Reconciliation: Using the Budget Process to Pass Health Care Reform

The most controversial question facing Congressional Democrats this winter is whether the budget reconciliation process should be used to pass health care reform legislation. In large part, the controversy over the use of reconciliation in the health care debate is simply an outgrowth of the controversy over the bill – observers in support of the bill generally characterize the use of reconciliation as aggressive action in service of the American public, while those opposed to the bill generally characterize it as a power grab and an affront to public opinion. At least part of the controversy, however, emanates from reconciliation process itself. Some Senators support health care reform (having voted for the legislation passed by the Senate on Christmas Eve), but oppose the use of reconciliation to advance a version more to the House’s liking (See the TMP report). According to these Senators, the reconciliation process is an inappropriate venue for major policy changes, which they suggest should be subject to supermajority votes (click here to learn more about Senate rules and traditions surrounding supermajority votes and the filibuster). Although defensible on political or philosophical grounds, on a procedural level this position draws an arbitrary line between policy and budget legislation, which ultimately obscures reconciliation’s fundamental purpose.

“The chief purpose of the reconciliation process is to enhance Congress’s ability to change current law in order to bring revenue, spending, and debt-limit levels into conformity with the policies of the annual budget resolution.” – Congressional Research Service Report, The Budget Reconciliation Process: House and Senate Procedures. Put more simply, reconciliation exists to help Congress reduce spending and avoid deficits. It recognizes that although a supermajority of Congress may agree to cut overall spending by certain amount over the long-term, when it comes to specifying the cuts, getting 60 votes in the Senate can be very difficult. To solve this problem, budget reconciliation allows Congress to “fast track” (i.e., avoid supermajority votes on) specific proposals that enable it to bring revenues or expenditures in line with spending targets in the budget resolution. This past April, Congress passed a budget resolution for FY 2010 that reduced spending targets over the next five years. Since entitlement spending (health care and social security) represents the baulk of projected expenditures, meeting these targets necessitated, among other things, changes to the laws governing Medicare/Medicaid. For this reason, the budget resolution included 5 reconciliation directives instructing 2 Senate committees and 3 House committees to report health care legislation eligible for consideration through the reconciliation process.

Admittedly, some elements of the health care bill may need to be stripped during reconciliation under the Byrd rule, which makes any provision of (or amendment to) the bill that is deemed “extraneous” to the purpose of amending entitlement or tax law vulnerable to a point of order. (See Policy Analysis: Introduction to the Federal Budget Process.) Still, a review of reconciliation’s function in the U.S. budgetary process suggests that Democrats should not be timid about using it to pass controversial pieces of legislation. Contrary to some of rhetoric, the whole point of reconciliation is to pass controversial pieces of legislation that would have little chance of receiving a supermajority vote. It is difficult to imagine, even in a less partisan environment, entitlement spending being significantly reduced any other way.

Hello friends,

Welcome to the course weblog of "State and Local Public Finance," which is an additional channel of communication for our journey together on PA 5113, 2010 spring.

Throughout the semester, each of you will be required to post two blogs, one before the spring break and one after. The schedule will be determined in the first class and then posted in our Moodle course website.

The broad topic area for each week is generally following the lecture schedule (see the table below), with some exceptions. For example, we only have a week for education finance, but we have two separate weeks to blog about K-12 education finance (on 04/16) and higher education finance (on 04/23).

When it is your turn, you shall pick a specific point of interest, find related materials on the Internet or other sources, and present your comments or questions that are related to our lecture or readings. Each blog should provide hyperlinks to additional web-base resources, and I would love to see some multimedia ones, which are often really enjoyable. In the class, you will do a 2-minute "mini speech" about your post and may answer one or two questions.

You are all encouraged to read these blogs and add comments. Each week we will select a "Post of the Week," whose author will be awarded 1 extra point in participation score.

Let me know if you have any questions or concerns.