The Budget Reconciliation Process: The Senate’s “Byrd Rule”
Released: 2016-11-22T00:00:00

Introduction

Reconciliation is a process established under Section 310 of the Congressional Budget Act of 1974 ( P.L. 93-344 , as amended). The purpose of reconciliation is to change substantive law so that revenue and mandatory spending levels are brought into line with budget resolution policies. Reconciliation generally has been used to reduce the deficit through spending reductions or revenue increases, or a combination of the two. In some years, however, the reconciliation process also encompassed revenue reduction generally and spending increases in selected program areas.

Reconciliation is a two-step process. Under the first step, reconciliation instructions are included in the budget resolution, directing one or more committees in each House to develop legislation that changes spending or revenues (or both) by the amounts specified in the budget resolution. If more than one committee in each House is given instructions, each instructed committee submits reconciliation legislation to its respective Budget Committee, which incorporates all submissions, without any substantive revision, into a single, omnibus budget reconciliation measure. Reconciliation procedures during a session usually have applied to multiple committees and involved omnibus legislation.

Under the second step, the omnibus budget reconciliation measure is considered in the House and Senate under expedited procedures (for example, debate time in the Senate on a reconciliation measure is limited to 20 hours and amendments must be germane). The process culminates with enactment of the measure, thus putting the policies of the budget resolution into effect.

Reconciliation, which was first used by the House and Senate in 1980, is an optional procedure, but it has been used in most years. Over the period covering from 1980 to the present, 20 reconciliation bills have been enacted into law and four have been vetoed.

During the first several years' experience with reconciliation, the legislation contained many provisions that were extraneous to the purpose of reducing the deficit. The reconciliation submissions of committees included such things as provisions that had no budgetary effect, that increased spending or reduced revenues, or that violated another committee's jurisdiction.

In 1985 and 1986, the Senate adopted the Byrd rule (named after its principal sponsor, Senator Robert C. Byrd) as a means of curbing these practices. Initially, the rule consisted of two components, involving a provision in a reconciliation act and a Senate resolution. The Byrd rule has been modified several times over the years.

The purpose of this report is to briefly recount the legislative history of the Byrd rule, summarize its current features, and describe its implementation from its inception through the present.

Legislative History of the Byrd Rule

During the first five years that the Byrd rule was in effect, from late 1985 until late 1990, it consisted of two separate components—(1) a provision in statute applying to initial Senate consideration of reconciliation measures, and (2) a Senate resolution extending application of portions of the statutory provision to conference reports and amendments between the two houses. Several modifications were made to the Byrd rule in 1986 and 1987, including extending its expiration date from January 2, 1987, to January 2, 1988, and then to September 30, 1992, but the two separate components of the rule were preserved. In 1990, these components were merged together and made permanent when they were incorporated into the Congressional Budget Act (CBA) of 1974 as Section 313. There have been no further changes in the Byrd rule since 1990.

The Byrd rule originated on October 24, 1985, when Senator Robert C. Byrd, on behalf of himself and others, offered Amendment No. 878 (as modified) to S. 1730 , the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. The Senate adopted the amendment by a vote of 96-0. In this form, the Byrd rule applied to initial Senate consideration of reconciliation measures.

Senator Byrd explained that the basic purposes of the amendment were to protect the effectiveness of the reconciliation process (by excluding extraneous matter that often provoked controversy without aiding deficit reduction efforts) and to preserve the deliberative character of the Senate (by excluding from consideration under expedited procedures legislative matters not central to deficit reduction that should be debated under regular procedures). He opened his remarks by stating

we are in the process now of seeing ... the Pandora's box which has been opened to the abuse of the reconciliation process. That process was never meant to be used as it is being used. There are 122 items in the reconciliation bill that are extraneous. Henceforth, if the majority on a committee should wish to include in reconciliation recommendations to the Budget Committee any measure, no matter how controversial, it can be brought to the Senate under an ironclad built-in time agreement that limits debate, plus time on amendments and motions, to no more than 20 hours.

It was never foreseen that the Budget Reform Act would be used in that way. So if the budget reform process is going to be preserved, and more importantly if we are going to preserve the deliberative process in this U.S. Senate—which is the outstanding, unique element with respect to the U.S. Senate, action must be taken now to stop this abuse of the budget process.

The Byrd amendment was included in modified form in COBRA of 1985 ( P.L. 99-272 ), which was not enacted into law until April 7, 1986, as Section 20001 (100 Stat. 390-391). The Byrd rule, in this form, thus became effective on April 7. As originally framed, the Byrd rule was set to expire on January 2, 1987.

Over the years, the Senate has expanded and revised the Byrd rule through the adoption of two resolutions and the inclusion of provisions in four laws. Table 1 lists the laws and resolutions that have established and revised the Byrd rule.

On December 19, 1985, the Senate adopted by voice vote a resolution ( S.Res. 286 ), sponsored by Senator Alan Simpson and others, that extended the application of portions of the statutory provision to conference reports and amendments between the two houses. Because the enactment of COBRA of 1985 was delayed until early 1986, the portion of the Byrd rule dealing with conference reports became effective first. The provisions of S.Res. 286 were set to expire on the same date as the provision in COBRA of 1985 (January 2, 1987).

