bill and bringing it to a final vote. When a bill is considered under the rules of budget reconciliation, debate is limited to 20 hours and ending debate requires only a simple 51-vote majority. In the House of Representatives, debate on all bills and amendments is subject to strictly enforced time limits, thus filibusters are not allowed.

Congress created the budget reconciliation process in the Congressional Budget Act of 1974 as a method of reducing federal spending, reducing the deficit and streamlining the process of considering federal budget and tax-related legislation. For example, budget reconciliation was used to pass major deficit reduction and tax-cutting legislation under both Presidents Bill Clinton and George W. Bush.

As designed, the budget reconciliation process is intended to ease the passage of bills that will bring government spending, revenues, or the national debt into better conformity with the annual congressional budget resolution.

Ideally, budget reconciliation is used only to pass budget-related legislation that responds to economic circumstances not envisioned in the annual budget resolution, like recessions and massive job loss.

There have, however, been cases when Congress has used budget reconciliation to pass legislation not directly related to the federal budget.

In 1996, for example, the congressional Republican majority used budget reconciliation to pass sweeping welfare reform legislation.

What Budget Reconciliation is NOT

Creators of the budget reconciliation process did not intend for it to be used as a loophole in the legislative process allowing the majority party to pass controversial social policy bills. To prevent that, Sen. Robert Byrd (D - West Virginia), helped craft six conditions -- the Byrd rule -- under which any part of a reconciliation bill could be ruled "extraneous" to or having no effect on the federal budget and excluded from consideration under the rules of budget reconciliation.

The Byrd Rule

Under the Byrd rule, the Senate is prohibited from considering bills determined to be extraneous to the federal budget under the relaxed rules of budget reconciliation. Specifically, under the Byrd rule, budget reconciliation may not be used for bills that:

  • do not produce a change in outlays or revenues;
  • produce changes in outlays or revenue which are merely incidental to the non-budgetary components of the provision (the bill);
  • are outside the jurisdiction of the congressional committee that submitted the title or provision for inclusion in the reconciliation measure;
  • increase outlays or decrease revenue if the provision's title, as a whole, fails to achieve the Senate reporting committee's reconciliation instructions;
  • increase net outlays or decrease revenue during a fiscal year after the years covered by the reconciliation bill unless the provision's title, as a whole, remains budget neutral (neither increases nor decreases spending or revenue);
  • contain recommendations regarding the OASDI (Social Security) trust funds.

Senators who object to the consideration of any part of a bill under the rules of budget reconciliation may offer an amendment striking the measure from the bill. Alternatively, a senator may raise a point of order (objection) against the measure under the Byrd rule.

From 1985 to 2008, Senators had used the Byrd rule to raise objections (points of order) to the consideration of bills under the rules of budget reconciliation 53 times.

According to a Congressional Research Service report, the objections were upheld in 43 of the 53 cases.