Budget Reconciliation Explained

Budget reconciliation (reconciliation) was created in the Congressional Budget Act of 1974.Reconciliation can only be used for legislation that addresses mandatory spending, revenue, or the federal debt limit. Mandatory spending is determined by law. Currently, spending on Medicare, Medicaid, SNAP, and more is considered mandatory spending. Spending on Social Security isn’t considered mandatory.

Reconciliation bills aren’t subject to the Senate’s filibuster and its 60-vote threshold. Since the filibuster cannot be used to establish the end of debate, the Congressional Budget Act provides for 20 hours of debate on any reconciliation bill.

Reconciliation bills must do one of the following:

  • increase or decrease spending by specified amounts over a fixed period of time;
  • increase or decrease revenue by a specified amount over a fixed period of time;
  • or raise or lower the public debt by a specified amount.

Barring a change in law, the Senate can only consider the three basic subjects of reconciliation (spending, revenue and the debt limit) once each year. The three subjects of reconciliation can be addressed in the same bill, or in separate bills.

When the full House or Senate considers a reconciliation bill, amendments can be offered. But the Congressional Budget Act generally prohibits any amendment that would increase spending or decrease taxes, unless the cost of the amendment is offset. One exception is that in the Senate an amendment to strike a provision from a bill is permissible, even if striking the provision would increase spending or cut taxes.

If the House and Senate pass different versions of a reconciliation bill, negotiators try and resolve the differences in a conference committee. If a compromise bill passes the House and the Senate, it’s sent to the president. If the president vetoes the bill and Congress cannot override the veto, the bill is dead.

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