In the following year, the Senate was involved in two actions affecting the Byrd rule. First, the Senate adopted S.Res. 509 by voice vote on October 16, 1986. The measure, offered by Senator Alan Simpson and others, modified S.Res. 286 in a technical fashion. Second, the Omnibus Budget Reconciliation Act of 1986 was enacted into law, as P.L. 99-509 , on October 21, 1986. Section 7006 of the law made several minor changes in the Byrd rule and extended its expiration date by one year—until January 2, 1988.

Further changes in the Byrd rule were made in 1987. These changes were included in a measure increasing the statutory limit on the public debt, modifying procedures under the Balanced Budget and Emergency Deficit Control Act of 1985, and making other budget process changes ( P.L. 100-119 , signed into law on September 29; see Title II (Budget Process Reform)). Section 205 of the law added an item to the list of definitions of extraneous matter in the Byrd rule and extended its expiration until September 30, 1992.

In 1990, Congress and the President agreed to further modifications of the budget process by enacting the Budget Enforcement Act (BEA) of 1990 (Title XIII of the Omnibus Budget Reconciliation Act of 1990). Section 13214 of the law made significant revisions to the Byrd rule and incorporated it (as permanent law) into the CBA of 1974 as Section 313 (2 U.S.C. 644).

Finally, the Budget Enforcement Act of 1997 (Title X of the Balanced Budget Act of 1997) made minor technical changes in Section 313 of the CBA of 1974 to correct drafting problems with the BEA of 1990.

Current Features of the Byrd Rule

A Senator opposed to the inclusion of extraneous matter in reconciliation legislation has two principal options for dealing with the problem. First, a Senator may offer an amendment (or a motion to recommit the measure with instructions) that strikes such provisions from the legislation. Second, under the Byrd rule, a Senator may raise a point of order against extraneous matter.

The Byrd rule is a relatively complex rule that applies to two types of reconciliation measures considered pursuant to Section 310 of the CBA of 1974—reconciliation bills and reconciliation resolutions. (A reconciliation resolution could be used to make changes in legislation that had passed the House and Senate but had not yet been enrolled and sent to the President. The practice of the House and Senate has been to consider only reconciliation bills.)

In general, a point of order authorized under the Byrd rule may be raised in order to strike extraneous matter already in the bill as reported or discharged (or in the conference report), or to prevent the incorporation of extraneous matter through the adoption of amendments or motions. A point of order may be raised against a single provision or two or more provisions (as designated by title or section number, or by page and line number), and may be raised against a single amendment or two or more amendments. The chair may sustain a point of order as to all of the provisions (or amendments) or only some of them. Once material has been struck from reconciliation legislation under the Byrd rule, it may not be offered again as an amendment.

A motion to waive the Byrd rule, or to sustain an appeal of the ruling of the chair on a point of order raised under the Byrd rule, requires the affirmative vote of three-fifths of the membership (60 Senators if no seats are vacant). A single waiver motion can (1) apply to the Byrd rule as well as other provisions of the Congressional Budget Act; (2) involve multiple as well as single provisions or amendments; (3) extend (for specified language) through consideration of the conference report as well as initial consideration of the measure or amendment; and (4) be made prior to the raising of a point of order, thus making the point of order moot.

When a reconciliation measure, or a conference report thereon, is considered, the Senate Budget Committee must submit for the record a list of potentially extraneous matter included therein. This list is advisory, however, and does not bind the chair in ruling on points of order. In practice, the list has been inserted into the Congressional Record in some years but not in others. Further, in some years, the chairman and the ranking minority member of the committee each have submitted their own lists. Finally, in some cases the list merely has stated that no extraneous matter was included in the measure.

Determinations of budgetary levels for purposes of enforcing the Byrd rule are made by the Senate Budget Committee.

Definitions of Extraneous Matter

Subsection (b)(1) of the Byrd rule provides definitions of what constitutes extraneous matter for purposes of the rule. The Senate Budget Committee, in its report on the budget resolution for FY1994, noted "'Extraneous' is a term of art. Broadly speaking, the rule prohibits inclusion in reconciliation of matter unrelated to the deficit reduction goals of the reconciliation process."

A provision is considered to be extraneous if it falls under one or more of the following six definitions:

it does not produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected; it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions; it is outside of the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure; it produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision; it would increase the deficit for a fiscal year beyond the "budget window" covered by the reconciliation measure; and it recommends changes in Social Security.

The last definition complements a ban in Section 310(g) of the CBA of 1974 against considering any reconciliation legislation that contains recommendations pertaining to the Social Security. For purposes of these provisions, Social Security is considered to include the Old-Age, Survivors, and Disability Insurance (OASDI) program established under Title II of the Social Security Act; it does not include Medicare or other programs established as part of that act.

Exceptions to the Definition of Extraneous Matter

Subsection (b)(2) of the Byrd rule provides that a Senate-originated provision that does not produce a change in outlays or revenues shall not be considered extraneous if the chairman and ranking minority members of the Budget Committee and the committee reporting the provision certify that—

the provision mitigates direct effects clearly attributable to a provision changing outlays or revenues and both provisions together produce a net reduction in the deficit; or the provision will (or is likely to) reduce outlays or increase revenues: (1) in one or more fiscal years beyond those covered by the reconciliation measure; (2) on the basis of new regulations, court rulings on pending legislation, or relationships between economic indices and stipulated statutory triggers pertaining to the provision; or (3) but reliable estimates cannot be made due to insufficient data.

