What is a Reconciliation Bill?

Congressional Budget Resolution

Following the State of the Union and transmittal of the President’s Budget, Congress begins its own budget process, including adoption of a spending and revenue framework called a “Budget Resolution,” appropriations bills to fund discretionary spending programs, and optional Budget Reconciliation legislation to modify mandatory spending and tax laws.

The Senate and House Budget Committees hold public hearings in February at which they receive testimony on the President’s Budget proposals from Administration officials, outside experts, trade associations and other interest groups, Members of Congress, and the public. At the same time, the other committees of Congress review the President’s Budget proposals and transmit to the Budget Committees their own “views and estimates” on appropriate spending or revenue levels for programs within their respective jurisdictions.

The Senate and House Budget Committees – using the President’s Budget request, information from their own hearings, views and estimates from other committees of Congress, and projections from the Congressional Budget Office – draft their respective versions of a “Congressional Budget Resolution” in a series of working meetings known as committee “mark-ups.”

It is important to understand that the Budget Resolution does not become a law and therefore is not presented to the President for signature. Rather, it is a congressional blueprint to guide subsequent action on specific spending and revenue measures. The Budget Resolution:

  • sets total federal spending and revenue levels;
  • allocates spending to each Committee, including a lump-sum to the Appropriations Committee for all “discretionary” spending;
  • establishes procedures to enforce the budget blueprint; and
  • may include optional special provisions called “budget reconciliation instructions” aimed at expediting changes to mandatory spending programs or tax laws through a filibuster-proof Budget Reconciliation Bill.

Budget Reconciliation Instructions to Reform Mandatory Spending and Taxes

Reconciliation instructions direct specified House and Senate authorizing committees to report, by a certain date, legislative provisions that achieve changes in mandatory spending levels or revenue levels for programs within the authorizing committee’s jurisdiction. While specific mandatory spending or tax changes are “assumed” by the Budget Committee when the dollar targets are drafted, the authorizing committees need not – and often do not – follow the Budget Committee assumptions.

For example, the Budget Resolution could direct the Senate Finance and House Ways & Means Committees to report legislation that makes changes in programs within their jurisdiction that change spending and/or revenue levels by $____ billion over ten years.  The Budget Committees, when drafting the Budget Resolution, base the dollar amounts on specific mandatory spending and tax reforms, but the Finance and Ways & Means Committees can decide to achieve their spending and revenue targets through entirely different reforms – and in some cases, can substitute revenue changes for spending changes, or vice versa, if the total deficit impact is achieved.

Adopting the Budget Resolution

When the House and Senate Budget Committees complete committee action on their respective Budget Resolutions – with or without reconciliation instructions – they report the resolutions to the full House and full Senate, respectively. Members of the House and Senate then have an opportunity to alter the work of their respective Budget Committees by offering amendments to the Budget Resolution during debate on the House and Senate Floors.

When the Senate and House have both passed their respective versions of the Budget Resolution, they appoint several of their Members to a House-Senate conference committee to resolve differences between the House- and Senate-passed resolutions. When differences have been resolved, each chamber must then vote on the compromise version of the Budget Resolution called a “Conference Report.”

Budget Reconciliation: Floor Consideration and the Byrd Rule

If the Budget Resolution includes “reconciliation instructions” to change mandatory spending or revenue levels, the authorizing committees named in the instructions are required to develop reconciliation legislation at the same time the Appropriations Committees are assembling their appropriations bills.

Reconciliation mark-ups can be lengthy and challenging depending on the authorizing committees’ instructions; and because reconciliation bills are difficult to amend on the Floor, committee mark-ups are especially significant.

After the authorizing committees mark-up their respective reconciliation legislation, the various titles are reported to the Budget Committees where they are packaged into a single Reconciliation Bill for House and Senate Floor consideration. Congress considers Budget Reconciliation Bills under special procedural protections, particularly in the Senate.

To explain the significance of Budget Reconciliation procedures, it is first important to understand how the Senate typically operates. The Standing Rules of the Senate, many of which have been in place since the founding of the Republic, generally protect the right of all Senators to engage in (1) unlimited debate and (2) the unlimited right to offer amendments.

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. The “filibuster” is simply the continuation of debate and amendments to prevent a 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 and more frequently, leading to the presumption that major legislation requires the support of 60, not 51 Senators.

The Budget Reconciliation process effectively short-circuits Senate rules because the Budget Act protects Reconciliation bills with (1) a strict (20-hour) time limit on debate and (2) a germaneness restriction on amendments. The limit on debate means that Reconciliation bills cannot be filibustered. (These same significant protections apply to Congressional Budget Resolutions, which likewise cannot be filibustered.)

Consequently, no matter how controversial a Reconciliation bill may be, passage in the Senate requires 51 votes (or 50 when the Vice President votes), rather than the 60 votes ordinarily required to invoke cloture and end debate on a controversial measure.

The “germaneness” restriction on amendments to Reconciliation bills is equally significant (though often overlooked). “Germaneness” is much stricter than mere relevance. An amendment is “germane” only if it strikes a provision, changes a number, limits some new authority provided in the legislation, or expresses the “sense of the Senate.” Effectively, this means that most substantive amendments offered to a Reconciliation bill on the Senate Floor are likely to be nongermane and can only be considered if the restriction is waived by a vote of 60 Senators. This elevates the importance of the committee mark-ups in the Reconciliation process.

Because Budget Reconciliation is a radical departure from the way the Senate normally does its business, Senator Robert C. Byrd (D-WV) created in 1985 what has become known as the “Byrd Rule,” which limits what can be included in a Reconciliation bill. Under the Byrd Rule, all legislation reported in response to Reconciliation instructions must be “budgetary” in nature. Anything not budgetary in nature is considered “extraneous” and in violation of the Byrd Rule, and can be stricken from the bill.

In addition, the Byrd Rule bars reconciliation provisions that would increase deficits beyond the 10-year “budget window.”  This is particularly significant for tax cuts, which violate the Byrd Rule unless they are fully paid for, or expire at the end of 10 years.


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