Passing new legislation in the U.S. can be, well, difficult to say the least. And when there is a Congress that is all but deadlocked because of razor-thin majorities in the House and Senate, that makes passing big budget legislation even more problematic. That's where reconciliation comes into the picture.
Budget reconciliation is a way for Congress to pass major funding bills — which are notoriously difficult to pass — especially when there's a very evenly divided Senate. It was created by the Congressional Budget Act of 1974 as a way to quickly advance these tax and spending bills.
With reconciliation, the party in control of Congress can pass funding legislation — things like taxes, spending and debt limits — with a simple majority (either 51 votes or 50 votes and the vice president's tiebreaking vote) in the Senate, without threat of a filibuster. It takes 60 votes to defeat a filibuster. The Congressional Budget Act also limits Senate debate on the bill to 20 hours and limits debate on the compromises between the two houses to 10 hours, which helps the Senate expedite and pass reconciliation bills much faster.
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How Reconciliation Works
To start the process, Congress agrees on a budget resolution that includes a reconciliation directive for specified committees. These directives instruct the committees on how much to increase or decrease spending and revenue, or how to to limit the debt ceiling. And it provides and a deadline for completion. Congress doesn't tell the committees how to hit the reconciliation target, just to hit it.
Once the various committees complete their tasks, the House and Senate budget committees combine the recommendations into a single omnibus bill — the reconciliation bill. Then the House and Senate vote; both must obtain a majority to pass the legislation.
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What Reconciliation May Include
Reconciliation bills can include spending changes to items such as Medicare, Medicaid, federal civilian and military retirement benefits, Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and farm programs. Social Security is untouchable. The reconciliation rule allow bills that raise the deficit, but only for 10 years. (The 2017 Trump tax cuts were passed via reconciliation, though the Senate allowed some of the tax cuts to expire so the bill wouldn't increase the federal deficit past the 10-year window.)
Important to note: Reconciliation only can be used once per fiscal year and only to change — or "reconcile" — laws related to taxes and spending.
Since reconciliation was first introduced in the Congressional Budget Act of 1974, it has been used 21 times. Some of its notable uses were the Trump tax cuts in 2017, the Bush tax cuts in 2001 and 2003, Clinton's welfare reform in 1996, and major deficit reduction bills in the 1980s and 1990s. The reconciliation process also was used to pass parts of the Affordable Care Act (ACA) in 2010. In 2021, reconciliation was used to pass President Joe Biden's $1.9 trillion COVID-19 relief package.
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