What Is a Budget Reconciliation Bill?

Aug 9

Key Takeaways

Budget reconciliation is a special legislative process used to change federal spending, revenues (taxes), or the debt limit.
Reconciliation bills cannot be filibustered in the Senate.
They require only a simple majority to pass the Senate.
Reconciliation may only be used for provisions that directly affect the federal budget.

Why It Matters

Most legislation in the U.S. Senate can be delayed indefinitely by a filibuster unless 60 senators vote to end debate. Budget reconciliation is one of the few exceptions.

Created by the Congressional Budget Act of 1974, reconciliation was intended to help Congress bring federal spending and tax laws into line with its annual budget resolution. Over time, it has become an important tool for passing major fiscal legislation when one party controls Congress and the presidency but lacks 60 Senate votes.

How It Works

Congress first adopts a budget resolution, which sets overall fiscal goals. The resolution may include reconciliation instructions directing specific committees to recommend changes in spending, taxes, or the debt limit.

Those recommendations are combined into a single reconciliation bill.

Because debate is limited to 20 hours in the Senate, a reconciliation bill cannot be filibustered and can pass with a simple majority.

What Can Be Included?

Reconciliation is limited to provisions that have a direct effect on the federal budget.

Examples include:

Tax cuts or tax increases.
Changes to Medicare or Medicaid spending.
Adjustments to mandatory spending programs.
Changes to the federal debt limit.

Provisions that are primarily policy changes without a significant budgetary effect are generally prohibited under the Byrd Rule, named after former Senator Robert Byrd.

The Senate Parliamentarian advises whether provisions comply with the Byrd Rule, and senators may challenge provisions they believe violate it.

Examples

Congress has used reconciliation to pass major legislation, including:

The Tax Cuts and Jobs Act of 2017.
Portions of the Affordable Care Act in 2010.
The American Rescue Plan Act in 2021.

Bottom Line

Budget reconciliation is a special procedure that allows Congress to pass certain tax and spending legislation with a simple majority in the Senate. Because it cannot be filibustered, reconciliation has become one of the most powerful—and controversial—tools in modern congressional budgeting. It is limited to measures that directly affect the federal budget, making it an exception to the Senate’s normal 60-vote threshold.

Further Reading: https://www.theinformedkansan.com/beu/the-save-act-requiring-proof-of-citizenship-to-vote

Paul Wilson