Note 10. Reconciliation

The Search for a Path to Majority Rule

Partisan conflict motivated the creation of the modern congressional budget process in 1974, reforms to it since then, and new strategies for exploiting it. This note focuses on reconciliation, a technical term that no longer means what was originally intended in the Budget Act of 1974. The large tax-cut bill of 2017, President Donald Trump’s major legislative achievement, and the equally large COVID-19 relief bill of 2021, President Joe Biden’s first major legislative goal, were considered reconciliation bills. We will see that congressional majorities manipulate the rules of legislating to solve political problems. The use of reconciliation reflects the challenges of partisan obstacles to enacting the majority’s program.

Some Details

The Constitution requires the House and Senate to pass legislation in identical form before it is sent to the president, but the internal procedures of the two houses are left to them to determine (Constitution, Article I, Section 5). Each house, and sometimes the two houses together, has modified or supplemented the rules to manage changing circumstances. An official budget process was created in 1974, and the rules established that year have been changed in significant ways more than a dozen times since then.

The Budget Act created a process for setting aggregate spending and revenue targets for a fiscal year and then coordinating the actions of the appropriations, authorizing, and tax committees with those targets established. Each May Congress would pass a preliminary budget resolution setting nonbinding targets for expenditures and revenues. During the summer, Congress would pass the individual bills authorizing and appropriating funds for federal programs, as well as any new tax legislation. Then, in September, Congress would adopt a second budget resolution, providing final spending ceilings. This resolution might require adjustments to some of the decisions made during the summer months. Those adjustments would be reflected in the second resolution, and additional legislation, written by the proper committees, would then be drafted to make the necessary changes. This process of adjustment was labeled “reconciliation,” to reflect the need to reconcile the earlier decisions with the second budget resolution. The reconciliation legislation was to be enacted by October 1, the first day of the federal government’s fiscal year.

The Senate accepted important changes in its procedures when it passed the Budget Act. The act set a limit of twenty hours on debate over budget resolutions and reconciliation legislation. This meant that budget measures could not be killed by a Senate filibuster conducted by a minority of its members. Moreover, the act barred nongermane amendments when budget measures were considered on the Senate floor. Unlike most other legislation, budget measures were protected from amendments that addressed other subjects. These rules were supplemented in 1987 when the Senate adopted the “Byrd rule”—named after its author, Senator Robert Byrd (D-WV)—that bars extraneous matter from reconciliation bills. A provision is considered to be extraneous if it does not change spending or revenues, concerns issues that lie outside of the jurisdiction of the committee reporting it, or leads to a net increase in spending or decrease in revenues for the years beyond those covered by the bill.[1]

The result is that the reconciliation bills are an attractive way for a Senate majority to avoid minority filibusters, subject to the constraint that a reconciliation bill may not include provisions that do not affect spending or revenues.  The first hint of the possibilities surfaced in 1980, an election year, when President Jimmy Carter and congressional Democrats were disparate to show that they could cut spending to address a rising federal deficit. To do so, they reordered the process set by the 1974 act by placing instructions to create a reconciliation bill in the first budget resolution, adopted in the spring, before acting on the usual spending and tax bills during the summer, as originally designed. This had the effect of imposing a budget earlier in the year and eliminating the need for a second budget resolution. At the time of this writing, Congress has sent 28 reconciliation bills to the president (four were vetoed).

The 1980 experience made the term “reconciliation” somewhat meaningless. In that case, the bill that imposed spending and tax policies was enacted before the usual spending and tax bills could be passed and in need of being reconciled with a final set of spending and revenue targets. Still, the label reconciliation stuck and is still with us.

Tax Measures

In time, the reconciliation process deployed after a first budget resolution has become a standard feature of legislative strategies. Through the 1980s and 1990s, several reconciliation bills encompassed major compromises, only achieved with great difficulty, that addressed both spending and revenues in order to keep federal deficits in check. In doing so, represented an increasingly centralized policy-making process in the initiative was in the hands of party leaders rather than the many committees of each house.

