Reconciliation: What is it? Why is it Important? How Could Democrats Leverage its Powers?

Every time I hear a somewhat obscure legislative term or try to unravel a complicated congressional process, the sound of Schoolhouse Rock’s anthropomorphic bill singing, “I’m Just a Bill,” starts playing in my head.

Well, cue the music because should Democrats take back the Senate in next week’s election, we are likely to start hearing the arcane term “reconciliation” thrown out with some frequency. While this budgetary process has been around for forty-plus years, it has seldom been utilized – 20 times since 1980 – because it typically requires one party controlling both chambers of Congress and the White House. So should a blue wave hit Washington, here’s what you need to know about reconciliation.

Reconciliation is rooted in a little understood piece of legislation, the Congressional Budget Act of 1974. Its powers are numerous but it created two mechanisms to regulate federal spending: a budget cap to limit appropriations and a reconciliation “instruction” to control mandatory spending. To oversimplify, reconciliation expedites the passage of certain budgetary legislation in the United States Senate without the threat of filibusters and non-germane amendments meaning those not closely or significantly related to the bill.

Reconciliation takes two steps. First, the concurrent budget resolution passed by both the House and Senate directs the authorizing committees to develop legislation within a certain time that changes spending, revenues or the federal debt limits. This legislation is considered under expedited procedures, such as germaneness and a debate time limit in the Senate. After a joint conference committee irons out the differences, the bills are next passed and sent to the president for signature or veto. It is important to note that reconciliation bills become laws whereas budget resolutions are only concurrent resolutions that are non-binding and do not require the approval of the president. It is equally important to note how infrequently Congress has actually adopted a budget resolution in recent years. The last budget resolution was adopted in October 2017. In the last decade, Congress has only come to an agreement four times.

Reconciliation is a vehicle that has been used to implement major policy changes including the Economic Growth and Tax Relief Reconciliation Act of 2001 (“Bush tax cuts”) and the Health Care and Education Reconciliation Act of 2010 (amended “Obamacare”). Most recently, reconciliation powers allowed Republicans to pass the Tax Cuts and Jobs Act (TCJA) in December 2017 with a simple majority along partisan lines. Democrats could look to run a similar playbook in the 117th Congress to dismantle TCJA as there will be tremendous pressure from not only the poles of the Democratic base but from congressional members and staffers who were in the minority and felt slighted by the manner in which TCJA was passed and the inherent policies within the legislation. And utilizing a legislative vehicle that blocks filibusters, limits time for debate and prevents the addition of extraneous items may be Democrats’ best bet to make a TCJA rewrite possible.

But achieving even partial tax reform will not be easy. Former Vice President Biden has said he does not want to undo all of TCJA and a closely divided Senate will present its own challenges. Where tax reform falls on the Democratic priority list is another question. Democrats will want to jump on the House’s massive $1.5 trillion infrastructure package, Biden recently announced he would spend $2 trillion in four years on clean energy and the caucus’ progressives are sure to push for changes to healthcare such as Medicare expansion and drug pricing with law enforcement reform and immigration also topping the list.

If Democrats control both the legislative and executive branches of government come January 2021, there will be desire and demand to deliver on many expensive but politically societal objectives that will likely need to be paid for via budgetary maneuvers such as reconciliation. In 2010, the stars aligned for Democrats to make amended Obamacare a reality as they did for Republicans in 2017 to push tax reform through Congress. With polls favoring a Democratic Washington next year, the question remains if reconciliation will offer Congress and the White House the best path to legislative victory.

Shellie Purvis is a managing director at Cogent Strategies where she keenly navigates domestic federal funding legislation for clients. She has an astute ability to dig deep into appropriations policy and pinpoint creative opportunities working hand-in-hand with close contacts on Capitol Hill. For Shellie’s complete bio, click here.