Procedural questions over when a budget resolution’s reconciliation instructions become stale have swirled for years.  There were three options:

  • the end of a fiscal year;
  • until the next budget resolution overtakes it (and next budget resolution could certainly affirmatively preserve it); or
  •  the end of a Congress. 

The huge news out of the Senate today (as reported by Ranking Member Bernie Sanders (D-VT, Senate Budget Committee) is that the Senate Parliamentarian has determined that the first option applies:  the reconciliation instructions that allowed a repeal/replace of Obamacare with 51 votes will expire on September 30.  Given the political difficulty (and unlikelihood) of passing a repeal/replace bill in September, with all the other must-pass bills, 60 votes will now be required to consider amendments to Obamacare.   

But this also has implications for tax reform.  Congressional staffers have explored the possibility of hijacking the Obamacare reconciliation instructions for tax reform.  That would have involved a complicated, but potentially doable, procedure of (a) recommitting the current repeal/replace bill to the Budget Committee (an acceptable procedure as the vote that failed in July was actually a vote on an amendment in the nature of a substitute and not final passage) and (b) the Budget Committee then reporting the bill to the floor as a tax bill.  This now is also off the table. 

For the Senate to be able to depend on the procedural protections of reconciliation, Congress will have to adopt an FY18 budget resolution, which could include reconciliation instructions for both Obamacare repeal/replace and tax reform…although the budget rules permit only one bill each for revenues, spending, and debt limit, potentially requiring tax reform and healthcare to be combined into one mega reconciliation bill.

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Photo of Ed McClellan Ed McClellan

Clients rely on Ed McClellan’s experienced counsel for their most technically sophisticated tax legislative challenges. Ed has over 35 years of experience in tax policy and technical tax analysis, having spent 16 years in private practice before serving as Tax Counsel on the…

Clients rely on Ed McClellan’s experienced counsel for their most technically sophisticated tax legislative challenges. Ed has over 35 years of experience in tax policy and technical tax analysis, having spent 16 years in private practice before serving as Tax Counsel on the U.S. Senate Finance Committee. A member of the Tax and the Public Policy practices, his practice focuses on federal tax legislation.

Ed advises clients across a wide range of industries on legislation relating to international taxation, domestic corporate taxation, corporate integration, redomiciliations, financial services, capital gains, dividend taxation, financial products, REITS, pass throughs, and accounting methods.

During his seven-year tenure with the Senate Finance Committee, Ed served as a lead tax counsel on the American Jobs Creation Act of 2004, the Jobs and Growth Tax Relief Reconciliation Act of 2003, the Job Creation and Worker Assistance Act of 2002, the FSC Repeal and Extraterritorial Income Exclusion Act of 2000, and the Tax Relief Act of 2001.