Starting in the 1990s, Republicans looked to the reconciliation process to enact tax legislation that otherwise would be obstructed by a filibuster conducted by Senate Democrats. This represented a significant shift in the purpose of reconciliation. In 1974, the process was envisioned to provide a means for imposing discipline on spending and taxes in order to manage or eliminate budget deficits. By considering a tax-cut measure as reconciliation bill without dealing with federal spending in the same bill, the immediate effect would be to increase deficits. Nevertheless, the ability to order a (tax) reconciliation bill early in the year and to guarantee quick action without concern about minority obstruction in the Senate made reconciliation for tax cuts an overwhelminingly appealing strategy.

In rapid succession in 1999, 2000, 2003, 2005, and again in 2012 and 2017, Republican majorities used the reconciliation process for passing bills providing for tax cuts. These measures would have passed the House as regular bills; the entire purpose was to avoid minority obstruction in the Senate. It is not possible to be certain about the fate of regular tax bills if they had been pursued instead of reconciliation bills, but no one doubts that the provisions included in these bills, particularly the depth of the tax cuts,  and excluded from these bills, due to the Byrd rule, would have been somewhat different.

Other Issues

Beyond the half dozen reconciliation bills used almost exclusively for tax cuts, most reconciliation bills has been used to change programs to reduce spending or to combine tax and spending provisions. However, three reconciliation bills designed to increase spending deserve special notice.

In 2009, the House and Senate passed different versions of the Affordable Care Act (Obamacare). The House acted in mid-2009, but the Senate Democrats could not muster 60 votes for cloture until after a vacant seat was filled by Democrat Al Franken took his seat after a recount of the 2008 election ballots in Minnesota. Senator Ted Kennedy (D-MA) died in late August 2009 and was replaced temporarily by another Democrat. With Franken and Kennedy’s replacement, Paul Kirk, seated, Democrats invoked cloture on a 60-40 vote and then passed the Senate version of the bill on Christmas Eve, December 24. A January special election in Massachusetts, however, produced a Republican winner, Scott Brown, before the House and Senate could work out and adopt a conference report. This was bad news for President Obama and the Democrats—a conference report could be filibustered in the Senate and they no longer had 60 votes.

The Democrats chose to use the reconciliation process to resolve differences between the House and Senate versions of ACA in early 2010. Due to the Byrd rule, using reconciliation meant that some issues could not be addressed, but the approach allowed the bill to pass with only 56 votes. Republicans complained bitterly about what they considered to be a novel and abusive use of the reconciliation process, but Democrats were able to get the important features of Obamacare in place as a result.

In 2021, the Democrats again chose to use reconciliation for an important measure—the COVID-19 relief bill called the American Relief Act. The bill provided for a huge increase in federal spending—about $1.9 trillion—to provide for unemployment compensation, direct payments to lower and middle class persons, aid to businesses and states, medical care, and other purposes to address the pandemic. It took a tie-breaking vote by Vice President Kamala Harris for the Senate to approve a budget resolution to start the reconciliation process. and then, a few weeks later, the Senate passed the reconciliation bill on a 50-49 vote. 

In 2022, Democrats used a reconciliation measure to enact new policy on a broad array of issues. Energy infrastructure and incentives for the use of non-fossil fuels comprised the largest ever federal investment in energy. The bill also made many changes in health policy, including giving Medicare the authority to negotiate prescription drug prices and extending Affordable Care Act (Obamacare) subsidies. And the bill increased the minimum tax for corporations and created a tax on corporate stock buybacks. The Senate passed the bill 51-50, with another tie-breaking vote by the vice president making the difference.

Majority and Supermajority Rule in the Senate

Both parties, Republicans on tax cuts and Democrats on major federal initiatives, passed major legislation using the reconciliation process to avoid filibusters and the need to find 60 votes for cloture. This should strike you as a bit odd. The Senate, after all, is a legislative body in which the case for limiting majority rule and protecting minority rights is articulated frequently. How do we explain this? There are a few things to take into account.

