The Biden COVID Agenda and Reconciliation

Blog Post
Wednesday, January 27, 2021

President Biden has proposed an ambitious 100-day agenda, starting with passage of a $1.9 trillion COVID relief and recovery bill. But in an evenly divided Senate, finding the necessary votes to avoid a legislative filibuster will be difficult as many Republicans appear skeptical of a large package coming so soon on the heels of the $900 billion relief bill enacted just before Christmas. So incoming Senate Budget Committee Chairman, Senator Bernie Sanders (D-VT), surprised few when he suggested that Democrats were planning to use reconciliation to enact their agenda. 

“We are going to use reconciliation, that is 50 votes in the Senate plus the vice president, to pass legislation desperately needed by working families in this country right now,” the Vermont senator told CNN’s Dana Bash on “State of the Union” on Sunday, January 24.

After years of gridlock, reconciliation may seem appealing to the newfound Democratic majority, but the restrictions imposed by the special process may thwart quick passage of important components of the Biden COVID agenda. 

The Basics of Reconciliation 

Reconciliation is a special fast track procedure used to expedite passage in the Senate of changes to federal laws governing direct (mandatory) spending, revenues, and the debt limit in order to bring the fiscal contours of those programs in line with the current budget resolution. Reconciliation is not an exercise in discretionary appropriations since Congress addresses those laws in the annual appropriations bills that fund federal government operations.

Initially conceived to help reduce the deficit, in recent years reconciliation has been used to enact George W. Bush’s tax cuts (twice); elements of Barack Obama’s Affordable Care Act; and Donald Trump’s tax cuts.

Procedurally, reconciliation essentially allows the Senate to act like the House—debate on a reconciliation bill is limited and the measure can pass with a simple majority—but there are several steps Congress must complete before it can initiate the debate and amendment process for a reconciliation bill. 

First, both chambers must agree on the contents of a budget resolution – a planning document that establishes the spending and revenue targets for the current year, the budget year, and at least four of the ensuing fiscal years. Target levels of budget authority, outlays, and revenues should reflect the underlying policy goals of the House and Senate majorities (which is why the Congressional budget resolution is often referred to as a policy statement). 

To achieve those goals, the budget resolution includes reconciliation directives to the relevant authorizing committees instructing them to report out changes in laws within their jurisdiction (by a date certain) that achieve specific budgetary targets within the time period covered by the budget resolution. These instructions may ask a committee to achieve (1) a specific revenue target, (2) an outlay target, (3) a deficit target, which is considered, procedurally, to be a combination of (1) and (2), or (4) a change in the debt limit.

Once the budget resolution is agreed to and the authorizing committees have their instructions, the committees begin the process of drafting, debating, amending, and reporting out their recommendations.  If only one committee receives instructions, their work product is sent directly to the floor where it is considered under the privileges of a reconciliation bill. If more than one committee receives instructions, the recommendations are sent to the Budget committee in each chamber where they are compiled into a single document and reported out for consideration by the entire chamber.

Major Steps in a Reconciliation Bill

Source: Congressional Research Service

In summary, while a reconciliation bill may be easier to pass in the Senate than general legislation, it takes a lot more time and prior work to get to that stage.

Reconciliation and the Byrd Rule

Once on the floor, a reconciliation bill has special privileges in the Senate. The motion to proceed is not debatable, debate is limited, amendments must be germane, and it requires only a simple majority to pass.  These features, however, represent a significant diminution of minority rights in the Senate, a chamber that is used to a posture of unlimited debate and amendment. To compensate for this truncation of minority rights, the contents of a reconciliation bill are tightly controlled by a set of restrictions contained in section 313 of the Congressional Budget Act, also known as the Byrd rule.

The Byrd rule prevents the inclusion of “extraneous matter” in a reconciliation bill. Since the goal of reconciliation is to make changes in laws so as to comply with the budget resolution, in general, all provisions in a reconciliation bill must have a budgetary effect that is primary to any other ancillary effect – meaning the primary objective or purpose must be to produce a change in outlays or revenues, not change behavior. 

