Reconcilia-what?

Although the numbers in the budget resolution draw a lot of attention, one of the most impactful parts of the resolution deals with budget process, setting up the parameters for legislation later in the year. A key part of this process is reconciliation instructions, which help turn the assumptions in the resolution into reality.  Additionally, it provides a bill prepared by a committee filibuster-proof consideration on the floor.  This legislation would need to be signed by the President and have the force of law, while the budget resolution does not. Both the Senate and House Budgets provide reconciliation instructions, starting this potentially powerful legislative process.

But what are reconciliation instructions?

Reconciliation instructions are directions to a committee to report legislation that changes existing law to bring spending, revenues, or the debt limit in line with the budget resolution. Reconciliation specifies the committee or committees, the nominal dollar savings needed, and sometimes a deadline for legislation to be reported. A reconciliation bill that comes to the floor cannot be filibustered in the Senate – meaning it does not need 60 votes – and has a 20-hour debate clock in both chambers (unless waived by rule or unanimous consent). Reconciliation's special privileges are important because they are intended to ease the passage of politically difficult (usually) deficit reduction legislation.

The House

The House budget takes a wide-open approach by giving every committee with jurisdiction over any mandatory spending or revenue provisions reconciliation instructions to achieve at least a nominal amount of deficit reduction (at least $1 billion in deficit reduction over ten years for committees with a large amount of mandatory spending in their jurisdiction and $15 or $100 million for committees with smaller amounts of spending in their jurisdiction). Including instructions for all committees might help facilitate action on any or all of the spending reductions in the budget. While there may be concerns about how realistic the spending reductions in the House budget might be, its procedural approach is appropriate by getting every committee involved to at least provide for a mechanism for action on legislation achieving savings throughout the budget.

The budget provides some guidance about how these reconciliation instructions are to be used. The instructions to all committees with any mandatory savings are a minimum level of savings for reconciliation (though the Ways and Means Committee could use revenue to meet the reconciliation target). All instructions are for savings, which means reconciliation legislation from any committee could not increase the deficit. Additionally, there is a special rule for dealing with any scoring ramifications to the King v. Burwell Supreme Court decision. (see our explanation here) The reconciliation instructions then encourage committees to look at Affordable Care Act (ACA) provisions to decide the best way to repeal them but do not necessarily require committees to include ACA repeal in reconciliation legislation.

The reconciliation instructions in the House budget instructions give the House considerable flexibility in how to use reconciliation.

• It could be used for legislation implementing all the mandatory savings on the budget.
• It could be used for a bill that has more modest mandatory savings in the tens or hundreds of billions of dollars that would make a down payment on reducing deficit and/or offset sequester relief.
• It could be used to pass a permanent SGR fix that is fully offset.
• It could be used for legislation repealing the spending and revenue provisions of ACA. (but not  regulatory provisions or other provisions that don't have direct budgetary effects)
• It could be used for legislation replacing or temporarily extending exchange subsidies under the ACA if the Supreme Court strikes down subsidies in states with a federally-run exchange.

The budget also contains an unusual provision giving the Chairman of the Budget Committee authority to publish further guidance to committees at a later date, including suggested amounts of deficit reduction each committee should achieve beyond the nominal savings required by the reconciliation instructions. This guidance presumably would reflect subsequent decisions about which direction the House intends to take with reconciliation instructions and the amount of deficit reduction it intends to achieve.

The Senate

The Senate budget also provides reconciliation instructions, but only to the Finance and Heath, Education, Labor, and Pensions (HELP) Committees.  The instructions require these committees to produce savings of at least $1 billion for the period of 2016 through 2025 by July 31, 2015. Because the instructions are limited to the two committees with jurisdiction over the Affordable Care Act (ACA), it seems that these instructions exist for helping the Senate majority repeal the ACA in its entirety or consider legislation amending or replacing parts of the ACA in response to the King decision. Because the budget does not include reconciliation instructions for committees other than Finance or HELP there would not be a mechanism requiring action on any of the spending cuts assumed in the budget resolution outside of the jurisdiction of those two committees. However because those two committees, particularly Finance, have jurisdiction over a significant amount of mandatory spending and revenues and the reconciliation instructions are rather broad, we could be hopeful that these instructions could be used for deficit reduction legislation.

In addition to the reconciliation instructions, the Senate budget includes a potentially dangerous provision repealing the "Conrad Rule" (Section 202 of S. Con. Res. 21, the FY 2008 budget resolution), which prevents reconciliation legislation from increasing the deficit in the first ten years. This rule came about after the 2001/2003 tax cuts were able to be passed using reconciliation, since the Byrd rule only prohibited reconciliation legislation from increasing deficits after the tenth year. The special procedures facilitating action on reconciliation legislation are intended to make it easier for Congress necessary to enact the difficult policy changes to reduce the deficit and should not be used to further facilitate action on legislation increasing the deficit which is already too easy. The repeal of the Conrad Rule is worrisome, and we would advocate for its removal through the amendment process. During consideration in the committee markup, Senator Baldwin (D-WI) and Warner (D-VA) introduced an amendment to strike this provision, but the amendment failed by a vote of 10-12. Read more on other amendments here.

We will continue to dive into the House and Senate budgets in the coming days and compare them with alternative budgets as they come out. You can also read more about developments with the FY 2016 budget here.

For additional budget process resources including specific options for reform, visit our Better Budget Process Initiative home page.