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The Pitfalls of Budget Reconciliation

March 2, 2010 - by Donny Shaw

It’s looking likely that, if health care reform is going to get finished, a package of compromises between the Senate and House bill (such as the package proposed by President Obama last week) is going to have to be passed first using the budget reconciliation process.

Budget reconciliation is a special congressional rule that makes it easier for the majority party to accomplish the legislative priorities they set forth in their annual budget resolution. The 2009 congressional budget resolution called for comprehensive health care reform, so, since the Democrats haven’t been able to get it done in regular order, they can use the budget reconciliation process to pass it more easily. The process allows them to pass the legislation with minimal Republican filibustering in the Senate because debate is limited to 20 hours and only a simple majority of 51 votes is needed for it to pass.

But there are some big potential pitfalls with using budget reconciliation. Six of them, to be specific, and they are all spelled out in the “Byrd Rule,” named after Sen. Robert Byrd [D, WV]. Any provision that falls under any of the 6 parts of the Byrd Rule won’t be eligible for passage under budget reconciliation and can be stripped from the bill by “points of order” being raised on the floor. Of the 16 budget reconciliation bills that have been attempted in Congress since the Byrd Rule took effect in 1985, 29 points of order have been raised to remove provisions, with 19 of them succeeding and resulting in provisions being removed.

If the health care compromises go through budget reconciliation, as expected, Republicans will try to remove everything they can through points of order. That could be a game-changer if they succeed. The health care bill is in such a delicate balance between conservative and progressive Democrats that if a few provisions are removed, it could cause it to lose votes off either side. Material removed under the Byrd Rule can’t be offered again as an amendment, so the Byrd Rule really allows the Republican party to poke holes in the Democrats’ bill.

Below is a list of all the points of order against budget reconciliation bills that have succeeded and resulted in provisions being removed over the years (via CRS). As you look it over, check the 11-page Obama health care compromise package, which we have posted online, to get a sense of what might qualify for removal under the Byrd Rule.

Bill name and section struck out Subject matter of the provision that was removed Basis of point of order under the Byrd Rule (See the rule)
Omnibus Budget Reconciliation Act of 1986 (OBRA-86), §403 Conservation programs Produces an outlay increase when the committee is not in compliance
OBRA-90, §7405(j) Apportionment of highway funds between states. Outside the jurisdiction of the committee that submitted it for the reconciliation bill.
OBRA-90, Page 1017, line 5-p. 1018, line 19; and p. 1018, line 22-p. 1019, line 18 Occupational Safety and Health Administration (OSHA) penalties Budgetary changes merely incidental to non- budgetary components
OBRA-90, §§4003-4016 Harvesting of timber in the Tongass National Forest in Alaska. Does not produce a change in outlays or revenues.
OBRA-93, §1105(c) Commercial use of bovine growth hormone in other countries. Does not produce a change in outlays or revenues.
OBRA-93, §7801; §7803(a) and §8252(a)(2), (b), and (c) Childhood immunizations and tax return preparer standards. Does not produce a change in outlays or revenues.
Balanced Budget Act of 1995, §7171 Raising the age of Medicare eligibility Does not produce a change in outlays or revenues.
Balanced Budget Act of 1995, §7191(a) Bar against the use of federal funding of abortions under Medicaid Does not produce a change in outlays or revenues.
Balanced Budget Act of 1995, 49 provisions in various titles of the bill [various topics, dealing primarily with welfare reform] point of order was sustained on 46 of the provisions and they were removed. 3 of them were allowed to remain in the bill. [various bases cited]
Balanced Budget Act of 1995, §8001 Application of antitrust rule to provider-sponsored organizations (MedicarePlus) and exemption of physician office laboratories. Does not produce a change in outlays or revenues. Budgetary changes merely incidental to non-budgetary components
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), §2923, page 772, line 13-p. 785, line 22 Medicaid supplemental umbrella fund. Produces an outlay increase when the committee is not in compliance
PRWORA, §408(a)(2) Family cap (no additional welfare cash assistance for children born to families receiving assistance). Does not produce a change in outlays or revenues.
PRWORA, §2909 Abstinence education programs Does not produce a change in outlays or revenues.
PRWORA, 22 provisions in various titles of the bill Various topics involving the Food Stamp, School Lunch, and Child Nutrition programs and welfare reform. [various bases cited]
Balanced Budget Act of 1997, §5822 Enrollment eligibility (Welfare-to-Work Grant Program) Budgetary changes merely incidental to non- budgetary components
Balanced Budget Act of 1997, §§5713, 5833, and 5987 [various topics] Outside committee’s jurisdiction
Taxpayer Relief Act of 1997, §602 District of Columbia Government reform. Does not produce a change in outlays or revenues.
Taxpayer Refund and Relief Act of 1999, §1502 General extension of revenue-reduction provisions. Increase in deficit or reduction of surplus in fiscal year beyond those covered by instructions.
Deficit Reduction Act of 2005, §5001(b)(3) and (b)(4), a portion of §6043(a), and §7404 Requiring the Secretary of Health and Human Services to submit to Congress by August 1, 2007, a report on the plan for the hospital value based purchasing program under Medicare (Section 5001(b)(3); requiring the Medicare Payment Advisory Commission to submit to Congress by June 1, 2007, a report that includes detailed recommendations on a structure of value based payment adjustments for hospital services under Medicare (Section 5001(b)(4); the negligent standard for hospitals and physicians who treat Medicaid patients (a portion of Section 6043(a)). Does not produce a change in outlays or revenues (Section 5001(b)(3) and (b)(4)), and budgetary changes merely incidental to non-budgetary components (a portion of Section 6043(a)).


The other part of the story is, of course, which points of order under the Byrd Rule have fallen with the provisions remaining in tact. We’ll have a post up on that in the coming days. Subscribe to the RSS feed and stay tuned.

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