Background on the Senate’s Byrd Rule
To appreciate the significance of budget reconciliation procedures in the Senate, it is helpful to understand how the Senate typically operates. The Standing Rules of the Senate generally protect the rights of all Senators to (1) engage in unlimited debate and (2) offer amendments without limitation.
Votes do not occur in the Senate until all debate on a matter is completed and all amendments have been offered. Consequently, opponents of a particular measure can block it by engaging in extended debate or continuing to offer amendments. A “filibuster” is simply the continuation of debate and amendments to prevent a final vote.
The only way to stop a filibuster in the Senate is by limiting debate and amendments with a procedure known as “cloture”—which requires 60 votes. In recent years, filibusters have been threatened more frequently—almost routinely—by opponents of legislation, effectively requiring the routine filing of cloture. This has led to the popular misconception that legislation in the Senate requires the support of 60 Senators. In fact, the passage of legislation requires 50 percent plus one, but invoking cloture requires 60 votes.
The budget reconciliation process effectively short-circuits Senate rules because the 1974 Budget Act protects reconciliation bills with (1) a strict (20-hour) time limit on debate and (2) a germaneness restriction on amendments. The time limit means that reconciliation bills cannot be filibustered.
Consequently, no matter how controversial a reconciliation bill may be, passage in the Senate requires only 51 votes (or 50 when the Vice President is available to break a tie), rather than the 60 votes required to invoke cloture on controversial measures.
Because filibuster-proof budget reconciliation bills are a radical departure from the Senate’s norm of unlimited debate and amendments, Senator Robert C. Byrd (D-WV) in 1985 proposed what came to be known as the “Byrd Rule” to limit the scope of what can be included in a reconciliation bill.
Under the Byrd Rule, all legislation developed pursuant to reconciliation instructions must be budgetary in nature. Any matter that is not budgetary is considered to be “extraneous.” Senators may use a Byrd Rule point of order to strike from the bill specific “extraneous” provisions from a reconciliation bill or conference report.
Generally, the Byrd Rule defines as “extraneous” provisions that (1) have no cost or (2) are policy changes with “merely incidental” budgetary effects (although nonbudgetary provisions are allowed in limited circumstances). Also considered extraneous are: (3) provisions that increase deficits and the reporting committee has not met its reconciliation instructions; (4) provisions that increase deficits in years beyond the (10-year) budget resolution window; (5) provisions that fall outside the reporting committee’s jurisdiction, or (6) provisions that impact Social Security (which is why the new tax break for seniors cannot directly amend the Social Security law).
Senators may challenge and strike out of the bill a lengthy provision as extraneous or short provisions down to the subsection level. The Byrd Rule, itself, (section 313 of the 1974 Budget Act, as amended) is highly technical and arcane. The following four-part test may be used in determining if a provision violates the Byrd Rule.
I. Does the provision have a budget effect?
a. Changes in outlays or revenues brought about by changes in the terms and conditions under which outlays are made or revenues are collected are considered to be budget effects.
II. If a provision has a budget effect, it does not violate the Byrd Rule (and can remain in the reconciliation bill) unless:
a. The budget effect is “merely incidental” to the nonbudgetary (policy) components of the provision (for example, if a policy provision does not have a budgetary “score” you cannot save it from the Byrd Rule by piggybacking it on a minor or “incidental” budgetary provision); or
b. The provision decreases revenues (or increases spending), and the reporting committee has failed to achieve its reconciliation instructions; or
c. In a year beyond the (10-year) budget resolution window the provision would reduce revenues (or increase spending) and that revenue loss (or spending increase) causes the relevant title of the reconciliation bill to become a net deficit increaser in the out-years. This restriction is why tax cuts in reconciliation bills are often drafted to expire after ten years, for example President George W. Bush’s 2001 tax cuts. This year, the Senate Budget Committee is ignoring the nonpartisan revenue estimates of the Joint Committee on Taxation and is claiming that extension of the 2017 tax cuts “cost nothing” because they simply extend current policies.
III. If the provision has no budget effect, it violates the Byrd Rule. Examples of “no-costers” that violate the Byrd Rule are reporting requirements, technical corrections, authorizations, and no-cost policy changes.
a. Exceptions: Senate-originated provisions which have no budget effect during the budget window do not violate the Byrd Rule, if the Chairman and Ranking Member of the Budget Committee and the Chairman and Ranking Member of the authorizing committee certify that one of the following is true:
i. the provision mitigates a budgetary provision; or
ii. the provision will result in substantial deficit reduction in an outyear (i.e., a year beyond the budget “window” of the reconciliation bill); or
iii. budgetary effects are likely to occur in the event of new regulations, court rulings, or statutory triggers; or
iv. budgetary effects are likely but cannot currently be estimated.
IV. Provisions outside a committee’s jurisdiction and provisions affecting Social Security automatically violate the Byrd Rule.
A Byrd Rule point of order may be raised by any Senator—Republican, Democrat, or Independent—when the reconciliation bill is on the Senate Floor. The nonpartisan Senate Parliamentarian rules whether the identified provision violates the Byrd Rule and, if so, it is stricken from the bill by the Senate clerk. However, the Parliamentarian is required to use budget estimates determined by the Chairman of the Senate Budget Committee—currently Senator Lindsey Graham (R-SC). Sixty votes are required to overturn a ruling of the Parliamentarian.
Examples of Provisions that Could Be Vulnerable to Byrd Rule challenges
Provisions in the House-passed OBBBA bill that could be vulnerable to Byrd Rule challenges include: the REINS Act aimed at rolling back regulations; preemption of state laws regulating Artificial Intelligence; expedited permitting rules for natural gas pipeline projects; and new immigration fees aimed at deterring asylum seekers (if the budgetary effect is found to be merely incidental to a policy objective).
For additional background, on the Byrd Rule and budget reconciliation procedures, request a copy of Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law (2024-25 ed.). Overnight Fed Ex is available.