Congressional Reconciliation Process

By Kevin Kayes and David Hoppe
February 5, 2008

There is a growing interest by the Democratic Majority in Congress to utilize the budget reconciliation process to advance their legislative agenda during the second session of the 110th Congress. This reconciliation process often breaks down along party lines and results in a more partisan approach with minimal participation or support by the minority party in Congress.

The use of reconciliation in the Senate creates a fast track process for consideration of the reconciliation bill and ultimately the conference report and places strict limitations on the text that committees may report and the types of floor amendments that may be offered. Amendments to a reconciliation bill must be germane to the text reported by committee, deficit neutral and not contain extraneous matter as prescribed by the Byrd rule.

The reconciliation fast track authorized in the Congressional Budge Act allows a simple majority to complete action on the bill in lieu of the 60 votes necessary under normal Senate procedure thereby eliminating the super majority protection that has become the hallmark of Senate procedure. These fast track procedures make it more likely that the Congress will be able to complete action on some of the more contentious issues involving taxes, healthcare and other entitlement programs even in this fractured political climate.

With this in mind, we thought it might be useful for you to have some informational background on the ways that reconciliation can be used and the limitations of its use given the specific rules that govern the budget reconciliation process.

Overview

This session of Congress, there is much speculation over whether the Congress will authorize the use of a reconciliation process to advance its legislative agenda. The use of reconciliation has a tremendous impact in the Senate and greatly increases the likelihood that Congress will be able to complete action on contentious tax and spending legislation. While budget reconciliation is just one part of the broader Congressional Budget process, it has taken on added importance. This process provides a fast track process to consider fiscal legislation by a simple majority and not the 60 votes required under cloture in the United States Senate.

Democrats in the Senate decided against the use of a broad reconciliation bill during the first session of the 110th Congress to implement their fiscal agenda. They did authorize a narrow reconciliation bill to facilitate consideration of legislation on student loans. That resulted in the enactment of the College Cost Reduction and Access Act of 2007, P.L. 110-84, which made significant changes to the federal student loan program.

The decision to forgo the use of reconciliation to consider broader tax and spending legislation was based, in part, on a desire by the new majority to operate on more of a consensus basis and not rely on reconciliation, which often devolves into a more partisan process in the Senate. That may change this session of Congress for several reasons: with the majority facing a shortened session because of the looming Presidential election; the filibuster and ultimate defeat of the tax title to the energy bill; and the difficulty Democrats faced in extending expiring tax provisions and making changes to the Medicare program.

Congressional Process

The budget reconciliation process was created in the landmark Congressional Budget Act of 1974, Public Law 93-344, which broadly reformed the federal budget process, and for the first time, required Congress to adopt a budget plan in advance with regard to revenues, spending and debt. Those budgetary decisions were then enforced as legislation was considered throughout the year.

The word reconciliation reflects the very limited purpose that was initially envisioned under the Congressional Budget Act. It was a process designed to quickly make small changes in tax and spending legislation at the end of a budget cycle so actual spending and revenue receipts conformed to the budget plan that Congress had passed earlier in the year. The reconciliation process is now used as a vehicle to make some of the most important multiyear fiscal decisions that the Congress considers with regard to tax, healthcare and other direct spending programs.

Budget Resolution and Instructions to Committees

The reconciliation process is triggered when the House and Senate pass a budget resolution that contains reconciliation instructions, which are directives to committees in the House and Senate to recommend changes in direct spending and tax legislation. Reconciliation instructions identify the committees being directed to make the changes, the amount of savings they are to achieve and the date by which the committees are to act.

While the committees are given a reconciliation number or target to meet, they are given complete discretion to review programs in their jurisdiction to make recommended changes in law. The budget resolution sometimes contains assumptions on programmatic changes the committee could implement to meet its reconciliation instructions, but those assumptions are not binding on the authorization committees. Having said that, when a committee is ultimately directed in a budget resolution to produce a reconciliation bill, there is usually an understanding as to which programs in the jurisdiction of that committee will be affected.

Committee Action

The committees that receive instructions will meet to mark up and report out legislation in accordance with the instructions contained in the budget resolution. The legislative text reported by the various committees is compiled by the Budget Committee and in the Senate, placed on the Senate Calendar as an original bill. The House and the Senate Budget Committee do not have the authority to modify the reported text from the committees in any way. If only one committee in the Senate receives instructions, then that committee reports an original bill that is placed directly on the Calendar. There is no way to force a committee to act on its reconciliation instructions or to act in a timely way.

The reconciliation process is focused on activities that have a major budgetary impact, but have proven difficult to control through the annual appropriations process, such as entitlement spending and laws related to federal revenues. Reconciliation is a tool to help Congress manage that portion of the budget, which is mandatory in nature and not controlled through annual discretionary appropriations. The Congressional Budget provides separate budgetary discipline for discretionary appropriations bills, which are considered annually by the House and Senate Appropriations Committees. While most authorizing committees have some jurisdiction over mandatory spending programs, the Senate Finance Committee, the House Ways and Means Committee and the House Energy and Commerce Committee share jurisdiction over the major entitlement programs and revenue issues and are often key participants on most reconciliation bills.

