What is Budget Reconciliation?

In the coming weeks, Democrats may use a process called budget reconciliation to pass the $1.9 trillion Covid Relief Package. Budget reconciliation is a legislative process created by the Congressional Budget Act of 1974. Since budget reconciliation is not subject to the filibuster, it allows the Senate majority to pass certain tax, spending, and debt limit legislation with a simple majority vote, rather than the three-fifths majority needed to end a filibuster and bring a bill to the floor for a vote.

The Congressional Budget Act permits using reconciliation for legislation that changes spending, revenues, and the federal debt limit. On the spending side, reconciliation can be used to address mandatory or spending - such as Medicare, Medicaid, federal civilian and military retirement, SNAP (formerly known as food stamps), and farm programs — but not Social Security.

Since the mid-1980s, Senate rules have prohibited including provisions in reconciliation legislation that are extraneous to the budget. This is known as the Byrd Rule. Another limitation of using reconciliation is that before a final vote occurs, senators can offer an unlimited number of amendments to the resolution in a process referred to as a "vote-a-rama”, a time-consuming process that allows senators to highlight issues important to them and try to score political points by forcing politically sensitive votes on their opponents.

Budget reconciliation was established in 1974 and has been used somewhat frequently since then. Most notably,  reconciliation was used in 2010 to amend the Affordable Care Act and Republicans tried to use Reconciliation to repeal the ACA in 2017 (an attempt that failed). After the failure of ACA repeal, Republicans used Reconciliation to pass the 2017 tax cuts.

While Congress typically considers one budget reconciliation process each year, there have been scenarios in which Congress has passed two budget resolutions - one for the fiscal year already underway, and one for the next fiscal year. As an example, in 2017, Congress used the fiscal year 2017 budget resolution to trigger a reconciliation bill intended to repeal the Affordable Care Act, and then, later that year, used the fiscal year 2018 resolution to trigger a tax-cutting reconciliation bill.

Since Congress did not adopt a budget resolution in fiscal year 2021, it has an opportunity to generate two reconciliation bills this year.  Congress will be able to use the overdue budget resolution for fiscal year 2021 to generate an initial reconciliation bill, and then generate a second reconciliation bill when it takes up a budget resolution for fiscal year 2022 (which begins on October 1, 2021).

Expect some sort of action on the COVID Relief package before March 15th when unemployment benefits from the last package run out. If Republicans indicate they will block or filibuster the package, Democrats will be able to tie it to a budget measure and invoke the reconciliation process to move the bill forward without any Republican support.