Reconciliation 101
According to reports, Democrats in Congress are looking to the budget reconciliation process to enact significant planks of President Joe Biden’s agenda over anticipated opposition from Senate Republicans in the coming months.
WHAT IS RECONCILIATION?
Reconciliation is a decades-old process that protects budget-related legislation from filibusters in the Senate. Congress created the reconciliation process in the Congressional Budget and Impoundment Control Act of 1974 (Public Law 93-344). Its purpose is to make it easier for the House and Senate – especially the Senate – to change current law to align (i.e., reconcile) revenue, spending, and deficit derived from permanent law with those specified in the annual budget resolution levels. Unlike most legislation, senators cannot filibuster reconciliation bills or motions to proceed to their consideration. This is because the 1974 Budget Act limits the time allowed for floor debate on reconciliation bills to twenty hours and requires that senators’ amendments are germane to the underlying legislation.
HOW DOES RECONCILIATION WORK?
The reconciliation process works in three steps.
STEP ONE
The first step in the process occurs when Congress passes the budget resolution, which sets overall spending, revenue, and debt levels for each fiscal year. That resolution must also include reconciliation instructions before Congress can use the special process’s expedited procedures to change permanent law.
Reconciliation instructions direct one or more committees in the House and Senate to report legislation that changes spending, revenue, and/or deficit levels in specific fiscal years by the amounts specified in the budget resolution. Suppose the budget resolution instructs multiple committees (the norm). In that case, each committee submits its reconciliation bill to the House/Senate budget committees. Each budget committee then combines all committee-submitted reconciliation bills into an omnibus budget-reconciliation bill. (Note: The House and Senate budget committees are barred from making substantive revisions to the text of the submitted bills.)
The Budget Act permits Congress to consider up to three reconciliation bills for each budget resolution. That is, Congress may include one reconciliation instruction in the budget resolution for each of its aggregate categories (i.e., spending, revenue, and deficits). Congress may consider all three reconciliation bills separately or together as one omnibus bill. In practice, Congress considers one reconciliation bill per budget resolution.
STEP TWO
The House and Senate next consider reconciliation bills under expedited procedures. While the House often adopts special rules that establish alternative procedures for the consideration of reconciliation bills, the process’s expedited procedures are critical in the Senate. This is because reconciliation bills are privileged. “Privileged” means senators cannot filibuster motions to proceed to their consideration. Consequently, the Senate votes as soon as a senator – any senator – makes a motion to start the debate.
Once the Senate is on a reconciliation bill, senators have up to 20 hours to debate it. They are barred from discussing the bill further (absent unanimous consent). However, senator may continue to offer amendments to the reconciliation bill after the debate is over. The post-debate amendment period is called “vote-a-rama.”
STEP THREE
In the event that the House and Senate fail to pass identical bills, they must reconcile the differences between their two versions via a conference committee or a process of amendment exchange between the two chambers. The Senate considers any subsequent conference reports (or amendments/messages between the two chambers) under expedited procedures. At this stage, the debate is limited to no more than 10 hours. That time is divided equally between the majority and minority leaders. And amendments are not permitted (if the Senate is considering a conference report).
WHAT IS THE BYRD RULE?
Senators frequently used the reconciliation process to pass policies unrelated to the federal budget in the period following its creation. In response, the Senate adopted the so-called Byrd Rule in the mid-1980s to stop senators from using reconciliation to circumvent the filibuster. The Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508) amended the 1974 Budget Act to make the Byrd Rule prohibition on including extraneous provisions in reconciliation bills permanent.
Section 313(e) of the amended Budget Act (i.e., the Byrd Rule) prohibits provisions in reconciliation bills extraneous to the reconciliation instructions. Under the Byrd Rule, provisions that are deemed extraneous to the reconciliation instructions contained in the applicable budget resolution are not eligible for inclusion in the reconciliation bill developed according to those instructions.
The Byrd Rule stipulates that a provision is extraneous if it meets one or more of the following six tests:
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The provision does not produce a change in outlays or revenues;
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The net effect of the provisions reported by the committee writing the title containing the provision is that the committee fails to achieve its reconciliation instructions;
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It is not in the jurisdiction of the committee with jurisdiction over said title or provision;
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It produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision;
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It increases net outlays or decreases revenues during a fiscal year after the fiscal years covered by such reconciliation bill…and such increases or decreases are greater than outlay reductions or revenue increases resulting from other provisions in such title in such year;
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It recommends changes to the Social Security program (old age and disability).
HOW DOES THE SENATE ENFORCE THE BYRD RULE?
Like all Senate rules, the Byrd Rule is not self-enforcing. Senators must take the initiative to enforce it. They do so by raising points of order against provisions in reconciliation bills on the basis that they are extraneous according to one, or more, of the Byrd Rule’s six tests. Section 313(e) gives the Senate’s presiding officer the authority to decide whether points of order are valid. If the presiding officer sustains senators’ points of order, the provisions targeted by them are stricken from the bill.
Section 313(e) stipulates that senators may move to waive points of order before the presiding officer rules on them. As with many other budget process points of order, those raised under the Byrd Rule may be waived by an affirmative vote of three-fifths of the senators duly chosen and sworn (typically 60 if all 100 seats are filled).
The Byrd Rule gives the Senate and its presiding officer a significant degree of discretion to determine whether disputed provisions are extraneous. First, the statute that authorizes the rule does not define the term “provision.” Instead, it merely permits senators to raise points of order against one provision or multiple provisions simultaneously.