Additionally, under subsection (b)(1)(A), a provision that does not change outlays or revenues in the net, but which includes outlay decreases or revenue increases that exactly offset outlay increases or revenue decreases, is not considered to be extraneous.

The full text of the Byrd rule in its current form is provided in the Appendix .

Implementation of the Byrd Rule

Congress and the President considered 24 omnibus reconciliation measures (as shown in Table 2 ) between calendar year 1980, when the reconciliation process was first used, and the present. As stated previously, 20 of these measures were enacted into law and four were vetoed.

The Byrd rule has been in effect during the consideration of the last 19 of these 24 measures, covering from the end of calendar year 1985 through 2015. The Byrd rule had not been established when the first five reconciliation bills were considered. As discussed in more detail below, actions were taken under the Byrd rule during the consideration of 15 of the 19 reconciliation measures.

The Byrd rule was only partially in effect during the consideration of the first of these 19 reconciliation bills. During consideration of that bill, the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, the Byrd rule applied to the consideration of an exchange of amendments between the two chambers, but not to initial consideration of the bill.

The 19 reconciliation bills considered and passed by the House and Senate during this period stemmed from reconciliation directives in 17 different budget resolutions. Two budget resolutions, in 1997 (for FY1998) and 2005 (for FY2006), led to the enactment of two reconciliation measures in each year.

As Table 3 shows, there have been 70 points of order and 57 waiver motions, for a total of 127 actions, considered and disposed of under the Byrd rule. The 127 actions involve only those instances in which the Byrd rule was cited specifically; due to the manner in which budget enforcement provisions operate in the Senate, the Byrd rule potentially could have been involved in other instances which cannot be identified.

There is not a one-to-one correspondence between points of order and waiver motions. A point of order can be raised under the Byrd rule without a waiver motion being offered; conversely, a waiver motion can be offered without a point of order having been raised.

On the whole, the points of order and waiver motions were disposed of in a manner that favored by a large margin those who opposed the inclusion of extraneous matter in reconciliation legislation, as discussed in more detail below.

Five of the six definitions of extraneousness (the exception being recommending changes in Social Security) have been cited as bases for points of order under the Byrd rule. The most common basis, that the provision or amendment did not change outlays or revenues, was cited as the sole basis in 34 instances and as one of two bases in three other instances. None of the other bases were cited as often; the second-most cited basis, that the provision or amendment was outside an instructed committee's jurisdiction, was cited in 15 instances. In some instances, the basis for the point of order was not cited.

The Byrd rule has been used primarily during initial consideration of a reconciliation measure. It has been invoked only five times during consideration of a conference report—twice in 1993, once in 1995, once in 1997, and once in 2005:

in 1993, two points of order against matter characterized as extraneous in a conference report were rejected by the chair. In both instances, the chair's ruling was upheld upon appeal. The two motions to appeal the chair's rulings were defeated by identical votes, 43-57; in 1995, two sections were struck from a conference report and the two chambers had to resolve the final differences with a further amendment between them; in 1997, a section in the conference report was retained following a successful vote (78-22) to waive a point of order; and finally, in 2005, three provisions were struck from a conference report (another provision was retained), necessitating action on a further amendment between the two chambers.

As shown in Table 3 , points of order and waiver motions under the Byrd rule have occurred more frequently in the 1990s (81) compared to the 1980s (5) or the 2000s (41 so far). The middle years of the decade of the 1990s, covering calendar years 1993 through 1997, were especially active in this regard, accounting for 65 of the total 81 points of order and waiver motions during that decade. The most active single year was 2010, which involved 20 points of order and waiver motions.

Points of Order

In total, 70 points of order were raised and disposed of under the Byrd rule. Points of order generally were raised successfully; 60 were sustained (in whole or in part), enabling Senators to strike extraneous matter from the legislation in 22 cases and to bar the consideration of extraneous amendments in 38 cases.

Ten of the points of order fell, either upon the adoption of a waiver motion or upon the ruling of the chair. Two points of order were withdrawn and are not counted in Table 3 .

In two instances, a point of order was not raised because a waiver motion previously had been offered and approved, thus making the point of order moot.

In many instances, a point of order was raised against multiple provisions, sections, or titles of the bill, sometimes covering a variety of different topics. In a few cases, the chair ruled that most, but not all, of the provisions violated the Byrd rule.

Waiver Motions

A total of 57 motions to waive the Byrd rule, to permit the inclusion of extraneous matter, were offered and disposed of by the Senate. Waiver motions generally were not offered successfully; nine were approved and 48 were rejected.

Two other waiver motions were withdrawn and a third waiver motion was changed to a unanimous consent request; they are not counted in Table 3 .

Eight of the nine successful motions were used to protect committee-reported language in the bill or language in the conference report; only one motion to protect a floor amendment was successful.

Eight of the successful waiver motions exceeded the required 60-vote threshold by between two votes and 21 votes; on average, they exceeded the threshold by nearly 12 votes. The remaining successful waiver motion was approved by voice vote.

