Congress continues to debate the One Big Beautiful Bill Act, the cornerstone of President Donald Trump’s domestic agenda for his second term. As so much with Congress, the details of this debate can be confusing. The legislative branch is using a procedure called “reconciliation” to enact Trump’s agenda — one that limits what Congress can actually enact but that avoids Senate procedures. What exactly is this?
To understand reconciliation, we need to know a little bit about the budget process, which Congress formally set into law with the 1974 Budget Act. This was one of several pieces of reform legislation that sprung up during the Watergate era (another being the 1974 amendments to the Federal Elections Campaign Act, which strictly limited campaign donations).
One purpose of the Budget Act was to reassert Congressional authority in the spending process against an assertive executive branch. Another was to force Congress to be more mindful of its spending habits in the face of rising deficits.
Every year Congress is supposed to pass a budget that sets targets on spending across multiple policy issues (like defense, agriculture, infrastructure) and tax revenues. The budget serves as the top-line amount Congress can spend when it passes its annual appropriations bills. The process is supposed to work like a household budget: Before you swipe your credit card, you establish a spending plan to manage your money. So it goes with Congress. It agrees to a broad framework that then restricts its specific decisions.
Reconciliation is an important part of this budgeting process. Sometimes existing laws need to be changed to hit the spending or taxation targets established by the Budget Committees. In that case the House and Senate Budget Committees instruct other committees to write legislation that would reconcile current law to the targets in the annual budget — hence the term “reconciliation.” The Budget Committees then package these changes into a reconciliation bill.
In the House of Representatives, reconciliation bills are mainly considered like other bills. The House Rules Committee determines how they will be debated on the House floor. But in the Senate, reconciliation bills are not subject to the filibuster, the ability of senators to “talk a bill to death” by debating without time limits. For normal legislation, 3/5ths of members (or 60 votes) must agree to end debate in the Senate. But reconciliation bills are limited to 20 hours of debate between the two sides.
The budget process was intended as a way for Congress to push back against strong presidents like Lyndon Johnson and Richard Nixon, but reconciliation has had the opposite effect. Starting with Ronald Reagan, presidents realized that this was a powerful tool to enact their governing agenda in the face of intense partisan opposition. It is rare, after all, that the minority party has fewer than 41 seats in the Senate — meaning that unless the president somehow manages to win over substantial support from the other side, reconciliation is the only way to enact their agenda. For all intents and purposes, the Senate becomes indistinguishable from the House when it considers a reconciliation bill. So, when Reagan cut domestic spending in 1981, he did it via reconciliation, over intense opposition from liberal Democrats. In 1982 the Tax Equity and Fiscal Responsibility Act of 1982, which protected most of the prior year’s tax cuts, was done under reconciliation to get around Democratic demands for more revenue.
Under its initial design, there were few practical limits to what could be done under reconciliation. Senator Robert Byrd of West Virginia saw it as a “super gag rule, the foremost ever created by this institution.” What made the Senate so special, in Byrd’s view, is the freedom members have to debate issues and offer amendments. In 1985 and 1986 the Senate adopted a series of provisions that have become known as the “Byrd Rule,” which limits what can be considered in a reconciliation bill.
The Byrd Rule mandates that provisions in the reconciliation bill not increase the deficit under the window established by the budget (usually 10 years), that they have direct effects on either spending or taxation, that they be directly related to the instructions of the Budget Committee, and that they not change Social Security. It is the job of the Senate parliamentarian to determine whether the parts of a reconciliation bill fit these restrictions (commonly known as a “Byrd Bath”). If a provision is found to be in violation, it takes 60 votes in the Senate to include it.
The purpose of the Byrd Rule is to protect senatorial privileges by narrowing the scope of reconciliation legislation. But presidents have still found reconciliation to be the best tool to get their initiatives passed through Congress. Bill Clinton and congressional Democrats used it in 1993 to increase taxes. In 1996 the welfare reform Clinton signed into law was a reconciliation bill. The multiplea tax cuts signed into law by Presidents George W. Bush and Trump were done via reconciliation. So also was Joe Biden’s “American Rescue Plan.”
Perhaps the most dramatic example of the power of reconciliation was the tortuous process to enact the Affordable Care Act (ACA) in 2009-10. Senate Democrats had a 60-seat majority during much of the debate over the ACA, and had no intention of using reconciliation for it. But on January 19, 2010 Republican Scott Brown of Massachusetts won the special election to fill the late Ted Kennedy’s seat. Democrats lost their filibuster-proof majority just as they were finishing work on the bill — the Senate had passed a draft version but the two chambers had not yet worked out a final bill. To get legislation passed, House Democrats agreed to pass the Senate draft (enabling it to go to President Barack Obama’s desk), and then worked out a patch to the ACA via the Health Care and Education Reconciliation Act of 2010.
Still, the Byrd Rule does make for real limits. It is why the Bush and Trump tax cuts have had to be “renewed.” The Congressional Budget Office scored them as increasing the deficit outside the 10-year time frame of the budget proposals, so they had to expire under the initial reconciliation legislation. Likewise, Republican efforts to replace the Affordable Care Act were stymied by the limits of reconciliation. The GOP could not create an alternative health care program only by modifying taxing and spending laws.
None of this is consistent with the original intent of reconciliation or the Byrd Rule. The purpose was in fact the opposite — to secure congressional sovereignty over the lawmaking process and facilitate deficit reduction. Obviously, neither has happened. Reconciliation is popular because it is the only way for presidents to enact their domestic policy agenda amidst deep and persistent partisan divisions. There might be 60 votes in the Senate to name a post office, but not to cut taxes or reform welfare — exactly the sort of pledges that presidents win election on. Barring major changes to legislative procedure or a new surge of bipartisan sentiment, reconciliation will continue to be the main way to get big things done in Congress.
Jay Cost (@Jay__Cost) is the Gerald R. Ford Senior Nonresident Fellow at the American Enterprise Institute. He’s the author of several books, most recentlyDemocracy or Republic? The People and the Constitution (AEI Press, 2023).
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