Congress might have passed a continuing resolution and pushed off the fiscal cliff until December, but fights are brewing in Congress as work has begun on using a process known as reconciliation to repeal parts of the Affordable Care Act. While President Obama will undoubtedly still veto any effort that passes, this special procedure requires only a simple majority to prevent a filibuster, and could lead to actual repeals if a Republican takes the White House in 2016. But just what is reconciliation, anyway? It was used to pass the controversial Bush Tax Cuts as well as parts of the ACA itself in 2010. It’s a potent political tool that’s been used 23 times between 1980 and 2010, often to pass landmark legislation. But few within the Beltway, and even fewer outside, understand much of the process beyond its existence.
Established by the Congressional Budget Act of 1974, budget reconciliation is a two-step process designed to assist in achieving budget reduction policies. Ideally, reconciliation allows Congress to streamline altering current law to bring revenues, spending, and debt-limit levels into conformity with the levels set forth in the annual budget resolution. One of the key advantages of the process is that Congress may pass reconciliation measures with a simple majority, making them impossible to block. And, debate on reconciliation measures is time-limited, making them one of the speediest processes within the government.
So how does it work in practice?
The reconciliation process is an optional step in the regular budget process. In the spring, the House and Senate Budget Committees have the option to include reconciliation instructions in budget resolutions.
Reconciliation is a way to change old laws to bring them in line with current desired policy, and the committees must draft legislation that will achieve the directed outcome. If the resolution instructs only one committee, they can send their recommendations directly to their parent chamber, thus bypassing the Budget Committee, but if the resolution instructs more than one committee in a given chamber, those committees must report their legislative recommendations to their respective budget committees by the resolution’s deadline, at which point the budget committees then combine the recommendations into an omnibus reconciliation bill. Rules state that the budget committees may make no substantive changes to the recommendations aside those necessary to comply with existing law or rules.
At that point, the House and Senate then consider the legislation under expedited procedures. In the Senate, all amendments must be germane (or relevant) to the measure, and debate on it is limited to 20 hours. In the House, the Rules Committee typically recommends a special rule for consideration of reconciliation measures that places restrictions on debate time and the offering of amendments. In addition to these procedural rules, the Byrd Rule establishes restrictions on the material allowed in a reconciliation measure or amendments to it, specifying six scenarios where Members may initiate a point of order — or a query as to whether proper procedures are being followed — against a provision in the measure deemed extraneous to reconciliation. Any provision found extraneous under the Byrd Rule is simply struck from the bill rather than stopping the entire legislation.
While the House and Senate can pass identical versions, reconciliation legislation, more often than not, usually comes with each chamber passing their own. The chambers form a conference committee to outline, debate, and resolve the differences between the two versions of the bill. The House and Senate may also resolve differences using the amendment process.
This time, only House committees have been directed to begin this process, and the House Guidelines specify that savings to reduce the deficit by $1 billion over the next decade must come from changes in mandatory spending or taxation — ideally the latter. If the House acts, the Senate could simply pick up what the House passed at that point, a process that has happened only once before.
A complicated history:
Despite its power as a procedural tool, reconciliation has only been used 23 times since its inception, with three of those bills being vetoed. Even so, it was used to pass some of the most significant legislation of recent times, including the “Bush Tax Cuts”, TARP, and even the HCERA that amended the ACA. Reconciliation’s original intent was to allow Congress to find ways to reduce spending and streamline budgets.
Estimates place the savings from reconciliation between 1980 and 2012 at $1.644 trillion, but unfortunately, reconciliation measures also generated losses of $1.869 trillion over the same period, leaving a net loss of $225 billion. In light of recent talk over using reconciliation to repeal or significantly alter the ACA, it’s also important to remember that key provisions of the ACA were passed using the procedure.
Almost as soon as the ACA was signed, Congress drafted reconciliation legislation, the Health Care and Education Reconciliation Act of 2010. Given that the ACA was passed under the assumption and promise that future reconciliation legislation would be adopted, it’s likely fair to associate the federal deficits from the ACA to reconciliation legislation as well. Recent estimates find that the ACA is expected to add somewhere between $340 billion and $530 billion to federal deficits between 2012 and 2021. Using the more conservative estimate, the total increase in federal deficits due to reconciliation legislation jumps from $225 billion to $565 billion. It’s safe to say, at least, that this complicated procedure can be dangerous for deficits.
Whether or not one attributes the deficits of the ACA to reconciliation legislation, its history clearly demonstrates a failure to control spending in the manner it was created to do. Reconciliation is just one part of the significant overhauls within the Budget Act of 1974, but it represents a major component of the fiscal process that should be open for reform. The complexity of the process, its ability to eschew filibusters, and its great power over revenues and outlays makes it a potent piece of the political toolkit. Beyond current fights over the Affordable Care Act and attempts to use it to save money, the tool’s history of use to hike spending suggest that perhaps it is time to look for reforms to this little-known but incredibly powerful procedure.