With regard to the 48 unsuccessful waiver motions, 47 of them fell short of the threshold by between one vote and 43 votes; on average, they fell short of the threshold by about 13 votes. The remaining unsuccessful waiver motion was rejected by voice vote. Nineteen of the unsuccessful waiver motions garnered at least 51 votes.

In one instance, the Senate set aside the Byrd rule without employing a waiver motion. The FY1988 budget resolution, in Section 4, set forth reconciliation instructions to various House and Senate committees, including the House Ways and Means and Senate Finance Committees. Section 6(a) of the budget resolution stated the assumption that in complying with their instructions, the two committees would establish a "deficit reduction account." Section 6(b) waived the Byrd rule for the consideration of any legislation reported under the assumed procedure:

(b) Legislation reported pursuant to subsection (a) shall not be considered to be extraneous for purposes of section 20001 of the Consolidated Omnibus Reconciliation Act of 1985 (as amended by section 7006 of the Omnibus Budget Reconciliation Act of 1986) or Senate Resolution 509 (99 th Congress, 2d Session).

The references in Section 6(b) were to the legislation that initially established the Byrd rule and extended it temporarily, before it was incorporated into the CBA of 1974 act on a permanent basis as Section 313.

Table 4 , at the end of this section, provides more detailed information on points of order and waiver motions made under the Byrd rule from 1985 through 2015.

Instances in Which the Byrd Rule Was Not Invoked

The Senate considered four different reconciliation measures without taking any actions under the Byrd rule. First, no points of order were raised, or waiver motions offered, under the Byrd rule during final consideration of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 in late 1985 and early 1986; as previously mentioned, this was the first instance in which the Byrd rule applied.

In 1989, no actions involving the Byrd rule occurred, in large part because the Senate leadership chose to use an amendment rather than the Byrd rule to deal with extraneous matter in the bill. On October 13, 1989, during consideration of the Omnibus Budget Reconciliation of 1989, the Senate adopted Mitchell Amendment No. 1004 by voice vote. The amendment struck extraneous matter from the bill; its stated purpose was "to strike all matter from the bill that does not reduce the deficit."

In 2001, no actions under the Byrd rule were taken during consideration of a significant revenue-reduction measure, the Economic Growth and Tax Relief Reconciliation Act of 2001. The potential application of the Byrd rule to the measures was averted by the inclusion of "sunset" provisions that limited the duration of the tax cuts, thereby preventing deficit increases beyond the applicable budget window.

Finally, the Byrd rule was not invoked during consideration of the College Cost Reduction and Access Act of 2007.

In another instance, the Senate considered two reconciliation bills in 2005 (the Deficit Reduction Act of 2005 and the Tax Increase Prevention and Reconciliation Act of 2005); final Senate action on the tax measure carried over into 2006. While points of order were raised successfully under the Byrd rule with regard to both measures in 2005, no actions under the rule occurred in 2006 as the Senate completed action on the tax measure.

Byrd Rule Controversies

Although the Byrd rule has advocates in the House and Senate, its use sometimes has engendered much controversy, especially between the two houses. Several of the major controversies are discussed below.

Impact on House-Senate Relations in 1993 and 1994

In 1993 and 1994, during the 103 rd Congress, the stringent application of the Byrd rule by the Senate significantly influenced the final shape of the reconciliation act and later affected the deliberations of the Joint Committee on the Organization of Congress.

The House considered its version of the Omnibus Budget Reconciliation Act of 1993, H.R. 2264 , on May 27. The Senate considered its version, S. 1134 , on June 23 and June 24 (after completing consideration of S. 1134 , the Senate amended and passed H.R. 2264 for purposes of conference with the House). Senator Pete Domenici, ranking minority member of the Senate Budget Committee, inserted a list of potentially extraneous matters included in S. 1134 in the Congressional Record of June 24 (at p. S7984). The list identified more than a dozen sections in five titles of the bill as possibly being in violation of the Byrd rule, specifically Section 313(b)(1)(A) (i.e., producing no change in outlays or revenues).

At the House-Senate conference stage, the Senate leadership directed the parliamentarian and Senate Budget Committee staff to thoroughly review the legislation to identify any provisions originating in the House or Senate that might violate the Byrd rule. As a result of this review, many provisions were deleted from the legislation in conference.

During Senate consideration of the conference report, Senator James Sasser, Chairman of the Senate Budget Committee, discussed this process:

with regard to the Byrd rule, we worked very hard and very faithfully over a period of well over a week in going over this bill to try to clarify and remove items that might be subject to the Byrd rule.

As the distinguished ranking member indicated, I think over 150 items were removed from the reconciliation instrument here, because it was felt that they would be subject to the Byrd rule....

I might say some of our House colleagues could not understand, and I do not blame them because there were a number of things that were pulled out of this budget reconciliation that had been voted on and passed by large majorities in both houses. But simply because they violated the Byrd rule, we had to go to the chairmen of the appropriate House committees and tell them they had to come out. They simply did not understand it. I think it made them perhaps have a little less high esteem for some of us here in the Senate.... In the final analysis, their leadership had to demand that some of these provisions subject to the Byrd rule come out.

