What is Reconciliation?
- BY FGA
Reconciliation. It’s a word you’re probably hearing in the news as the talking heads discuss what’s happening in Congress. But what, exactly, does it mean? How does it work?
Put simply, it’s a special fast-track process Congress uses to pass budget-related legislation without needing 60 votes in the Senate. It includes two steps:
STEP 1: Setting budget goals through a budget resolution
STEP 2: Creating a bill to adjust spending or revenue to hit the budget
It’s called “reconciliation” because Congress must reconcile the new spending plan with the money.
Want to do a deeper dive? Keep reading ↓
First, a little background
Most legislation in the Senate requires 60 votes (a supermajority) to limit debate and call for a vote on a bill. Without that supermajority, legislation can be filibustered, which leaves it in limbo without a clear path forward.
This filibuster can be avoided with legislation relating to taxes, spending, and the debt limit if Congress uses a process called reconciliation, which would only require a simple majority (51 votes or 50 + vice president’s tiebreaker) in the Senate to pass a bill.
It’s been used periodically since the Carter administration, most recently with the Inflation Reduction Act and the American Rescue Plan Act under Biden, and the Tax Cuts and Jobs Act under the first Trump administration.
Here’s how it works
Under the Congressional Budget Act, Congress is supposed to pass a budget resolution each year, which serves as a blueprint for congressional action on tax- and spending-related legislation for the year ahead. It doesn’t allocate any funding or change the law, but it does set guidelines.
When putting together these budget resolutions, Congress decides whether or not to include “reconciliation directives,” or instructions that direct one or more committees to recommend changes to existing law in order to increase or decrease spending and revenue over a certain time period. It can also include instructions to modify the debt limit.
For example, the budget resolution passed by the House currently contains those instructions. Specifically, the target was set at $1.5 trillion in savings and $4.5 trillion in tax cuts.
It’s important to note that the target sets the minimum amount of savings Congress must include in the reconciliation bill in order to comply with the Byrd rule (more on that later) and pass in the Senate—not the maximum. In this case, Congress can, should, and probably will exceed the goal by cutting more than $1.5 trillion in spending.
The committees that were instructed to recommend changes draft those recommendations and submit them to the Budget Committee, who then packages it together and reports it to the House floor.
For reconciliation to happen, the House and Senate both need to agree and pass identical bills. After the House passes their version of a reconciliation bill and the Senate passes theirs, if the two versions differ, the two chambers come together for what is called a “conference committee.” They negotiate and compromise and prepare a final version of the bill together that is then voted on again by their chambers and sent to the president for signature.
But what about the Byrd rule?
The Byrd rule, named after the late Sen. Robert Byrd (D-WV), is a feature of the reconciliation process that gives senators the right to object to provisions in the bill that don’t relate to the budget. A provision of a bill could violate the Byrd rule if it doesn’t have a budget impact, if it impacts Social Security, if it affects spending or revenue outside of the budget window, if it exceeds the jurisdiction of the committee, if it leads a committee to fail to comply with its instruction, or it produces a budget impact that is “merely incidental” to the non-budgetary components of the provision.
The Byrd rule is not self-enforcing, however. It requires a senator to raise a “point of order” against a provision of the reconciliation bill. The presiding officer of the Senate would then consult with the non-partisan Senate Parliamentarian in a process sometimes called the “Byrd Bath.” The parliamentarian will issue guidance on whether that provision violates the Byrd rule. If it does, the Senate majority usually makes changes to the legislation, and provisions that violate the Byrd rule are struck from the bill or modified so they no longer violate the rule.
Continuing the play on words, if the provisions are removed from the bill, they’re called Byrd droppings.
Why is it needed now? What is Congress trying to accomplish?
With Republican control of the House, the Senate, and the White House, 2025 is a rare opportunity for reform. But with only a small majority in the Senate, it’s going to be difficult for Senate Republicans to pass much without being filibustered.
Important issues like the border, taxes, energy, the economy, welfare, regulations, and entrenched bureaucracy all have a fiscal component that can be addressed through a reconciliation bill.
One such reform is already part of the House’s budget resolution: the Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require costly federal regulations to receive an up-or-down vote from Congress before being implemented. This will help prevent a future president from undoing all the Department of Government Efficiency (DOGE)’s hard work to eliminate waste, fraud, and abuse.
