Imagine your parents have a weekly budget they spend on household items. Every Sunday, they choose the food for the week, family activities, and any money you’re allowed to spend on new items. You and your siblings want more say in this process so you band together and demand that you can make changes to the budget.
Achieving something like this with your parents may seem unrealistic, but the US Congress decided to implement a similar change when they created the power of budget reconciliation. The legislative branch felt the executive branch had too much power over money and spending decisions and so Congress pushed for budget reconciliation to be included in the 1974 Congressional Budget Act.
Budget reconciliation allows a simple majority of 51 votes in the Senate to pass legislation that calls for significant changes in government spending, revenues, or the debt ceiling. It was set up to allow lawmakers to change policy on spending or taxes to keep the nation's budget in line.
How It Works
Legislation passed through budget reconciliation is not subject to the infamous filibuster which otherwise derails major legislation unable to obtain 60 votes in the Senate. While the changes can be just as significant, or more, than other non-budget related legislation, ensuring the country has the money it needs to function allows budget reconciliation to fast-track Congressional action.
Not all legislation can be passed using budget reconciliation. The Byrd Rule, named after West Virginia’s Senator Robert Byrd, calls for any bill deemed extraneous or unrelated to the budget be removed from budget reconciliation. Officially, any bill that either has no budgetary impact, is not a specific responsibility of the committee that wrote it, increases deficits outside the time window specified in the budget resolution, or makes any change to Social Security funding is disqualified. The Senate Parliamentarian, the official advisor to the US Senate on the interpretation of Senate rules and procedures, ultimately decides whether or not something is exempt from budget reconciliation via the Byrd Rule.
The United States Congress specifically included budget reconciliation when they passed the Congressional Budget Act in 1974. By passing the CBA, Congress established the House and Senate Budget Committees, the Congressional Budget Office, eliminated the executive branch’s ability to impound funds approved by Congress, and established the budget process and timeline. This effectively established Congress as the primary decider for all things budget related.
Part of the new changes called for the Senate and House to adopt a budget resolution each year. This budget resolution would serve as a roadmap outlining the different ways the US would spend its money and what priorities would change from previous years. For the country to successfully operate, it is extremely important for Congress to ensure laws and regulations are in place that allow the budget to be met on time. Congress realized that by ensuring the power of budget reconciliation, they could pass these laws quickly and effectively.
While the budget reconciliation process may seem unusual, it has played a frequent and notable role in US History. During Presidents George W. Bush’s and Donald Trump’s terms, Congress used the process to pass significant tax cuts. It was used during the Clinton and Obama administrations to pass tax increases and parts of the Affordable Care Act .
Budget reconciliation is a process frequently referenced but rarely understood. While it may seem like an unassuming technicality to Congressional rules, its impact carries significant weight for the country’s future. Achieving large changes to tax policy or spending decisions are huge elements to accomplishing a given presidential administration’s objectives. The President and Congress also want to avoid government shutdowns and inefficiencies resulting from a failed budget resolution, so they push to get things done quickly via budget reconciliation.
The added benefit of avoiding the Senate filibuster gives the budget reconciliation process appeal to lawmakers on both sides of the aisle. Because of this perk, the dominant party in Congress frequently tries to include as much of their policy agenda as possible in a bill that can pass through budget reconciliation while still avoiding the regulations of the Byrd Rule. Keeping an eye on the process of budget reconciliation gives you an important look inside how an administration wants to set the agenda for the country’s budget. It signals what the top priorities of politicians are and lets you know if they are pushing for the changes that you advocate for or not.