Some provisions may have budgetary effects but still be inappropriate to include in a reconciliation bill because the change in outlays or revenues are insignificant relative to the underlying policy. For example, a provision overturning the Supreme Court’s decision in Roe vs. Wade would probably violate the Byrd rule since the primary purpose of the provision is not budgetary but to end legal abortion. 

The Byrd rule contains six character tests used to determine whether the primary purpose of matter in a reconciliation bill is budgetary. The rules are complex with many precedents, but the following are the most basic. A provision is extraneous (inappropriate for reconciliation) if: 

  • It does not produce a change in on-budget outlays or revenues;
  • The budgetary effects of a provision are “merely incidental” to the underlying policy change;

  • It causes an increase the deficit in any fiscal year beyond the budget window; and

  • It recommends a change to the Old-Age and Survivors and Disability Insurance trust funds (Social Security retirement and disability).

The Byrd rule is not self-enforcing, a point of order must be raised at the appropriate time to enforce the rule. Another member can ask to waive the violation but will need at least three-fifths of all senators to agree (60 votes in a fully-seated Senate). 

The Byrd rule is unusual in that it is a surgical strike. If a point of order is sustained and the waiver fails (or isn’t made at all), the offending provision is struck but the rest of the bill remains standing. For this reason, careful attention to the Byrd rule is needed when drafting a reconciliation bill to avoid a final product that could look like swiss cheese.

The Byrd Rule and Biden’s COVID Package 

To apply the Byrd rule to a proposed reconciliation bill, two elements are essential: legislative text and a CBO score. The Biden administration has released a summary of it’s COVID relief package, but without bill text and a score, it is hard to say definitively which provisions would or would not survive a Byrd rule challenge. It is possible, however, to identify some vulnerabilities:

  • Discretionary appropriations. According to Senate precedent, discretionary appropriations are considered extraneous to a reconciliation bill. The Biden COVID plan proposes billions in discretionary spending including emergency funding for education, the Child Care Development Block Grant, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Community Development Block Grant, international and humanitarian aid programs, FEMA’s Disaster Relief Fund, rental assistance programs, the Low Income Home Energy Assistance Programs and more – all of which would be vulnerable if challenged under the Byrd rule.  

  • Regulations. Federal regulations often fail one or more of the Byrd tests because many do not produce changes in outlays or revenue, or because their budgetary effects are often merely incidental to the underlying policy. Whether a regulatory provision is germane to a reconciliation bill is a question the parliamentarian decides on a case-by case basis. For example, a 1993 provision regulating the content of cigarettes was found to violate the Byrd rule but a later provision opening the Arctic National Wildlife Refuge to oil drilling was not. The Biden plan includes a proposal that would direct the Occupational Safety and Health Administration (OSHA) to issue new COVID-19 workplace protection standards which would be vulnerable to a Byrd challenge.

  • Private sector mandates.  The Biden plan proposes to increase the minimum wage from $7.25/hour to $15.00/hour. There is ongoing debate about whether this proposal could survive a Byrd challenge. CBO scores of prior legislation show the provision would have a nominal impact on mandatory outlays. This is a case, however, where the Senate parliamentarian, who provides advice to the presiding officer of the Senate on these matters, would scrutinize the non-budgetary components of the proposal (the policy aspects) and determine whether they outweighed the budgetary components. If challenged, it is possible an increase in the minimum wage would fail the Byrd rule as “budgetary but merely incidental.” Likewise, the Biden plan attempts to reinstate and expand a  requirement that private sector employers provide mandatory paid sick leave for their employees. The tax credits to encourage this behavior were extended in the December coronavirus relief bill, but the mandate was not. The mandate could also be vulnerable to a Byrd challenge.

In summary, it will be difficult for Democrats to get the entirety of the Biden COVID agenda enacted via reconciliation--and in a timely fashion. Bipartisan negotiations may yield a more durable solution to the COVID crisis.