During House consideration of the conference report, several Democratic Members criticized the Byrd rule and discussed its impact on the legislation. For example, Representative Dan Rostenkowski, chairman of the House Ways and Means Committee, stated

I also have to express my grave concerns regarding the other body's so-called Byrd rule. As a result of this procedural rule, policies that would have significantly improved the Medicare Program could not even be considered. Over 80 pages of statutory language were stripped out of the Medicare title. Staff wasted countless hours, scrutinizing every line to ensure that there is nothing that would upset our friends at the other end of the Capitol. Even more absurd is the fact that most of the items stripped were minor and technical provisions that received bipartisan support when they passed both the House and the Senate last year.

I hope that Members on both sides of the aisle share my grave concerns about how this rule has been used, and its impact on reconciliation. I sincerely hope that this rule will be reconsidered before we ever return to the reconciliation process again.

Controversy over the Byrd rule persisted during late 1993 and into 1994. The Joint Committee on the Organization of Congress, co-chaired by Representative Lee Hamilton and Senator David Boren, was slated to make recommendations on congressional reform, including changes in the budget process, in December of 1993. Representative Martin Olav Sabo, chairman of the House Budget Committee, wrote to Co-Chair Hamilton in October, telling him that "widespread use [of the Byrd rule] this year was extremely destructive and bodes ill for the reconciliation process in the future." Further, he stated that "the use of mechanisms like the Byrd rule greatly distorts the balance of power between the two bodies" and that strict enforcement of the Byrd rule "requires that too much power be delegated to unelected employees of the Congress."

Chairman Sabo attached two Budget Committee staff documents to his letter: (1) a 29-page listing of reconciliation provisions "dropped or modified" in conference in order to comply with the Byrd rule, and (2) a three-page statement identifying specific problems caused by the rule (including a bar against including authorizations savings in reconciliation, the forcing of piecemeal legislation, incentives to use counterproductive drafting techniques to mitigate effects, and a bar against provisions achieving savings or promoting efficiency when the Congressional Budget Office was unable to assign particular savings to them).

The Senate Members of the Joint Committee on the Organization of Congress recommended in their final report that a provision clarifying "that the 'Byrd rule' is permanent, applies to conference reports, requires sixty votes to waive, and applies to extraneous matters" be included in a broad reform bill. Legislation embodying the Senate recommendations ( S. 1824 ) was introduced on February 3, 1994 (the recommendation pertaining to the Byrd rule was set forth in Section 312 of the bill). The House Members of the Joint Committee did not include any recommendations regarding the Byrd rule in their report or legislation ( H.R. 3801 , also introduced on February 3, 1994).

The day after the two reform bills were introduced, the chairmen of 15 House committees wrote to Speaker Tom Foley. They urged him to meet with Senate Majority Leader George Mitchell in order to get Section 312 of S. 1824 , dealing with the Byrd rule, removed from the reform package.

On July 19, 1994, Chairman Sabo introduced H.R. 4780 . The bill would have amended the CBA of 1974 to make the Byrd rule "applicable to the Senate only," chiefly by removing references to conference reports in Section 313 of the act.

None of the three bills cited above were acted upon before the 103 rd Congress adjourned.

Effects on Tax-Cut Legislation

During the 106 th Congress, the budget resolutions for FY2000 and FY2001 included reconciliation instructions directing the House Ways and Means and Senate Finance Committees to develop legislation implementing substantial reductions in revenue. The reconciliation instructions in the two budget resolutions called for total revenue reduction over five years of $142 billion and $150 billion, respectively. Neither budget resolution included any instructions regarding spending. This marked the first time that the House and Senate had recommended substantial reductions in revenue through the reconciliation process without offsetting savings to be achieved in spending programs. Any resultant reconciliation legislation was expected under these budget resolutions to reduce large surpluses, not to incur or worsen deficits.

In each of these two years, there was controversy in the Senate regarding the appropriateness of using reconciliation procedures under circumstances that worsened the federal government's fiscal posture. Some Senators argued that the use of reconciliation, with its procedural restrictions that sharply curtail debate time and limit the offering of amendments in comparison to the usual Senate procedures, could be justified only when it was necessary to reduce or eliminate a deficit (or to preserve or increase a surplus). Other Senators maintained that reconciliation is neutral in its orientation—the language in Section 310 of the CBA of 1974 refers to "changes" in spending and revenue amounts, not increases or decreases—and is intended to expedite the consideration of important and potentially complex budgetary legislation.

Against the backdrop of the larger issue of the appropriate use of reconciliation under these circumstances, Senators also debated in particular the impact of the Byrd rule on the scope of the resultant tax-cut legislation. One of the determinants of extraneousness under the Byrd rule is whether the legislation reduces revenues or increases spending in the net beyond the budget window (i.e., the period to which the reconciliation instructions apply). Changes in tax law, however, often are made on a permanent basis. As a consequence, reconciliation legislation recommending permanent tax cuts may run afoul of the Byrd rule.

During consideration of the Taxpayer Refund and Relief Act of 1999 and the Marriage Tax Relief Reconciliation Act of 2000, the Byrd rule was used successfully to ensure the inclusion of sunset provisions in the bills, limiting the effectiveness of the tax cuts to the period covered by the reconciliation instructions.

