How Does Budget Reconciliation Work in Congress?

The U.S. Capitol building, on Nov. 19, 2024. Madalina Vasiliu/The Epoch Times

WASHINGTON—A powerful but little-known mechanism is expected to be employed in the upcoming Congress to advance significant parts of President-elect Donald Trump’s legislative agenda.

The budget reconciliation mechanism can be used to pass certain types of legislation without having to clear the 60-vote filibuster threshold in the Senate. By avoiding filibuster, only a simple majority is needed in the Senate.

Reconciliation, established by the 1974 Congressional Budget Act, can be used to pass measures related to three issues: taxation, spending, and debt.

Technically, multiple reconciliation bills can be passed separately within a fiscal year, provided each bill addresses only one of these three issues. For instance, there can be a reconciliation bill solely focused on spending, without including provisions related to taxation or debt. However, reconciliation bills often deal with more than one of the three issues, thus limiting Congress to a single reconciliation bill for the fiscal year.

What Legislation Has Been Enacted Under Reconciliation?

In 2022, Democrats used reconciliation to pass the Inflation Reduction Act, which included spending on environmental and health care measures, as well as instituting tax credits and a 15 percent tax on certain companies. Thus, the bill encompassed both the spending and tax categories.

Under the Byrd Rule, named after the late Sen. Robert Byrd (D-W.Va.), reconciliation bills cannot increase the deficit beyond a decade and cannot be used to make changes to Social Security. Measures must originate from committees with jurisdiction over the subject matter. For instance, the Senate Commerce Committee can propose amendments related to transportation but not homeland security.

The rule also states that reconciliation cannot be used to pass measures where the spending or taxing effects are minimal. For example, lawmakers might attempt to include an amendment in a border bill under reconciliation that requires the president to close the border if there are 100 illegal entries in a day. While such a provision involves costs, such as paying Border Patrol agents, the spending would be considered secondary, making the amendment likely inadmissible under reconciliation.

Decisions on whether amendments are germane fall to the parliamentarian of the chamber where the amendment is introduced.

The reconciliation process was used in the GOP’s unsuccessful attempt to repeal and replace Obamacare in 2017 but was successful later that year to pass Trump’s tax reform and tax cuts for the 2018 fiscal year, which began on Oct. 1. Since reconciliation bills are tied to the fiscal year, the deadline for passage expires on Sept. 30.

Democrats used reconciliation in 2021 to pass the American Rescue Plan, which provided stimulus checks to Americans and increased the child tax credit in response to the COVID-19 pandemic.

What Is the Reconciliation Process?

The reconciliation process begins with the Senate and House passing an identical budget resolution with a top-line number.

For instance, a reconciliation bill to fund border security could have a top-line number of $1 trillion. Total costs in the bill cannot exceed that amount, leading to some measures being excluded or reduced. A border bill with that top-line could allocate $50 million for a border barrier, but this would mean $50 million less for other priorities, such as border technologies.

In the Senate, up to 20 hours of debate is allowed on the budget resolution. The process typically includes what is known as a “vote-a-rama,” during which senators propose unlimited amendments, many of which are symbolic. These amendments are often an attempt by the opposition to delay or block the resolution, even though it requires only a simple majority to pass.

Some of the amendments are non-binding. For example, Senate Republicans introduced an amendment to the budget blueprint to strip federal funding from jurisdictions that defund their police departments. The move was a response to the so-called defund the police movement that gained prominence following the 2020 death of George Floyd.

Once both chambers pass an identical resolution, it unlocks the ability to pass a bill through reconciliation. While the reconciliation resolution does not require the president’s signature, as it does not carry the force of law, the final bill passed through reconciliation does. If the president vetoes the bill, a two-thirds majority in both houses of Congress is required to override the veto.

How Could Reconciliation Be Used Next Year?

Next January, the GOP will have control of the House, Senate, and the White House, making passing and enacting reconciliation bills easier.

The House GOP leadership has been mostly quiet on what will be passed using reconciliation. House Speaker Mike Johnson (R-La.) said that the details will be revealed “in the coming weeks.”

Based on Trump’s campaign promises, it is expected that Republicans will use the mechanism to expand the 2017 tax cuts and repeal at least parts of the Inflation Reduction Act.