Reconciliation (The Budgetary Kind)

Eakinomics: Reconciliation (The Budgetary Kind) This note is not about the restoration of friendly relations. It is about the congressional process known as reconciliation that permits legislation to get an up or down vote in the Senate. Reconciliation is all the rage in nerd Washington. AAF’s Gordon Gray lays out all the details in his latest; this is the (Zoom) cocktail party version. The Congressional Budget and Impoundment Control Act of 1974 (“Budget Act”) set up the modern budget process and infrastructure – the House and Senate Budget Committees, budget resolutions, the Congressional Budget Office, and so forth. The authors intended that these serve the purposes of fiscal sanity and anticipated that this fiscal discipline would involve tough legislative initiatives such as raising taxes (and not just on the 1 percent) and cutting spending (and not just the defense budget). Given the political difficulty of these actions, they were looking to grease the skids when it was necessary to bring the actual budget deficit to match the planned budget deficit – that is, “reconcile” the difference between the reality and the budget resolution. A potentially important hurdle was the Senate’s tradition of unlimited debate that is cut off only by a super-majority vote for cloture. This tradition raised the possibility that a single Senator or a small group could filibuster these attempts at fiscal sobriety. Reconciliation was included in the Budget Act to bypass those Senate rules: A reconciliation bill has a fixed amount of time for debate and then is subject to an up or down simple majority vote. Given such an opening, it was too much to hope that reconciliation would be used strictly for deficit reduction; indeed, the vast, vast majority of such bills have increased deficits. Also, there would also be the temptation to use it for non-budgetary lawmaking. Recognizing the threat to his beloved Senate rules, the late Robert Byrd of West Virginia had passed into law the “Byrd Rule” that prevents the inclusion of provisions that are not budgetary in nature. Notice that a provision can have a budgetary impact and still be excluded. If the Senate Parliamentarian rules that a provision’s budgetary impact is incidental to its primary policy purpose, then it is not germane and requires a 60-vote approval to be included. For obvious reasons, when identified these provisions are quickly dropped. The 2021 emphasis on reconciliation has created a new parlor game in trying to guess where the Parliamentarian will draw the line on what is in and what is out. It has also raised the specter of using a “nuclear option” (similar to that used in judicial appointments) to overrule the Parliamentarian. One hopes the latter is empty chatter, as using it would not just get a favored policy over the finish line. It would simultaneously destroy the integrity of reconciliation and badly degrade the Senate legislative process. That’s reconciliation – the budgetary kind, at least.