During the first session of the 107 th Congress, the Senate again addressed these issues as it considered H.R. 1836 , largely embodying President Bush's proposal for a $1.6 trillion tax cut. In addition to debating the appropriateness of using the reconciliation process to expedite tax-cut legislation, Senators argued for and against the inclusion of the 10-year "sunset" provision necessary to achieve compliance with the Byrd rule. Some Senators maintained that permanent changes in tax law should be allowed under reconciliation procedures, just as they often are customarily made in freestanding tax legislation. Other Senators praised the value of being able to reexamine such significant modifications in budgetary policy in future years when economic circumstances may have changed materially.

The sunset provision was retained in the final version of the legislation, as Section 901 (115 Stat. 150) of P.L. 107-16 , the Economic Growth and Tax Relief Reconciliation Act of 2001.

In 2003, during the first session of the 108 th Congress, the Byrd rule influenced the form of revenue reconciliation directives in the FY2004 budget resolution ( H.Con.Res. 95 ). Initially, House and Senate leaders indicated that they would settle on a conference agreement instructing the House Ways and Means Committee to reduce revenues through reconciliation by $550 billion or more for the period covering FY2003-FY2013 and the Senate Finance Committee to reduce revenues by $350 billion for the same period. A majority of Senators had indicated their opposition to revenue reductions greater than $350 billion.

The use of dual reconciliation instructions in the budget resolution would enable the leadership to secure passage of the budget resolution while leaving open the possibility that a subsequent conference on the differing versions of the revenue reconciliation measure passed by the two houses might reach an acceptable compromise between these two amounts.

However, it soon became apparent that, if the Senate initially passed a revenue reconciliation measure consistent with the directive in the budget resolution (i.e., reducing revenues by $350 billion), the later consideration of a conference agreement reflecting a compromise level of revenue reductions greater than $350 billion could violate the Byrd rule. In particular, Section 313(b)(1)(B) defines as extraneous any provision reported by a committee that reduces revenues (or increases outlays) if the net effect of all of the committee's provisions is that it fails to achieve its reconciliation instructions. Proposing revenue reductions greater than the level of reductions set in the reconciliation instructions would be considered a failure to achieve the instructions.

In order to resolve the problem, the conference agreement on the FY2004 budget resolution instructed both the House Ways and Means Committee and the Senate Finance Committee to reduce revenues by $550 billion over FY2003-FY2013, but a point of order barred the initial consideration in the Senate of a reconciliation measure (as distinct from a conference report) containing revenue reductions in excess of $350 billion for this period. The FY2004 budget resolution further provided that the Senate point of order could be waived only by the affirmative vote of three-fifths of the Members duly chosen and sworn (i.e., 60 Senators, if no seats are vacant). This procedural formulation strengthened the position of those who favored initial Senate passage of a reconciliation measure limited to $350 billion in revenue reductions, but removed the potential Byrd rule hurdle should a majority of Senators later choose to support a conference agreement providing as much as $550 billion in revenue reductions.

Senator Max Baucus, the ranking minority member of the Senate Finance Committee, questioned whether the directive to the committee should be regarded as $350 billion or $550 billion. Ultimately, Senator Charles Grassley, chairman of the Senate Finance Committee, indicated that he had reached agreement with other Senators to adhere to the $350 billion level in the conference on the reconciliation measure, notwithstanding the fact that the limitation in Section 202 of the budget resolution only applied to initial consideration of the measure. The resultant reconciliation measure ( H.R. 2 ), according to final estimates of the Congressional Budget Office and Joint Tax Committee, contained $349.7 billion in revenue reductions and related outlay changes. The bill, which became P.L. 108-27 , the Jobs and Growth Tax Relief Reconciliation Act of 2003, on May 28, 2003, included sunset provisions in Section 107 (117 Stat. 755-756) and Section 303 (117 Stat. 764).

During the 109 th Congress, the House and Senate considered separate revenue and spending reconciliation bills pursuant to the FY2006 budget resolution. The budget resolution provided for a revenue reconciliation bill that reduced revenues by up to $70 billion over the five-year budget window (FY2006-FY2010) used in the budget resolution. The conference agreement on the revenue reconciliation bill, H.R. 4297 , recommended significant revenue reduction beyond the budget window, principally with respect to extensions of current capital gains and dividends provisions through December 31, 2010. Instead of incorporating sunset provisions in order to comply with the Byrd rule, as had been done in the past, the conferees included offsets of the revenue losses. The JCT estimated the total revenue loss over 10 years (FY2006-FY2015) at $69.084 billion, an amount nearly $900 million smaller than the five-year revenue loss. The measure became P.L. 109-222 , the Tax Increase Prevention and Reconciliation Act of 2005, on May 17, 2006.

Comprehensive Policy Changes: Health Care and Education Reform

At the beginning of the 111 th Congress, in 2009, President Barack Obama proposed a legislative agenda focusing on health care reform, as well as broad initiatives in education and other policy areas. An immediate point of contention was whether the proposals regarding health care reform should be pursued through the regular legislative process or the expedited procedures available under the reconciliation process. The Democratic leadership in the Senate was concerned, in particular, that passage of the proposals in the Senate could be stymied by a filibuster conducted by Republican opponents. Use of the reconciliation process, with its debate limitations and other expedited features, would ensure that a filibuster could not be employed against the legislation. On the other hand, in such a comprehensive reform proposal, many important provisions might be vulnerable to challenge under the Byrd rule and other enforcement procedures; the resulting legislation might become like "Swiss cheese" if many parliamentary challenges were successful.

