Policy & Practice February 2015

spending in one area and decrease it in another as long as the net effect complies with the reconciliation instructions. The House and Senate Budget Committees combine various com- mittee recommendations into a single reconciliation bill. They are not per- mitted to make substantive changes to other committees’ recommendations for how to comply with reconciliation instructions. In past years, members of Congress realized that reconciliation bills could be used as a “Christmas Tree” 11 to enact all kinds of provisions that might not otherwise be enacted. The practice so distorted the original purpose of the reconciliation that the Senate enacted specific restrictions on what could be included in a reconciliation bill. While these restrictions do not apply to the House, they apply to amendments and conference reports and they represent a de facto limitation on what the House can include in its reconciliation bill. In 1985, the Senate adopted the Byrd Rule, named after its principal sponsor, Sen. Robert Byrd (D-WV). The Byrd Rule was codified in 1990 as Section 313 of the Budget Act. 12 The Byrd Rule’s purpose is to keep extraneous provi- sions out of reconciliation legislation. The rule allows any senator to object (using a point of order) to any provi- sion that is “extraneous.” Extraneous is defined as any one of six criteria. If a Byrd Rule point of order is upheld in the Senate, it is stricken from the bill unless 60 votes are in favor of waiving the point of order. To be considered extraneous, a pro- vision typically would fall under one or more of the following criteria: 13 1. A provision that produces changes in mandatory spending or revenues that is merely incidental to the legis- lation of that provision; 2. A provision increasing mandatory spending or reducing revenues (i.e., increasing the deficit) in a commit- tee’s title of the legislation that is not in compliance with its reconciliation instructions; 3. A provision not in the jurisdiction of the committee that reported the title of the legislation; 4. A provision that would increase the deficit in a fiscal year that is beyond

into compliance with the provisions of a budget resolution. 8 Congress will consider reconciliation legislation, therefore, only if it has been able to adopt a budget resolution and then only if that resolution contains recon- ciliation instructions. A budget resolution is different from most bills. First, it is a concurrent resolution, which means that while it must pass the House and Senate, it is not sent to the president for approval. 9 Furthermore, it is also a privileged legislative vehicle in the Senate that cannot be filibustered, and only needs a simple majority to pass. The budget resolution establishes aggregate spending levels that limit the amount of spending for discretionary programs available to both appropriation com- mittees for the coming fiscal year. It can increase or decrease limits on man- datory spending and revenue levels. To ensure that targets for mandatory spending and revenues are met, the budget resolution may require specific congressional committees to report bills to meet those targets, which is indicated in a reconciliation bill. It is critical to understand that there are limits as to what can be included in reconciliation legislation. Such legisla- tion can affect mandatory spending, revenue (i.e., taxes), and debt-limit levels. 10 Other legislative items— such as setting specific discretionary spending or enacting legislation that does not affect federal manda- tory spending programs—cannot be enacted through reconciliation. The budget committee, in preparing the budget resolution, can require separate reconciliation bills to deal with manda- tory spending, with revenue, and with the debt limit, or they can combine them into one reconciliation bill. While the reconciliation instructions direct specific committees to achieve certain net levels of spending or revenue changes, they cannot specify the policy changes the committees may use to achieve those changes. The instructions can only direct commit- tees to increase or decrease mandatory spending or revenue by a certain amount over a specific time period. Reconciliation instructions are for net amounts of change in mandatory spending—a committee can increase

power to veto bills that would require 295 votes in the House and 66 in the Senate to override, far more votes than either chamber is likely to achieve. 4 It is more likely that Republicans will use their new Senate majority to repeal or modify highly unpopular portions of the health care law, or at least force Democrats to go on record on those issues. Faced with the reality that repealing the ACA is likely beyond their control, there are still elements of the bill that remain subject to congressional attack. The most likely provisions of the ACA the majority will focus on include the: Š Š Medical device tax Š Š Tax on health insurance premiums Š Š Employer-mandate penalty Š Š Definition of the full-time work week at 35 hours, and Š Š Individual tax for not purchasing qualified health insurance. As previously mentioned, there are legislative vehicles that are not subject to a Senate filibuster and thus are the most likely vehicles the majority will use to address some of these issues. The budget reconciliation process may be familiar to many who follow congressional action, but few fully understand its purpose and its limitations. What is Budget Reconciliation? A reconciliation bill is considered “privileged” under Senate rules. 5 The reconciliation process was created as part of the Congressional Budget Act (CBA) of 1974. 6 That law stipulates that the Senate needs only a simple majority to pass a reconciliation bill and that the bill is subject to just 20 hours of debate. Over time the scope of how reconciliation bills are used has changed in many ways. Most important, it is the use of the recon- ciliation, and the budget process in general as the CBA established it, that gives Congress the “dominant role in policymaking.” 7 The reconciliation process was origi- nally intended to provide Congress with a vehicle for considering adjust- ments to mandatory spending, revenues (i.e., taxes), and the debt- limit and to bring the federal budget

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Policy&Practice   February 2015