Reconciliation is a process under the Congressional Budget Act of 1974 (CBA) that allows Congress to implement budget priorities affecting direct spending, revenues, and the debt limit using expedited procedures.  The principal benefit to using reconciliation is that a reconciliation bill cannot be filibustered in the Senate.  As a result, it takes only a simple majority to pass a reconciliation bill in the Senate, rather than the 60 votes needed to overcome a filibuster.

With the Senate evenly divided between Democrats and Republicans in the 117th Congress, it would take at least 10 Republicans joining all 50 Democrats to obtain the 60 votes necessary to break a filibuster.  This level of Republican support may be difficult to achieve.  Under reconciliation, however, only a simple majority of 51 votes is necessary.  In other words, Democrats would have the ability to pass a reconciliation bill with as few as one Republican supporting the effort.  Moreover, even if there is no Republican support, incoming Vice President Harris could vote with Senate Democrats to break a 50-50 tie.

The Byrd Rule

There are specific content restrictions on what can be included in reconciliation legislation.  The “Byrd Rule,” which is codified in section 313 of the CBA, is one example.  Its purpose is to ensure that the reconciliation legislation does not include provisions that are “extraneous” to implementing budgetary goals.

Under the Byrd Rule, a provision is considered to be extraneous if it meets one or more of the following tests:

• The provision does not produce a change in outlays or revenues (that is, it does not “score” in the cost estimate by the Congressional Budget Office);
• It increases outlays or decreases revenues when the committee reporting the title containing the provision does not achieve its reconciliation instructions;
• It is outside the jurisdiction of the committee reporting it;
• It produces a budgetary effect that is “merely incidental” to the non-budgetary components of the provision;
• It causes an increase in the deficit in any year outside the budget window (usually ten years); or
• It makes changes to Social Security.

There are various exceptions to the Byrd Rule.  For example, a provision is not “extraneous” if it causes a change in outlays that is equally offset by a change in revenues, even if the net budgetary effect is zero.

Byrd Rule Enforcement

The Byrd rule is not self-enforcing.  A senator must raise a point of order against a provision of a reconciliation bill on the Senate floor for the Byrd Rule to be invoked.  Following the debate on the point of order, the presiding officer rules on whether the provision subject to the point of order violates the Byrd Rule.  If the point of order is sustained, the offending provision is stricken, and consideration of the bill continues.

It should be noted that the Byrd Rule may be waived, or the ruling of the presiding officer be overturned, with 60 votes.  A motion to waive the Byrd Rule can be made before a point of order is raised.

The presiding officer historically has followed the guidance of the non-partisan Senate Parliamentarian on procedural matters, including questions on the Byrd Rule.  Before a reconciliation bill is considered on the Senate floor, the Parliamentarian reviews the bill in a process referred to as a “Byrd Bath” and issues guidance on Byrd Rule violations.  The Senate majority usually modifies the legislation in response to the Parliamentarian’s guidance, either striking provisions that are deemed to violate the Byrd Rule (sometimes referred to as “Byrd Droppings”) or amending them in an attempt to make them compliant.

The Senate Parliamentarian develops her guidance after consulting with the Congressional Budget Office (CBO).  CBO estimates the costs of each provision in a reconciliation bill. CBO estimates are in practice always adopted by the Senate Budget Committee Chair.  The costs are stated in terms of the change in federal outlays and revenues under current law if proposed legislation were enacted and fully implemented.  CBO scores typically include 5-year and 10-year estimates.

The Byrd Rule has had a significant impact on the reconciliation process.  According to a recent Congressional Research Service Report,

In total, 72 points of order were raised and disposed of under the Byrd rule. Points of order were generally raised successfully; 62 were sustained (in whole or in part), enabling Senators to strike extraneous matter from the legislation in 23 cases and to bar the consideration of extraneous amendments in 39 cases

A total of 59 motions to waive the Byrd rule, to permit the inclusion of extraneous matter, were offered and disposed of by the Senate. Waiver motions were generally not offered successfully; nine were approved and 50 were rejected.

But these statistics do not tell the whole story.  They do not take into account the deterrent effect of the rule—that is, they do not count the number of times that the Byrd Rule causes a committee not to include language in a reconciliation bill, or a senator not to offer a floor amendment, or the House not to include a provision in its reconciliation legislation, or a House-originated provision not to be included in a conference report.

The Byrd Rule in Practice

As Senate majorities often try to fit as much of their agenda as possible in reconciliation bills, the Byrd Rule is most frequently invoked to determine whether the budgetary effect of a provision is “merely incidental” to the policy objective.  This is a subjective analysis under which the Senate Parliamentarian reviews each provision on a case-by-case basis, first reviewing the provision for any non-budgetary components, then weighing that against the budgetary components to determine if the latter are “merely incidental” to the former.  The purpose of this test is to prohibit provisions in which policy changes overwhelm deficit changes.

Another frequent Byrd Rule point of order is that the provision does not produce a change in outlays or revenues.  Often, a provision that otherwise has a budgetary impact may include “terms and conditions” that do not have a budgetary impact, such as language prescribing how outlays are made or revenues are collected.  The Senate Parliamentarian will determine whether the “terms and conditions” are necessary to achieving the budgetary change.

Senate majorities spend significant effort drafting reconciliation legislation that accomplishes policy goals and complies with the Byrd Rule, and the Byrd Rule restriction often affects how reconciliation measures are structured.  For instance, the requirement that provisions of a reconciliation bill that increase the deficit in any year must fall within the budget window has caused reconciliation tax bills to sunset in the last year of the budget window.