First, history matters. The battle over budgets between Republican President Richard Nixon and Democratic Congresses in the lead up to the adoption of the Budget Act of 1974 produced a budget process that guaranteed that a Senate majority could act on budget measures. Stalemate in the Senate would only strengthen Nixon’s case that the Democrats were irresponsible and that only unilateral action by the president would make for sensible public budgets. Of course, the budget process remained in place long after Nixon left office and as new political challenges arose. As partisan polarization and partisanship deepened, it is not surprising that party leaders looked for procedural advantages to exploit and eventually turned to reconciliation and its debate limits.

Second, it is easy to be fooled by senators’ expressed commitment to the protection of the minority through supermajority cloture. Every good politician looks for a general principle to justify a rule or practice that serves their partisan or personal interest. The general principle in the case of reconciliation the vital importance of setting budgets requires that even the Senate must allow a majority to gain action on budget measures. Many senators have long argued that civil and voting rights, the equality of citizens, serious threats to the nation’s welfare such as climate change and global terrorism, and other challenges are equally deserving. The Senate even has allowed debate limits to be imposed for several kinds of bills, such as trade agreements, on a piecemeal basis. A fair summary is there really are no consistent threads to the Senate’s collective judgment about the right decision rule.

Third, senators like personal power. Below the surface of many institutional and partisan arguments about the use and reform of the filibuster practice is the personal stake that senators have in the filibuster practice. The ability of a single senator to object or threaten to object to unanimous consent requests, to offer amendments on any subject to most bills considered on the floor, and to conduct debate at length gives the individual senator a wider range of opportunities to be heard than is the case in the House or in most legislative bodies. The ability to filibuster, if only for a day or two, is a leveling factor within the Senate and gives senators a voice in the larger polity that members of the House cannot match. They seldom say so; they often camouflage personal interest with policy, partisan, and institutional interests. So while senators occasionally allow simple majorities to pass measures, many of them, including Democrats, are reluctant to give up much personal power.

Fourth, the pressure on senators to be consistent about procedural matters is weak. The public does not seem to mind having senators who take inconsistent positions on majority rule. In fact, the public has attitudes about the filibuster that are ill-informed, lightly held, and readily influenced by what is seen and heard from senators and other opinion leaders. Policy outcomes matter far more.

The use of reconciliation, seen in this context, is not so odd. 

The Future of Reconciliation

Many proposals for limiting or expanding the use of reconciliation procedures have been offered in the interest of giving a Senate majority more options for acting on its legislative program. For example, the struggle to pass appropriations bills has led some observers to recommend that appropriations bills be treated to debate limits in the same way that reconciliations bills are treated. No serious moves in this direction, or any other basic feature of the Budget Act, have been taken.

Another approach would be to give a Senate majority more flexibility in determining the number and focus of reconciliation bills. Current Senate precedent provides that there may be up to three reconciliation bills targeted at a fiscal year (current or next) and that there may be no more than one that addresses spending, one on revenues, and one on the debt limit. They may be, and often have been, combined. A majority that wants a spending bill must decide once and for all what to put in a reconciliation bill. This lends some order to the process, but it is far more restrictive and limits the viable options for House, which gives itself more latitude. A change in the interpretation of the Senate parliamentarian or even a precedent imposed by the Senate could improve the Senate majority’s leeway and move the Senate in a strongly majoritarian direction. 

Simple majority cloture would, if adopted by the Senate, reduce or eliminate the focus on reconciliation as majority’s solution to minority obstruction. The Budget Act and related precedents process would still provide different rules for reconciliation bills than for regular legislation that might produce a preference for one or the other. Without filibuster reform, reconciliation bills will remain a very attractive approach to circumventing minority obstruction.

[1] The rule is enforced by points of order raised by senators from the floor and upheld by a ruling of the chair, who depends on the advice of the Senate parliamentarian. The Senate may overturn the ruling of the chair as long as sixty senators agree.