The Reconciliation Decision – Why It Is Important

By Dave Hoppe and Kevin Kayes
March 18, 2009

Most administrations face a moment when they have to decide whether they are going to bet the farm or keep their wagers small. However, few administrations have faced a time where they are willing to double down on their whole agenda. President Obama and the new Democratic majorities will make just this decision in the next 10 days. It all relates to some rather arcane budget procedures that will dictate the legislative calendar for the rest of the 111th Congress.

The law which authorizes congressional budget actions, referred to as the Budget Resolution, requires that these decisions be made early in the process. Both the House and the Senate Budget Committees will meet next week to develop their budget proposals. In addition to deciding how much money will be spent on different parts of the budget such as energy, defense, education, and other priorities, they also have to decide whether or not to authorize reconciliation legislation to meet these goals. Reconciliation protects budget measures from some parliamentary hurdles such as filibusters, and is governed by the Budget Act.

In some ways the Budget Act is very simple. Broad brush decisions are made to fund the government at certain levels and to tax the American people at certain levels. Since the budget resolution is for the use of Congress, the President has no say in it. It never has to be signed by the President. It is a document to guide the internal budget actions of the Congress. It does not change any laws. Most important of all, the budget process limits debate in the Senate because it only takes a simple majority to pass the budget.

Yet the budget resolution does include one other critical option for the Congress. Reconciliation instructions call for a reconciliation process that leads to the development of legislation that changes laws; eventually, the reconciliation document is signed by the President. It instructs congressional committees to make the changes that actually increase and/or decrease spending and increase and/or decrease taxes. The key is that these reconciliation bills are part of the official budget process. They limit debate in the Senate and can be passed by a simple majority vote.

Thus it would seem that this decision is a no-brainer for the administration and the enhanced Democratic majorities. They have the process and the votes to pass a bill that will accomplish their goals. They won’t have to find 60 votes to end a filibuster.

But there are extenuating circumstances in the Budget Act that make this a little more difficult.

The changes in law enacted under the reconciliation process only run as long as the budget resolution, usually five or ten years. That’s why the tax cuts enacted during the George W. Bush presidency expire in 2011. In addition, over the years Senator Byrd has added some significant limitations to the use of the fast track budget reconciliation process. One of these limits requires that any provision included in reconciliation have an actual fiscal impact, often referred to as the “Byrd rule”. Language can be attacked through the use of a super-majority point of order on the Senate floor if it doesn’t raise or lower revenues or does not involve direct spending or entitlement programs. For example, if reconciliation rules governed heath care, demonstration projects that were not scored by CBO would be eliminated by the Byrd rule. Similarly, there would be significant pieces of an overall bill on climate change that probably would not pass muster under the Byrd rule in reconciliation.

Therefore, language that tries to make wholesale programmatic changes that have nothing to do with reducing the deficit can be stricken from the legislation by a simple point of order. This means that much of the authorizing language that makes changes in the programs will end up on the cutting room floor. The final product will look like Swiss cheese. Now, these points of order can be overridden by getting 60 votes. However if the majority can gather 60 votes, why not use the regular order? Regular order might be preferred because it doesn’t have the partisan shadow of using the reconciliation process. In a post partisan Washington, that might be useful.

Today, the White House and the Democratic leadership in the House and the Senate are trying to decide whether they want to authorize a reconciliation bill in the budget that will be written next week. The House has long chafed under the Byrd rule. They also don’t like being told that something they desperately want to do can’t be done because the Senate can’t get 60 votes for it. So the House is more than willing to double down on this bet. In the Senate, the role of the parliamentarian becomes very important. Each party has to make its case.

The White House wants to get it all done now. Delayed gratification isn’t part of their DNA. But what the final language looks like after the Byrd rule deletions is of great concern to them. The Senate is always of two minds. Yes, they want to achieve these goals as much as the White House and the members of the House of Representatives, but they have to work on lots of other legislation that can’t be done by reconciliation. The increased partisan feeling that will result from using reconciliation won’t make for easy relations in the daily give and take with the minority.

So here they stand at a key moment in the game. Should they bet the farm and include health care reform, climate change, and perhaps energy legislation in the reconciliation bill, or should they be more cautious and pass a limited budget resolution that leaves the grunt work of policy changes liable to a possible filibuster? That decision has to be made in the next 10 days, because once they develop the budget resolution, they have to include reconciliation or waive that option for the year.

It should be an interesting week.

About the Authors

David Hoppe is one of QGA’s most seasoned Capitol Hill veterans and the President of the firm. Mr. Hoppe brings nearly 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 and federal agencies.

Kevin Kayes 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.

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