Education Video

What’s Budget Reconciliation?

To pass a law in Washington, you need to get three things. One, you need support from a simple majority in the House of Representatives, or 218 members. Two, you need 60 votes in the Senate. And three, you need the President’s signature.

Many times, getting the 60 votes in the Senate is the most challenging hurdle to overcome. So, in some cases, one party will try to take advantage of a little-used loophole that only requires bills to receive 51 votes to pass. The process is called “budget reconciliation” and has been used roughly two dozen times since 1980.

Budget reconciliation can only be applied to legislation that affects spending, revenue or deficits and was designed to help Congress better tame out-of-control debt. Examples include measures that spell-out broad budget parameters, reign-in spending or adjust the tax code to help move towards a balanced budget.

But over time, lawmakers began using the mechanism to pass, or threaten to pass, policies that failed to live up to the original intent of the shortcut. Contemporary examples include the Bush tax cuts and adjustments to Obamacare.

But even today, not all policies can be passed through budget reconciliation. Current rules prevent reconciliation from being used to pass a law unrelated to spending or taxes. In short, lawmakers can’t use budget reconciliation as a shortcut to pass anything and everything.

For example, although some lawmakers may try, raising the federal minimum wage doesn’t meet the reconciliation requirements.

When you hear about Congress trying to pass a law using budget reconciliation, view the move with skepticism. Typically someone is trying to game the system because they don’t have the support to conventionally pass the policy.