House Floor Consideration

The Congressional Budget Act provides specific procedures for the consideration of reconciliation measures in the House and the Senate to ensure timely consideration.

In the House, reconciliation legislation is normally brought from the Budget Committee to the Rules Committee, which grants a special rule governing floor consideration of the measure. Under the Budget Act, amendments in the House must be deficit neutral and cannot increase spending or decrease revenue levels relative to the base bill without equivalent decreases in spending or increases in revenues. Also, non-germane amendments may not be offered absent a waiver from the Rules Committee. While there are some specific rules that apply to consideration of a reconciliation bill in the House, they are generally considered the way other measures are – by adopting a rule by majority vote that sets a time limit for debate, specifies which amendments and motions are in order and may even waive certain rules to facilitate consideration.

Senate Floor Consideration

The Congressional Budget Act establishes a fast track process that applies to the consideration of reconciliation bills in the Senate, which contrasts greatly with normal Senate Rules. Senate Rules generally do not impose limitations on debate or the type of amendments that may be offered unless cloture is invoked by 60 members of the Senate. In doing so, the Congressional Budget Act creates a process that allows a majority to impose its legislative agenda by a simple majority instead of the supermajority vote normally required in the Senate.

The Congressional Budget Act limits debate on reconciliation bills in the Senate to 20 hours. Debate on first degree amendments and motions are limited to two hours and one hour for second degree amendments. Amendments must also be germane to the committee reported text, which prohibits floor amendments that try to add new subject matter to the bill. The germaness rule ensures that committees, based on the text of what they report to the full Senate, really set the parameters regarding what may actually be considered by the full Senate under reconciliation. In addition, the Congressional Budget Act limits debate on the motions necessary to convene a conference and on consideration of the conference report itself to ten hours to ensure that Congress can complete action in a timely way.

Points of Order and the Byrd Rule

Similar to the House, the Congressional Budget Act prohibits consideration of any amendment in the Senate that would increase the deficit. An amendment that would increase spending above the level set forth in the bill must be offset by an equivalent amount of spending reductions, revenue increases or a combination of both. The amendment would also have to be germane to the subject matter of the bill. However, amendments to strike provisions in the bill are always in order regardless of their fiscal impact.

In addition to the limitations described above, the Congressional Budget Act also prohibits amendments that contain extraneous matter. This is often referred to as the Byrd Rule, which creates a point of order against any amendment or part of an amendment that does not cause a change in direct spending or revenues. The rule serves to limit the inclusion of general authorization provisions in a reconciliation bill and is intended to keep the committees’ work product and floor amendments focused on changes that directly affect the budget. Changes to Social Security are also prohibited by the Byrd Rule to ensure that this program may only be modified under normal Senate procedures.

The impact of the Byrd rule cannot be overstated and severely limits what the committees, individual members and the House and Senate conferees can ultimately include in a reconciliation bill that is presented to the President. A Byrd rule point of order may be made against select text of a reconciliation conference report, and if successful, has the affect of striking the offending language from the report and returning the conference report or message to the House to approve or disapprove. This is an extraordinary procedure that gives the Senate, and the minority in particular, significant power in process. It is important to note that the Senate may waive any of the points of order in the Congressional Budget Act by an affirmative vote of 60 members.

Timetable for Consideration

The Congressional Budget Act contains a timetable for consideration of the budget resolution and any reconciliation bill authorized by an annual budget resolution. It sets a deadline for the Budget Committees to report a budget resolution by March 15th and to complete work on the reconciliation bill by June 15th. The latter deadline is often not met. The timing for consideration of any reconciliation bill often depends on the ability of the individual committees to come up with a substantive proposal that satisfies their instructions and obtains the support of a majority of the committee.

About the Authors

David Hoppe
Dave is one of QGA’s most seasoned Capitol Hill veterans and the President of the firm. Mr. Hoppe brings more than 30 years of experience working for senior Republican members, including six years as Chief of Staff to then-Senate Majority Leader Trent Lott. Mr. Hoppe maintains extensive contacts in the House, Senate, federal agencies and Bush Administration.

Kevin Kayes
Kevin brings over 23 years of Capitol Hill experience to QGA, most recently serving as Chief Counsel to Senate Majority Leader Harry Reid. In this capacity, he helped manage Senate Commerce, Banking, HELP, Judiciary, Finance and Government Affairs Committee policy work for the Leader. Previously, he served as Staff Director and Chief Counsel on the Senate Commerce, Science and Transportation Committee and as Assistant Floor Parliamentarian. A seasoned Hill veteran, he is an accomplished legislative strategist, a Senate expert, and advises QGA clients on a wide array of challenging issues.

ABOUT QUINN GILLESPIE & ASSOCIATES

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