Second, the statute stipulates that it is the presiding officer’s responsibility to determine if points of order should be sustained as to some or all of the targeted provisions. Section 313(c) requires the Budget Committee to submit for the record a list of extraneous provisions in a reconciliation bill (or conference report) before its consideration on the Senate floor. But the statute states explicitly that “the inclusion or exclusion of a provision shall not constitute a determination of extraneousness by the Presiding Officer of the Senate.” The law gives the presiding officer – and only the presiding officer – the initial authority to determine if a disputed provision violates the Byrd Rule.
The six tests of which the Byrd Rule is comprised do not all bestow on the presiding officer the same degree of discretion in determining whether or not a particular provision is extraneous. For example, section 312(a) stipulates that the Budget Committee determines outlay and revenue levels in a given fiscal year. This information is given to the presiding officer to assist in evaluating a provision’s budgetary impact to determine if it passes the Byrd Rule’s first, second, and fifth tests. Similarly, the Byrd Rule’s third test can be evaluated by examining committee jurisdictions as specified in Senate Rule XXV. The Byrd Rule’s sixth test can be discerned with relative ease by studying a provision’s legislative language for direct evidence that it amends Title II of the Social Security Act.
In contrast to these tests, determining whether or not a provision passes the Byrd Rule’s fourth test is not straightforward. As a consequence, the presiding officer has considerable discretion in enforcing the rule in ambiguous parliamentary situations. Because the Byrd Rule does not explicitly define what “merely incidental” means, determining whether a provision is extraneous under the test is often difficult. In lieu of defining the term, the statute requires that the presiding officer weigh the non-budgetary components of a provision against its budgetary impact. Suppose the presiding officer determines that the non-budgetary elements outweigh a provision’s budgetary impact. In that case, it is stricken from the reconciliation bill.
Give these Byrd Rule restrictions, one commentator equated passing a bill through the Senate using the reconciliation process with “trying to force a giraffe through a keyhole.” However, senators get to determine the size of the keyhole. This is because the Senate’s written rules periodically require a significant degree of additional interpretation when applying them to specific parliamentary situations. For example, the standard against which “merely incidental” is given meaning and assessed is defined by precedent (i.e., what senators did in the past in similar situations). But there are very few past precedents with which the Senate can inform its understanding of how to apply the “merely incidental” test. For example, the Senate adjudicated 127 points of order, or motions to waive them, under the Byrd Rule before November 2016. However, not all of these instances concerned the “merely incidental” test. The most common basis for raising one of these points of order (or moving to waive) was that the provision in question failed the Byrd Rule’s first test (i.e., it did not produce a change in outlays or revenues). The second most common basis was that the provision in question failed the Byrd Rule’s third test (i.e., outside of the reporting committee’s jurisdiction). In contrast, the Senate adjudicated points of order on the basis that the targeted provision violated the “merely incidental” test a mere ten times. The small number of precedents on which the definition of “merely incidental” is based complicates the ability of the presiding officer and the Parliamentarian, to assess if a provision is extraneous on this basis alone.
THE PARLIAMENTARIAN’S ROLE
The “merely incidental” test suggests that the question of how senators should enforce the Byrd Rule is not straightforward. Applying its strict restrictions to disputed provisions in specific reconciliation bills requires the parliamentarian and, by extension, rank-and-file senators to interpret both the statutory language that created the rule and the legislative language of the targeted provision in the underlying reconciliation bill (or amendment).
The Senate’s presiding officer is charged with evaluating disputed provisions in reconciliation bill debates to determine whether they comply with the Byrd Rule and are therefore eligible to be included in the reconciliation bill. Yet as noted, the rule does not always provide clear guidance on how the presiding officer should apply it. It is appropriate for senators to determine how to apply the Byrd Rule in specific situations in which those rules are silent. And the presiding officer is not required to accept the parliamentarian’s advice regarding how he or she should enforce the rule in specific situations. Given this, senators and their presiding officer are under no obligation to follow the parliamentarian’s procedural advice in determining whether the budgetary impact of a disputed provision in a reconciliation bill is “merely incidental” to its underlying policy impact.
Any advice provided by the parliamentarian is necessarily limited by the same shortage of precedents that also complicates the presiding officer’s ability to discern the meaning of “merely incidental” by merely referring to past practice. While the parliamentarian may also rely on informal conversations in the so-called Byrd-Bath process to inform her understanding of how to apply the test to a particular provision, agreements regarding the Byrd Rule’s applicability to a disputed provision reached in such discussions lack precedential authority. This is because a Senate majority did not take prat in the agreement; it was not adjudicated officially on the Senate floor. It is therefore incorrect to treat such informal discussions as binding precedents, which are created whenever the Senate acts officially under the Constitution (Article I, section 5, clause 2) to determine its rules of procedure in specific situations. That is, only those decisions made by the presiding officer or by the full Senate carry precedential weight.
In contrast, identifying who is ultimately responsible for enforcing the Byrd Rule is straightforward. The statute requires that the Senate’s presiding officer determine whether or not a particular provision is compatible with the rule and whether it is eligible to be included in the reconciliation bill. Furthermore, the statute does not require the presiding officer to accept the parliamentarian’s advice when deciding on how the “merely incidental” standard should be interpreted.
Consequently, there is nothing inappropriate, illegal, or otherwise inconsistent with the Senate’s rules in senators determining how to enforce the Byrd Rule in parliamentary situation where its meaning is ambiguous or silent. Senators making such a determination would, if successful, merely create a new precedent that would provide additional guidance to the Senate in the future regarding the definition of “merely incidental.”
THE TAKEAWAY
Democrats can use the reconciliation process to enact President Joe Biden’s agenda by circumventing a Republican filibuster in the Senate. The Byrd Rule prevents them from including non-budgetary priorities in reconciliation bills. But Democrats can adjust the Byrd Rule’s application in specific instances – especially those involving its “merely incidental” test – without violating the rule itself.
