There has been a great deal of discussion in the last few weeks of how the new Congress and the Trump Administration will use the budget reconciliation process. What is the budget reconciliation and why is it so important?

Budget reconciliation is a tool used by the Congress to enact spending reductions or increases in revenue to address the deficit. It was first used in 1980 under President Jimmy Carter. There have been 20 instances in which a reconciliation bill has been enacted in law while four reconciliation bills have been vetoed by the President, most recent by President Obama in 2016 to reject a repeal of the Affordable Care Act. The other three vetoes were by President Bill Clinton in showdowns with Republican Congresses in 1995, 1996 and 2000.

The reconciliation process was created as a way to reduce the deficit by cutting long term mandatory spending and/or by increasing revenues (taxes). That changed significantly in the George W Bush Administration when it was used to enact separate tax cut packages which had the effect of increasing deficits. One of those reconciliations, the reconciliation bill of 2005 (which was passed in 2006) included tax cuts and was the last time TANF was reauthorized.  It also included a repeal of the child welfare-related Rosales 9th Circuit Decision that impacted foster care placement eligibility in some western states including California.

In the 110th (2007-08) Congress, a provision was enacted that prohibited the reconciliation process from being used to increase the deficit. That budget law provision was repealed in 2015.

What makes the reconciliation process so important is that it short-circuits the Senate debate making a filibuster impossible. In addition, it limits the time of debates and, for all practical purposes, the amending process. The reconciliation process is a very critical tool that could be used to enact major changes in the law—particularly entitlements. It was used by Democrats in 2010 to create the ACA and was used by Republican Congresses to enact several tax cuts early in the 21st-century.

A newer approach to the reconciliation is for a Congress to use two reconciliation measures within one year.  This was done in 1996 so the Republican Congress could split off their Medicaid block grant from welfare reform which eventually became TANF.  It is expected that the Congress next year will use two reconciliations but with a friendly White House it would be expected that both bills will become law.

Two reconciliations would give the new 115th Congress two opportunities to make hugely significant changes into entitlement programs. It is anticipated that the first, as soon as January, would be used to repeal the ACA and make other changes while the second would move slower and include tax cuts and changes to other entitlements including Medicaid, SNAP and possible Medicare.  Changes to Title IV-E and SSBG could happen here but changes could also be part of the earlier bill.  The only thing that is off limits in terms of reconciliation is Social Security but all other entitlements could all be the subject of significant changes within the budget reconciliation process.

The process starts when a budget resolution is adopted by the Congress. A budget resolution is not signed by the President but is agreed to by both the Senate and the House.  A budget resolution would include instructions for various committees with directions to find a certain total of savings or revenue. For example, if the next Congress wanted to make significant changes to entitlements including SNAP, Medicare, Medicaid and foster care, assignments would be given the two Agriculture Committees (SNAP program), and for the other programs, the Finance Committee in the Senate and in the House, the Ways and Means Committee and the Commerce Committee to come up with savings.  The budget resolution instructions would likely not have the specifics but it would be understood.

Once each committee has enacted their proposed changes the cuts are assembled into one budget reconciliation bill.  That bill then would be up for debate on the floors of the House and in the Senate.  Congressional members not on those key committees would have that floor debate as their opportunity to make any changes. But once that reconciliation bill is constructed there would be limited opportunity to make any significant changes or delete the cuts from the bill.

In the House, debate is controlled through the Rules Committee as is the normal process and so very few hours could be allowed for debate and even fewer amendments would be allowed. In this sense in the House of Representative reconciliation is not necessarily different from a lot of other bills or legislation.  But the Senate circumstance is vastly different.

A reconciliation cannot be filibustered so there is no need for 60 votes to reach final agreement.  An additional and critical restriction is that debate is limited to 20 hours total to be divided equally between the two parties. That means there is limited opportunity for opponents of the reconciliation bill to raise critical issues.

For example, if there are several controversial provisions in a reconciliation bill, block grants of Medicaid and SNAP and raising the age of Medicare, along with significant changes including other block grants or cuts, the larger programs and cuts could capture all the attention and strategy for advocates. The focus of the limited hours of debate could be dedicated to preserving SNAP, Medicare and Medicaid. Once the 20 hours of debate is expired members can offer amendments and in past years the Senate has engaged and what has been labeled a “vote-a-rama” in which amendments are offered—sometimes dozens—with very little debate and members work late in the night making one minute statements before an up or down vote.

Once the two Houses have agreed to their own reconciliation bills, there usually is a conference agreement that is negotiated between the House and the Senate. Once they have agreed on one final reconciliation conference report, the debate is once again limited in the Senate.  This time to a total of 10 hours equally divided.

One other key provision that applies to the Senate can sometimes be a tool for an opponent of the reconciliation.  The Senate has certain parliamentary restrictions written up and named after the late Sen. Robert Byrd (D-WV).

The “Byrd Rule” allows a challenge of provisions if they are not “germane” to the budget targets and deficit reduction. It is a complex rule that frequently leans on the Senate parliamentarian for interpretation so it is not always clear how it applies or can be used.  The Byrd rule can be used to strike critical provisions of a bill. One example of this was in the summer of 1996 during the debate over the creation of TANF.  A Senator could have raised a Byrd Rule point of order against the time limits that were incorporated into the TANF block grant as not germane (it did not have a budget impact since they were creating a fixed block grant) but for political purposes no Senator raised the issue.

All in all, the reconciliation process can be used to make hugely significant changes to entitlement programs and it limits the debate in the discussion.  If the legislation is crowded with numerous entitlement changes, there will be limited time to defend those programs or to make changes.