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Home > Advocacy > No Caps on Kids! Campaign > What is a Congressional Budget Resolution and Budget Reconciliation?


What is a Congressional Budget Resolution and Budget Reconciliation?

Budget Resolution
  • Each year Congress is charged with passing a congressional budget resolution. This resolution establishes a limit on total federal spending.

  • Both the Senate and the House of Representatives vote on budget resolutions independently and then a final, single compromise measure is adopted. The budget resolution is not signed by the President, however, it does bind the Congress to follow its provisions.

  • The budget resolution always includes instructions and spending limits for each of the 13 appropriations committees that are in charge of making spending decisions in areas under their jurisdiction.

  • The instructions sometimes require deep funding cuts and far reaching policy changes.
Budget process/timeline:
  • President sends his proposed budget to Congress by the first Monday in February following the State of the Union message. In 2005, the President's budget proposal was released on February 7.

  • Six weeks later congressional committees report their budget estimates to the Budget Committees.

  • The House and Senate Budget Committees then begin congressional hearings to analyze the impact of these proposals.

  • Both Budget Committees approve their own versions of a budget resolution, usually in mid-March.

  • After both the Senate and House approve a budget resolution, a conference committee is held to iron out differences and a final, single version is crafted.

  • Both the Senate and House then vote on final passage of the budget resolution.

  • April 15 is the deadline for the adoption of a final budget resolution.
Budget Reconciliation
  • Congress can use a budget resolution to create a special rule called reconciliation, a process in which Congress sets a multi-year deficit target and moves legislation on a fast track to make cuts in entitlement programs (such as Medicaid and foster care) to meet that target.

  • The reconciliation process results in legislation designed to bring revenues (taxes, fees, etc.) in line with spending.

  • When finding ways to reduce federal spending, the reconciliation process almost always focuses on making changes to entitlement programs. It cannot, however, make changes to Social Security.

  • The reconciliation process begins with a "reconciliation instruction" that has three points:

    • Naming the committee or committees that are directed to take action.

    • Specifying the total amount of federal funds that each committee must cut.

    • Providing a deadline for committee action--typically within 60 to 90 days.

  • The budget reconciliation instructions do not specify the programs to be cut or changed, but they do specify amounts to be cut and are based on assumptions resulting from particular changes-these assumptions in total savings are in the instructions contained in the budget resolution.

    • An instruction to the Senate Finance Committee, the House Ways and Means Committee, and the House Commerce Committee (which have jurisdiction over Title IV-E Foster Care and Medicaid) could, for example, assume the Committee will find $110 billion in savings.

    • These savings over five years, for example, could include $65 billion in Medicaid savings, $35 billion in Medicare, $10 billion in Title IV-E Foster Care, Title IV-B Child Welfare Services and Title IV-A Temporary Assistance for Needy Families (TANF).

    • The instruction may not list these specific programs, but assumptions of "savings" in these areas could be included in tables included in the instructions.

    • Such proposals would require cuts, caps, and flexible funding proposals or block grants to reach their spending reduction targets.

    • To increase spending or to spare one program from being cut, cuts would have to be made to other programs.

  • When more than one committee is directed to come up with savings via reconciliation, the various committee bills are combined by the Budget Committee into an omnibus bill.

    • That means that an omnibus bill that made cuts/changes to Medicare, Medicaid, TANF, Child Welfare, and other areas such as housing and agriculture would all be debated together in the same bill, at the same time.

  • The omnibus reconciliation bill is debated and approved by both the Senate and the House and signed by the President.

    • Debate on the legislation in Congress is limited, particularly in the Senate where no filibuster is allowed on reconciliation.

    • A simple majority of 50% plus one is all that is required to pass such an omnibus bill that could impose historically significant changes.

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