What You Need to Know About the Upcoming Budget Reconciliation Process
Key Takeaways:
The budget reconciliation process allows certain fiscal legislation to pass the Senate with a simple majority (51 votes). It can be a way to quickly advance high-priority fiscal policy.
Only provisions that have a direct impact on the federal budget may be included. Senators may raise points of order against any provision of a bill that they believe to be “extraneous,” and the Senate Parliamentarian, a nonpartisan advisor, makes the final ruling on these challenges.
The current president has a history of attempting to exert influence on nonpolitical actors, and the Parliamentarian could become a target if she does not rule favorably on his legislative priorities.
If your organization relies on federal funds, your legal and government affairs advisors can advocate for your interests to shape favorable outcomes, and represent you through all available avenues, including litigation, to delay or prevent funding disruptions whenever possible. Please get in touch.
Key Contact:
Government Relations Director and Counsel
Point of Difference Strategies/Croke Fairchild Duarte & Beres
What is budget reconciliation?
Congress sometimes uses this special legislative process to quickly advance high-priority policy because it allows certain fiscal legislation to pass the Senate with a simple majority (51 votes) rather than the usual 60 votes needed to overcome a filibuster. This process was created by the Congressional Budget Act of 1974 to make it easier to align federal spending with budget resolution targets.
Because reconciliation bills cannot be filibustered, in recent decades the reconciliation process has been used most frequently when the same party controls the presidency, House, and Senate but lacks the 60-vote majority in the Senate needed to overcome a filibuster.
The process begins when Congress adopts a budget resolution containing “reconciliation directives”; instructing specific committees to change spending, revenues, or the debt limit by certain amounts. This will likely happen in the next week or two for the upcoming cycle. The committees then draft legislation to meet these targets, which is bundled into a reconciliation bill.
What kinds of provisions can be included?
The Congressional Budget Act permits using reconciliation for legislation that changes spending, taxes, revenues, and/or the federal debt limit. Notably, tax-related items cannot increase the federal deficit in any year beyond the period covered by a committee’s reconciliation instruction, which is typically 10 years. The “Byrd Rule” named after Senator Robert Byrd, restricts what can be included in reconciliation bills. Under this rule, provisions must have a direct impact on the federal budget.
Who determines whether a provision meets these requirements?
Which committee has jurisdiction over a provision, and especially whether non-budgetary provisions are allowable terms or whether budgetary effects are merely incidental, are subject to interpretation. Senators may raise points of order against any provision of a bill or conference agreement that they believe to be extraneous under the Byrd Rule. Like most other House and Senate rules, the Byrd Rule is enforced only through points of order raised by senators. Material that violates the Byrd Rule may remain in reconciliation legislation if no senator objects.
Deciding whether a provision violates the Byrd Rule is often a judgment call that is traditionally made by the Senate Parliamentarian, a nonpartisan advisor. Provisions that are deemed primarily policy focused rather than fiscal — known as “extraneous matters”— must be removed. This process is often called the “Byrd bath” For example, in 2021 the Biden administration tried to pass immigration legislation through this process, but the Parliamentarian ruled that providing legal status to undocumented immigrants was not an appropriate use of the reconciliation process. Biden succeeded with the Bipartisan Infrastructure and Jobs Act (2021) and the Inflation Reduction Act (2022).
Do people from outside the process get involved?
In politics? Of course! However, most leaders in the past have respected the Parliamentarian’s authority, even when they disliked the decision. The current president has a history of attempting to exert influence on nonpolitical actors, and the Parliamentarian could become a target if she does not rule favorably on his legislative priorities, which include tax provisions, border security, energy production and deregulation, defense funding, and raising the debt ceiling. The volume of provisions and the pace at which the majority party hopes to move may make it difficult to track every item — and raise the possibility of inappropriate provisions slipping through without objection.
What is the timeline?
Government funding runs out on March 14, so a budget must be passed by then to avert a partial shutdown. House Speaker Johnson has laid out an ambitious timeline to address everything in one bill — including debt limit, tax, energy, and border security priorities. His plan would pass the budget resolution by the end of February and then complete the subsequent reconciliation process with all the relevant committees to bring a final bill for a vote in the House by April. If Congress fails to pass a budget by the March 14 deadline, the government will shut down, meaning all non-essential services and federal agencies will be forced to shutter operations. Congress may pass a continuing resolution — a stopgap measure to keep the government funded at current levels — to keep the government open while the body debates future funding.
What steps can individuals and organizations take to prepare for possible outcomes?
Proactive stakeholder advocacy will play a vital role in shaping favorable outcomes. Your legal and government relations advisors can help your organization understand what federal programs, funds, and grants may be at risk. They can also advocate for you through all available avenues, including litigation, to delay or prevent funding disruptions whenever possible.
Questions? Please get in touch with David or another member of the Government Affairs team.