Congressional leaders decided to consider health care reform (and education reform) proposals under the regular legislative process, but to include reconciliation directives in the FY2010 budget resolution so that reconciliation procedures could be used as a fallback if regular legislative procedures failed. One of the factors influencing the decision was that, at the time, the Democrats held a 60-seat majority in the Senate, exactly the minimum number of votes needed to invoke cloture (i.e., to terminate a filibuster). Title II of the FY2010 budget resolution, S.Con.Res. 13 , included reconciliation directives for FY2009-FY2014 to three House and two Senate committees that would accommodate health care and education reform initiatives.

The House and Senate passed separate versions of health care reform legislation in late 2009 but did not resolve their differences before the session ended. The House passed H.R. 3962 on November 7 by a vote of 220-215. The Senate chose another House-passed bill dealing with unrelated subject matter, H.R. 3590 , and transformed it into a health care reform measure; the Senate passed the bill on December 24 by a vote of 60-39. (In addition, the House passed an education reform measure in 2009, H.R. 3221 , but the Senate did not.)

In early 2010, the Democratic leadership in the Senate found an altered political situation; a special election held in Massachusetts in January to fill a vacant seat (due to the death of Senator Ted Kennedy) resulted in a changeover to Republican control of the seat, thereby reducing the Democratic majority in the Senate to 59 seats. In assessing how to resolve the House-Senate differences in the health care reform legislation, the Democratic leadership faced a dilemma: the Democrats no longer held the 60-seat majority necessary to thwart a filibuster (and Republican opposition to the measure was unified), and the House could not pass the Senate version without change, thereby sending it to the President, because that version was not acceptable to a majority of House Members.

The solution to the dilemma settled on by the Democratic leadership was for the House to pass the Senate version of health care reform legislation, H.R. 3590 , while simultaneously passing a reconciliation measure (referred to colloquially as a "sidecar") that would amend H.R. 3590 in a manner acceptable to majorities in both chambers. In this manner, comprehensive health care reform legislation could be enacted without concern about challenges under the Byrd rule that could strip away many of its provisions, while the revisions to the measure necessary to accommodate the political agreement could be achieved through an expedited reconciliation process that relied upon a simple majority vote in the Senate rather than a 60-vote supermajority. Education reform provisions also would be included in the reconciliation measure. Compared with the comprehensive health care reform measure, the reconciliation bill was much more narrow in scope and focused on budgetary matters.

To execute this strategy, the House on March 21, 2010, adopted a special rule reported by the House Rules Committee, H.Res. 1203 , by a vote of 224-206. Under the terms of the special rule, the House then concurred in the Senate amendments to H.R. 3590 (thus clearing the bill for the President) by a vote of 219-212. Finally, the House passed H.R. 4872 , the reconciliation measure, by a vote of 220-211.

Following the House's actions on March 21, the Senate considered H.R. 4872 on March 23, 24, and 25, passing the measure on March 25 by a vote of 56-43. Republican opponents of the measure offered a series of amendments and motions to recommit to the bill, all of which were defeated by motions to table or points of order. Nine of the amendments fell when points of order raised under the Byrd rule were sustained (in each instance, after a waiver motion had been rejected). All but one of the points of order were raised on the ground that the amendment included provisions outside the jurisdiction of the instructed committees.

Toward the end of Senate consideration of the reconciliation measure on March 25, Senator Judd Gregg successfully raised two points of order under the Byrd rule, striking two brief provisions in the education reform portion of the measure dealing with the Pell grant program. The provisions were judged to be in violation of the Byrd rule on the ground that they produced no changes in outlays or revenues.

As required under the Byrd rule, the Senate then returned the reconciliation measure (with the two provisions pertaining to the Pell grant program removed) to the House for further action. On March 25, the House agreed to a special rule, H.Res. 1225 , providing for the consideration of a motion for the House to concur in the Senate amendment to H.R. 4872 . The House agreed to the motion by a vote of 220-207, thus clearing the measure for the President.

President Obama signed H.R. 3590 , the Patient Protection and Affordable Care Act, into law on March 23 as P.L. 111-148 , and H.R. 4872 , the Health Care and Education Reconciliation Act of 2010, into law on March 30 as P.L. 111-152 .

Appendix. Text of the Byrd Rule

(Section 313 of the Congressional Budget Act of 1974)

EXTRANEOUS MATTER IN RECONCILIATION LEGISLATION

Sec. 313. (a) In General .—When the Senate is considering a reconciliation bill or a reconciliation resolution pursuant to Section 310, (whether that bill or resolution originated in the Senate or the House) or Section 258C of the Balanced Budget and Emergency Deficit Control Act of 1985 upon a point of order being made by any Senator against material extraneous to the instructions to a committee which is contained in any title or provision of the bill or resolution or offered as an amendment to the bill or resolution, and the point of order is sustained by the Chair, any part of said title or provision that contains material extraneous to the instructions to said Committee as defined in subsection (b) shall be deemed struck from the bill and may not be offered as an amendment from the floor.

