House Budget Committee Letterhead
FACT SHEET    

The Reconciliation Process:
How It Works
Quick Facts
  • The Budget Act of 1974 established the reconciliation process to give Congress a means of addressing mandatory spending (also called direct spending) – which, unlike discretionary spending, is not subject to regular annual review.

  • The process starts in the budget resolution, which establishes deficit reduction targets for certain committees, and requires legislation to reduce rates of direct spending for programs in those committees’ jurisdiction.
    • While this year’s budget resolution provided for three reconciliation bills, only the spending bill will be reported by the Budget Committee (as explained below). The tax relief and debt limit reconciliation bills from the Ways & Means Committee will go directly to the floor.

  • A reconciliation directive specifies only the change in spending. The committees of jurisdiction have full authority to determine specific policy reforms and submit legislation as they judge appropriate, so long as they achieve the savings required.
    • Each reconciled committee must submit this legislation to the Budget Committee by a specified date – in this year’s case, the date was moved from September 16th to October 28th to accommodate hurricane relief efforts.
    • In addition to the legislation, committee submissions include a cost estimate (which must be made by the Congressional Budget Office), purpose, section-by-section, and so forth.

  • The Budget Committee receives and combines reconciled committees’ legislation into a comprehensive measure – a reconciliation bill – to implement the instructions. The Budget Committee then marks up this package and reports it to the House.
    • Typically, each authorizing committee’s submission is a separate title.
    • The Budget Committee may not make any substantive change to the legislative language submitted by an authorizing committee.

  • The Budget Committee may seek to amend the bill on the floor if a committee fails to meet its savings target.
    • Typically, only substitute amendments are allowed on the floor – no “cut and bite” amendments.
    • Any amendments offered on the floor are required to be deficit neutral (cannot increase the deficit).

  • Once the House and Senate pass reconciliation bills, a conference committee is convened, and reports the final version of the bill. Each chamber must then pass the bill, which – unlike the budget resolution – is sent to the President for his signature.




Senate-Specific
  • An important feature of the reconciliation procedure is that it cannot be filibustered in the Senate: debate and amendments are limited, so it can pass that body with 51 votes.

  • The "Byrd Rule": The Senate can use this rule to strike provisions from the reconciliation bill that do not have a direct budgetary impact.
    • Such provisions are termed "extraneous," and a point of order may be raised in the Senate against any of them.
    • Unless waived, the point of order causes the provision to be dropped from the bill.
    • The rule prohibits any change in Social Security.
    • It also prohibits provisions that cause the deficit to increase in years subsequent to the time period covered by the budget resolution – in this year’s case, years after fiscal year 2010.
Brief History
  • Since the enactment of the Budget Act in 1974, Congress has passed 19 reconciliation bills: 16 were signed into law by the President; three were vetoed.
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  • Since 1990, Congress has passed, and the President has signed into law, four reconciliation bills.
FY 2006 Reconciliation
  • This year’s budget marks the first time in almost a decade – since 1997 – that Congress has used the reconciliation process to reduce the deficit through reforms of mandatory programs. (Congress used reconciliation for tax relief in 2001 and 2003.)

  • This year’s reconciliation instructions contain total budget-directed savings of $34.7 billion, plus an additional savings of $15 billion in the House to help pay for hurricane relief. While this year’s effort will not “fix” our mandatory spending problem in one stroke, it does provide the critically needed first step to regaining control of our currently unsustainable growth in mandatory spending.