The process is sometimes called arcane, but it has been used often in the past 35 years to write some of the nation’s most important laws.
“Reconciliation is probably the most potent budget enforcement tool available to Congress for a large portion of the budget,” the Congressional Research Service, a nonpartisan arm of Congress, has said.
Here is a primer.
Q. What is the budget reconciliation process?
Although conceived primarily as a way to reduce federal budget deficits, it has also been used to cut taxes and to create programs that increase spending — changes that can raise deficits.
In the Senate, a reconciliation bill can ordinarily be passed with a simple majority. For other bills, a 60-vote majority is often needed to limit debate and move to a final vote.
Q. Why is it called reconciliation?
A. The term originated in the Congressional Budget and Impoundment Control Act of 1974, which was intended to give Congress more control over the budget process by allowing lawmakers to set overall levels of spending and revenue.
The process begins with a budget blueprint, a resolution that guides Congress but is not presented to the president for a signature or veto. It recommends federal revenue, deficit, debt and spending levels in areas like defense, energy, education and health care.
The resolution may direct one or more committees to develop legislation to achieve specified budgetary results. By adopting these proposals, Congress can change existing laws so that actual revenue and spending are brought into line with — reconciled with — policies in the budget resolution.
Q. How has reconciliation been used?
Budget reconciliation bills. Twenty became law. Four were vetoed.
The Omnibus Budget Reconciliation Act of 1981 was a vehicle for much of the “Reagan revolution.” It squeezed savings out of Social Security, Medicare, Medicaid, food stamps, the school lunch program, farm subsidies, student loans, welfare and jobless benefits, among many other programs.
In 1996, Congress reversed six decades of social welfare policy, eliminating the individual entitlement to cash assistance for the nation’s poorest children and giving each state a lump sum of federal money with vast discretion over its use. Those changes were made in a reconciliation bill, pushed by Republicans but signed by President Bill Clinton.
Congress reduced deficits with another reconciliation bill, the Balanced Budget Act of 1997. That law also created the Children’s Health Insurance Program, primarily for uninsured children in low-income families. On the same day in 1997, Mr. Clinton signed a separate reconciliation bill that cut taxes.
The Bush tax cuts were adopted in reconciliation bills signed by President George W. Bush in 2001 and 2003.
On several occasions, Congress has increased assistance to low-income working families by increasing the earned-income tax credit in reconciliation bills.
Congress also made changes to the Affordable Care Act in a reconciliation bill passed immediately after President Obama signed the health care overhaul in 2010. Later, when Republicans controlled both houses of Congress, they passed a reconciliation bill to eviscerate the Affordable Care Act, but Mr. Obama vetoed the bill in January 2016.
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Republicans say that measure will provide a template or starting point for their efforts to undo the health care law this year, with support from President-elect Donald J. Trump, who calls the law “an absolute disaster.”
Q. How does the reconciliation process work in the Senate?
A. In the House, leaders of the majority party can usually control what happens if their members stick together. In the Senate, by contrast, one member or a handful of senators can often derail the leaders’ plans. The reconciliation process enhances the power of the majority party and its leaders. Senate debate on a reconciliation bill is normally limited to 20 hours, so it cannot be filibustered on the Senate floor.
The Senate has a special rule to prevent abuse of the budget reconciliation process. The rule, named for former Senator Robert C. Byrd, Democrat of West Virginia, generally bars use of the procedure to consider legislation that has no effect on spending, taxes and deficits. The Senate parliamentarian normally decides whether particular provisions violate the Byrd rule, but the Senate can waive the rule with a 60-vote majority.
Q. What does this mean for the Affordable Care Act?
A. Republicans hope to use the fast-track procedure of budget reconciliation to repeal or nullify provisions of the law that affect spending and taxes. They could, for example, eliminate penalties imposed on people who go without insurance and on larger employers who do not offer coverage to employees.
They could use a reconciliation bill to eliminate tens of billions of dollars provided each year to states that have expanded eligibility for Medicaid. And they could use it to repeal subsidies for private health insurance coverage obtained through the public marketplaces known as exchanges.
Republicans could also repeal a number of taxes and fees imposed on certain high-income people and on health insurers and manufacturers of brand-name prescription drugs and medical devices: tax increases that help offset the cost of the insurance coverage expansions.
Those provisions were all rolled back in the reconciliation bill Mr. Obama vetoed last January. That bill did not touch insurance market standards established in the Affordable Care Act, which do not directly cost the government money or raise taxes. The standards stipulate, for example, that insurers cannot deny coverage or charge higher premiums because of a person’s pre-existing conditions. Insurers must allow parents to keep children on their policies until the age of 26, and they cannot charge women higher rates than men, as they often did in the past.
Such provisions are politically popular, but it is not clear how they could remain in force without the coverage expansions that help insurers afford such regulations. Without an effective requirement for people to carry insurance, and without subsidies, supporters of the health law say many healthy people would go without coverage, knowing they could obtain it if they became ill and needed it.
Democrats say they will fight to preserve the law after Mr. Obama leaves office. Recent history shows that lobbying and public pressure can sometimes make a difference, altering the votes of individual lawmakers and changing the contents of a reconciliation bill.