What Is Budget Reconciliation and Why Does It Matter?

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Budget reconciliation is a special process that makes it easier for the majority party to pass legislation in the U.S. Senate. Like the filibuster that forces its use, it was once a fairly obscure provision. 

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In 2021, however, it’s a hot topic. 

That’s because the Democrats’ grip on power in the Senate is so slim that they need Vice President Kamala Harris to break ties in a 50/50 chamber. Even so, they’ve already proven with the most recent COVID-19 stimulus that they can pass major legislation without a single Republican vote thanks to budget reconciliation. 

What Is Budget Reconciliation and Why Does It Matter?

If you’re reading this, chances are good you’re $1,400 richer than you were at the start of the year. That stimulus check you got in the mail would never have arrived if not for budget reconciliation. 

See: Here’s Why Your Stimulus Check Might Still Be Pending

The president can only sign a bill into law after it passes both the House of Representatives and the Senate. Bills can pass the House with a simple majority, but in the Senate, the minority party can block legislation with a stalling mechanism called the filibuster. In order to break a filibuster, the majority has to muster 60 votes out of 100 instead of 50. That’s almost impossible in today’s political climate, so obstructionists continue to use the filibuster to stall virtually all Senate bills.

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The Congressional Budget Act of 1974 created the process of budget reconciliation to allow high-priority fiscal legislation to pass the Senate quickly. Like the budget itself, bills passed through the process of reconciliation can’t be filibustered and therefore require only a simple majority to pass.

Why Not Use Reconciliation for Everything?

The Senate has used reconciliation to pass only 21 bills since 1974. Most recently, Democrats in the 50/50 Senate passed President joe Biden’s $1.9 trillion American Rescue Plan Act through reconciliation. Before that, President Donald Trump’s only major legislative accomplishment, the 2017 Tax Cuts and Jobs Act, passed the Senate through reconciliation, as well.

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It’s not used more often because the Congressional Budget Act was written with rules to protect the minority from tyranny by a simple majority. Reconciliation is allowed strictly for matters that affect the federal debt limit, revenues and spending. 

In the mid-1980s, a series of changes known collectively as the Byrd rule — named for the late Sen. Robert Byrd of West Virginia — made it even harder to abuse the process by adding unrelated provisions to reconciliation bills. Most recently, the Senate parliamentarian — who plays the role of Senate referee — ruled that the Byrd rule prevented Democrats from including a $15 minimum wage provision in the American Rescue Plan.

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With the scope of reconciliation so limited and the climate of obstructionism so total, there’s a growing movement among Democrats to kill the filibuster altogether while they control both chambers of Congress. The Republicans are advising them to be careful what they wish for as the shoe is sure to be back on the other foot soon enough.

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Last updated: March 26, 2021

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.

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