Budget Reconciliation

The Congressional Budget Act of 1974 created reconciliation as a way to bring existing tax and spending law into line with the targets in a budget resolution. Congress first adopts a budget resolution containing reconciliation instructions, which direct named committees to change spending, revenue, or the debt limit by set amounts. The committees write the changes, the Budget Committee packages them into one bill, and that bill gets special treatment: in the Senate, debate is limited to twenty hours and amendments must be germane, so it cannot be filibustered and passes by a simple majority.

Because it bypasses the sixty-vote threshold, reconciliation has become the main vehicle for a party that controls both chambers to pass major fiscal legislation alone. It carried Ronald Reagan's 1981 budget cuts, Bill Clinton's 1993 deficit package, the George W. Bush tax cuts of 2001 and 2003, the 2010 changes that completed the Affordable Care Act, the 2017 tax law, the 2021 American Rescue Plan, the 2022 Inflation Reduction Act, and the 2025 budget law signed on July 4, 2025. When debate time expires, senators can still offer unlimited amendments without debate, producing an all-night marathon known as a vote-a-rama.

The Byrd rule, named for Senator Robert Byrd and made permanent in 1990, limits what reconciliation can contain. A provision is extraneous, and can be struck by a point of order needing sixty votes to waive, if it does not change spending or revenue, if its budgetary effect is merely incidental to its policy purpose, or if it increases deficits beyond the budget window, typically ten years. That last rule is why many tax cuts passed by reconciliation were written to expire. The Senate parliamentarian advises on which provisions survive, a process known as the Byrd bath, and her rulings have removed provisions from minimum wage increases to immigration changes.