A Lesson in Politics: Budget Reconciliation

While the Senate healthcare repeal bill may or may not be dead (who knows what the plan is this hour… but fingers crossed, knock on wood, etc.), that doesn’t mean this fight is over. It’s been seven years and the GOP still brings up repealing the Affordable Care Act at every opportunity they get… often through a process called reconciliation. Regardless of the status of the current repeal bill, it’s important to understand the complex process Congress keeps jumping through to pass healthcare legislation. Because it will come up again.

Reconciliation is a process established in the Congressional Budget Act of 1974. It is used by Congressional budget committees to make sure tax law and mandatory spending programs align with the benchmarks outlined by the budget resolution. Basically, it’s a way to fast track legislation dealing with spending, revenue, and federal debt limit (we’ll call these the three elements of reconciliation). Originally, the intent of reconciliation was to gradually bring down the deficit by establishing a mechanism to create budget and tax deals.

The process goes like this:

• Congress passes a concurrent resolution (adopted by both the House and the Senate) on the budget that provides instructions for the committees on how to change their spending and revenue to meet the standards of the resolution.
• Committees send their updates to the Budget Committee of their respective chambers.
• The Budget Committee submits the recommendations via one omnibus bill and it is presented to the respective chambers.
• If the House and Senate adopt different versions of the reconciliation bill, they must go to conference and work out the differences.
• A final up-down vote is taken and if it passes, it is sent off to the president for signing.

Seems simple, right? Plot twist.

The Senate has special rules when it comes to reconciliation. In the Senate, reconciliation bills can be passed with 51 votes and cannot be filibustered. Other legislation (in normal circumstances) can be filibustered, a stonewalling tactic unique to the Senate, and 60 votes are needed to end the filibuster. Reconciliation bills, however, evade this clever tool. Instead, it only gets 20 hours of floor debate in the Senate chamber before it goes to a vote.

Senate rules also dictate that the chamber can consider spending, revenues, and debt limit legislation in one single bill or in multiple bills, but it can only consider each of these topics in one bill per year.

Senate rules also dictate that the chamber can consider the three elements of reconciliation together in one bill, separate where each has its own bill, or a combination of two elements. However, each element can only be considered once per budget resolution. As such, the maximum number of reconciliation bills that the Senate can consider in a year (the typical duration of a budget resolution) is three, which is contingent on the Senate bringing forward spending, revenues, and the federal debt limit each in their own bill. If spending and revenues are combined, however, then the Senate can only bring forward two reconciliation bills — one for spending and revenues and another for the federal debt limit.

This hold true unless Congress passes a second budget resolution, then the rules reset. This element of the Senate reconciliation rules is important because it means if the first reconciliation bill includes both spending and revenues, they cannot be brought up again under the presiding budget resolution, even if one of the elements is not introduced to a vote and therefore not put into effect. This results in a time crunch for passing the reconciliation bill.

Furthermore, under the Senate rules, the budget cannot impact entitlements (such as Medicaid and SNAP) unless the instructions in the reconciliation bill allow for modifications. If this is the case, the Byrd Rule comes into play.

What is the Byrd Rule?

The Byrd Rule, named for West Virginia Senator Robert Byrd, was introduced in 1985 and added as an amendment to the Congressional Budget Act of 1974 in 1990. It prohibits the Senate from considering any element to the bill that is “extraneous.” There are six tests laid out in Section 313(b)(1) of the Congressional Budget Act. “Extraneous matter” is defined as…

“A provision is considered to be extraneous if it falls under one or more of the following six definitions:

• it does not produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected;
• it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
• it is outside of the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
• it produces a change in outlays or revenues which is merely incidental to the non- budgetary components of the provision;
• it would increase the deficit for a fiscal year beyond the “budget window” covered by the reconciliation measure;12 and
• it recommends changes in Social Security.”

So… how does this relate to healthcare?

Prior to 2010, reconciliation was not connected to healthcare at all. In fact, it has only been used 20 times since its inception. The process is now connected to healthcare through the passage of the Affordable Care Act. While the substantive law that is the ACA was not passed via reconciliation, a few discreet budgetary changes were made via the reconciliation process that same year. The Affordable Care Act itself was filibustered, and Democrats reached across the aisle to work with their GOP counterparts to find legislative solutions that would ultimately invoke cloture, ending the filibuster, and passing a generation-changing healthcare law.

The GOP angled to use the reconciliation process in a similar way — they were not changing the inherent structure of the Affordable Care Act, they were altering the spending and revenue aspects of the law so that parts of it were essentially inoperable. They were then replacing those elements with those from their own bill, you know, the ones that the Congressional Budget Office said would cause over 22 million Americans to lose their healthcare over the next 10 years.

But what is this about a time crunch?

Only one reconciliation bill can be considered at a time… so until they do something about healthcare, they cannot move forward with tax reform (assuming they plan on using a reconciliation bill to get that through, too). Additionally, healthcare reform is attached to the budget for fiscal year 2017 which ends on September 30, 2017. Their deadline to get not only the healthcare bill passed, but also their tax reform bill, and everything else they need to do in September (reauthorized CHIP, likely raise the debt ceiling, and a variety of other bills that are needed to keep the government functioning). Time is running out on getting the heathcare bill through this year — and if it isn’t voted on or is voted down, then they will have to wait for the next fiscal year to try again. The New York Times has a great piece on the time crunch for the repeal and replace/repeal bill, if you’re interested in reading more.

The reconciliation process began with the best of intentions, but over the past few years, the GOP has tried to use it to sabotage the American people. However, if the BCRA does not pass, it will drastically impact how the GOP structures their upcoming tax reform. In the meantime, pay attention to the back and forth over what the Senate Republicans plan to do with the healthcare bill and watch how the reconciliation process plays out. They only need 51 votes to move forward — and you can help stop the bill in its tracks by calling your Senators.

Read more about how to do that here.