Republicans in Congress want to pass President Donald Trump’s agenda through the budget reconciliation process, a legislative approach that bypasses the threat of a Democratic filibuster in the Senate and allow Republicans to pass their agenda. However, this will require ̶ nearly if not all ̶ House Republicans to agree. Before Congress gets to reconciliation, it must pass a budget resolution. Other tasks that need to be completed, including funding the government. Current funding expires on March 14, 2025. The funding of the government will be done by a continuing resolution which is different from the reconciliation process. Additionally, Congress needs to address the debt limit, and there has been discussion of combining debt limit into a reconciliation bill or as part of the continuing resolution to fund the government.
The president has made clear that among his goals are extending his tax cuts passed in his first administration, reducing the corporate tax to 15%, and eliminating taxes on tips, overtime and social security benefits. Those are expensive items which would have to be paid for through the reconciliation process.
What is a Budget Resolution?
Before reconciliation can occur, Congress must first pass a budget resolution. The resolution is not a law and cannot be signed or vetoed by the president. The resolution is an outline of the Congress’ spending and revenue priorities. It divides the government into “functions” and provides numbers for each function. Those spending and revenue levels serve as part of the congressional budget enforcement process by creating points of orders should legislation be considered that would breach those levels.
What is Budget Reconciliation?
The Congressional Budget Act provides for the inclusion of optional items in the resolution, including reconciliation instructions to committees. A resolution with reconciliation instructions directs the authorizing committees to develop policies for consideration to meet those spending or revenue changes. For example, if an instruction is to reduce Medicare spending by $150 billion, the committees with jurisdiction over Medicare must determine policies, that if enacted, would reduce spending by that number.
Once the committees have created the legislation that responds to the reconciliation instructions, the legislation goes back to the Budget Committee. Each body of Congress can develop its own package. Once the Budget Committee for its respective body combines the legislation from all the committees responding to reconciliation instructions, it moves forward for consideration by the full House or Senate. If the House and Senate pass differing policies, a conference committee will meet to determine the final package. However, in recent times, these differences have been worked out in less formal discussions.
Under Senate interpretations of the Congressional Budget Act, the Senate can consider the three basic subjects of reconciliation – spending, revenues, and the debt limit – in a single bill or multiple bills, but a budget resolution can generate no more than one bill addressing each of those subjects. In practice, however, a tax bill is likely to affect not only revenues but also outlays to some extent (for example, via refundable tax credits). Thus, as a practical matter a single budget resolution can probably generate only two reconciliation bills.
Under the Budget Act, Congress can revise a budget resolution after adopting it. The Senate parliamentarian has ruled that a revised budget resolution could be used to trigger another reconciliation bill, but this has never been successfully done.
Budget reconciliation cannot be used to change the Social Security program; however, it can change other mandatory spending programs like Medicare and Medicaid.
Consideration of a Budget Reconciliation Bill
When the reconciliation package is considered in the House, it is not very different from any other bill. The rule by which the package is considered may restrict amendments to lessen the risk of changes that lead to a loss of support and to ensure the bill adheres to the reconciliation’s goals.
The Senate, the Byrd Rule and Expedited Consideration
The Senate considers reconciliation bills differently from other bills. In the Senate, only a simple majority is needed to pass reconciliation rather than the usual requirement of 60 votes. Also in the Senate, debate time is limited to 20 hours and once that time expires the Senate can only add additional debate time by unanimous consent. There is no limit to the number of amendments that can be offered, which when debate time has expired, typically results in an hours-long series of considering amendments known as “vote-a-rama.” Vote-a-rama allows the minority a chance to force votes on their priorities.
However, before floor debate even starts, the Senate’s parliamentarian determines whether the bill’s provisions adhere to the Byrd Rule. The Byrd Rule prohibits the inclusion of “extraneous” measures in reconciliation and defines extraneous as:
- measures with no budgetary effect (i.e., no change in outlays or revenues);
- measures that worsen the deficit when a committee has not achieved its reconciliation target;
- measures outside the jurisdiction of the committee that submitted the title or provision;
- measures that produce a budgetary effect that is merely incidental to the non- budgetary policy change;
- measures that increase deficits for any fiscal year outside the reconciliation window; and
- measures that recommend changes in Social Security.
If the parliamentarian advises that a provision does not comply with the Byrd Rule, the provision is typically removed – either preemptively before the bill reaches the floor, by floor amendment, or by a point of order raised against it.
If a point of order is raised and sustained by the Senate’s presiding officer, the provision is stricken – unless a senator moves to waive the point of order. In that case, the Senate votes on whether to keep the provision in the bill. Thus, the Byrd Rule plays an important role in what provisions can be considered by the Senate.
Timing for 2025
The House Majority Speaker Mike Johnson (R-LA) has said that he wants to send reconciliation to the president’s desk by the end of April. The Republican caucus has been discussing a 50-page list of spending cuts and potential revenue raisers. Johnson has said he wants the House Budget Committee to begin mark up of a resolution next week, although no formal announcement has been made.
Each step of the budget process is complex with a variety of decisions that have to be made about policies and cost estimates. With narrow margins in both bodies of Congress, and such large cuts being discussed, the process will not be easy and probably will move slower than the speaker has outlined.
