According to reports, Democrats in Congress are looking once again to the budget reconciliation process to circumvent anticipated opposition to their legislative agenda from Senate Republicans. Reconciliation is a fast-track process that protects budget-related legislation from filibusters. Congress created reconciliation in the Congressional Budget and Impoundment Control Act of 1974 (Public Law 93-344). Its purpose is to make it easier for the Senate to make changes to the current law to align – or “reconcile” – the aggregate revenue, spending, and deficit/debt levels under permanent law with the levels specified for each category in the annual budget resolution.

Congress must first pass a budget resolution that includes reconciliation instructions before the House and Senate can consider a reconciliation bill under the Budget Act’s expedited procedures. The law permits Congress to consider one reconciliation bill for each of the budget resolution’s aggregate categories (i.e., spending, revenue, deficit). The House and Senate may consider all three reconciliation bills separately or together as one omnibus bill. Congress usually considers one reconciliation bill per budget resolution.

The current Democratic effort to use reconciliation is notable because Congress already passed an omnibus reconciliation bill, the American Rescue Plan Act of 2021 (Public Law 117-2), according to the reconciliation instructions included in the fiscal year 2021 budget resolution (S. Con. Res. 5). That means that Congress must do one of two things before the Senate can take up a second reconciliation bill. It can pass another budget for the fiscal year 2021 that includes new reconciliation instructions. Or it can pass a budget resolution for the fiscal year 2022 that provides for new reconciliation instructions.

Majority Leader Chuck Schumer, D-N.Y., appears to lean toward the first approach – a second budget resolution for fiscal year 2021. Schumer’s decision, if successful, will give Democrats more procedural options moving forward because it preserves the fiscal year 2022 budget resolution and any related reconciliation bill(s) to be used to address priorities that may arise in the future.

THE SECOND BUDGET RESOLUTION

The Budget Act of 1974 initially required Congress to pass two budget resolutions in a fiscal year. The first budget resolution – passed by May 15 each year – was advisory in nature. It set budgetary targets that the House and Senate would then meet in their subsequent legislative activity. Unlike the first budget resolution, the second budget resolution – passed by September 15 each year – was not advisory in nature. The 1974 Budget Act put its deadline at the end of each fiscal year so that the House and Senate could compare the target budget levels set by the first budget resolution with the aggregate levels calculated at the end of the fiscal year.

The 1974 Budget Act authorized a fast-track process – reconciliation – with the second budget resolution (but not the first resolution). Just like today, the reconciliation process associated with the second budget resolution empowered the House and Senate to make specified changes in permanent law necessary to align its levels with those in the (second) budget resolution that authorized the particular procedure. The 1974 Budget Act required Congress to pass reconciliation bill(s) – if approved – by September 25, just ten days after the second budget resolution’s deadline.

Congress consistently complied with the 1974 Budget Act’s two-budget requirement until the early 1980s. It passed multiple budgets in the fiscal year 1976 (H. Con. Res. 218 and H. Con. Res. 466), the fiscal year 1977 (S. Con. Res. 109 and S. Con. Res 139), the fiscal year 1978 (S. Con. Res. 19 and H. Con. Res. 341), the fiscal year 1979 (S. Con. Res. 80 and H. Con. Res. 683), the fiscal year 1980 (H. Con. Res. 107 and S. Con. Res. 53), the fiscal year 1981 (H. Con. Res. 307 and H. Con. Res. 448), and fiscal year 1982 (H. Con. Res. 115 and S. Con. Res. 50).

Congress stopped complying with the 1974 Budget Act’s two-budget requirement beginning in the fiscal year 1983. From the fiscal year 1983 to 1986, Congress included language in the first budget resolution that stipulated that it also served as the second resolution. And Congress eliminated the two-budget requirement altogether in 1985 when it passed the Balanced Budget and Emergency Deficit Control Act (Public Law 99-177). In that law, Congress eliminated the second budget resolution authorized in section 310 of the 1974 Budget Act and applied its reconciliation provisions to the first budget resolution. Congress also moved the deadline for action on reconciliation bills from September 25 to June 15.

REVISED BUDGET RESOLUTIONS

Congress is not required to pass a second budget at the end of the fiscal year. But it retains the option to revise its first budget at any point after its adoption and before the end of the fiscal year, as stipulated by section 304 of the 1974 Budget Act.

“At any time after the first concurrent resolution on the budget for a fiscal year has been agreed to…and before the end of such fiscal year, the two Houses may adopt a concurrent resolution on the budget which revises the concurrent resolution on the budget for such fiscal year most recently agreed to. ”— SECTION 304 OF THE BUDGET ACT OF 1974

Congress designed this provision to empower the House and Senate to change the (first) budget resolution after passing it in response to unexpected events or new fiscal information. The section 304 revision authority has only been used once. In the fiscal year 1977, Congress passed a budget revision S. Con. Res. 10 (or a third budget resolution for the fiscal year 1977) in response to the budgetary changes precipitated by President Jimmy Carter’s 1977 economic stimulus package.

THE TAKEAWAY

The 1974 Budget Act’s expedited procedures for budget resolutions govern budget revisions. By extension, the Budget Act’s reconciliation provisions should also apply.

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