(b) Extraneous Provisions .—(1)(A) Except as provided in paragraph (2), a provision of a reconciliation bill or reconciliation resolution considered pursuant to Section 310 shall be considered extraneous if such provision does not produce a change in outlays or revenues, including changes in outlays and revenues brought about by changes in the terms and conditions under which outlays are made or revenues are required to be collected (but a provision in which outlay decreases or revenue increases exactly offset outlay increases or revenue decreases shall not be considered extraneous by virtue of this subparagraph);

(B) any provision producing an increase in outlays or decrease in revenues shall be considered extraneous if the net effect of provisions reported by the Committee reporting the title containing the provision is that the Committee fails to achieve its reconciliation instructions;

(C) a provision that is not in the jurisdiction of the Committee with jurisdiction over said title or provision shall be considered extraneous;

(D) a provision shall be considered extraneous if it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision;

(E) a provision shall be considered to be extraneous if it increases, or would increase, net outlays, or if it decreases, or would decrease, revenues during a fiscal year after the fiscal years covered by such reconciliation bill or reconciliation resolution, and such increases or decreases are greater than outlay reductions or revenue increases resulting from other provisions in such title in such year; and

(F) a provision shall be considered extraneous if it violates Section 310(g).

(2) A Senate-originated provision shall not be considered extraneous under paragraph (1)(A) if the Chairman and Ranking Minority Member of the Committee on the Budget and the Chairman and Ranking Minority Member of the Committee which reported the provision certify that

(A) the provision mitigates direct effects clearly attributable to a provision changing outlays or revenues and both provisions together produce a net reduction in the deficit;

(B) the provision will result in a substantial reduction in outlays or a substantial increase in revenues during fiscal years after the fiscal years covered by the reconciliation bill or reconciliation resolution;

(C) a reduction of outlays or an increase in revenues is likely to occur as a result of the provision, in the event of new regulations authorized by the provision or likely to be proposed, court rulings on pending litigation, or relationships between economic indices and stipulated statutory triggers pertaining to the provision, other than the regulations, court rulings or relationships currently projected by the Congressional Budget Office for scorekeeping purposes; or

(D) such provisions will be likely to produce a significant reduction in outlays or increases in revenues but, due to insufficient data, such reduction or increase cannot be reliably estimated.

(3) A provision reported by a committee shall not be considered extraneous under paragraph (1)(C) if

(A) the provision is an integral part of a provision or title, which if introduced as a bill or resolution would be referred to such committee, and the provision sets forth the procedure to carry out or implement the substantive provisions that were reported and which fall within the jurisdiction of such committee; or

(B) the provision states an exception to, or a special application of, the general provision or title of which it is a part and such general provision or title if introduced as a bill or resolution would be referred to such committee.

(c) Extraneous Materials .—Upon the reporting or discharge of a reconciliation bill or resolution pursuant to Section 310 in the Senate, and again upon the submission of a conference report on such reconciliation bill or resolution, the Committee on the Budget of the Senate shall submit for the record a list of material considered to be extraneous under subsections (b)(1)(A), (b)(1)(B), and (b)(1)(E) of this section to the instructions of a committee as provided in this section. The inclusion or exclusion of a provision shall not constitute a determination of extraneousness by the Presiding Officer of the Senate.

(d) Conference Reports .—When the Senate is considering a conference report on, or an amendment between the Houses in relation to, a reconciliation bill or reconciliation resolution pursuant to Section 310, upon—

(1) a point of order being made by an Senator against extraneous material meeting the definition of subsections (b)(1)(A), (b)(1)(B), (b)(1)(D), (b)(1)(E), or (b)(1)(F), and

(2) such point of order being sustained, such material contained in such conference report or amendment shall be deemed struck, and the Senate shall proceed, without intervening action or motion, to consider the question of whether the Senate shall recede from its amendment and concur with a further amendment, or concur in the House amendment with a further amendment, as the case may be, which further amendment shall consist of only that portion of the conference report or House amendment, as the case may be, not so struck. Any such motion in the Senate shall be debatable for 2 hours. In any case in which such point of order is sustained against a conference report (or Senate amendment derived from such conference report by operation of this subsection), no further amendment shall be in order.

(e) General Point of Order .—Notwithstanding any other law or rule of the Senate, it shall be in order for a Senator to raise a single point of order that several provisions of a bill, resolution, amendment, motion, or conference report violate this section. The Presiding Officer may sustain the point of order as to some or all of the provisions against which the Senator raised the point of order. If the Presiding Officer so sustains the point of order as to some of the provisions (including provisions of an amendment, motion, or conference report) against which the Senator raised the point of order, then only those provisions (including provisions of an amendment, motion, or conference report) against which the Presiding Officer sustains the point or order shall be deemed struck pursuant to this section. Before the Presiding Officer rules on such a point of order, any Senator may move to waive such a point of order as it applies to some or all of the provisions against which the point of order was raised. Such a motion to waive is amendable in accordance with the rules and precedents of the Senate. After the Presiding Officer rules on such a point of order, any Senator may appeal the ruling of the Presiding Officer on such a point of order as it applies to some or all of the provisions on which the Presiding Officer ruled.