The purpose of the reconciliation process is to enhance Congress's ability to bring existing spending, revenue, and debt-limit laws into compliance with current fiscal priorities established in the annual budget resolution. When Congress adopts a budget resolution, it is agreeing upon budgetary goals for the upcoming fiscal year. In some cases, for these goals to be achieved, Congress must pass legislation that alters current revenue, direct spending, or debt-limit laws. In this situation, Congress seeks to reconcile existing law with its current priorities. The reconciliation process is still a relatively new congressional process in that there have only been 23 reconciliation bills passed by Congress since the first use of reconciliation in 1980. Budget reconciliation is an optional, congressional process that consists of several different stages ( Figure 1 ). The first stage in the reconciliation process is the adoption of the budget resolution. If Congress intends to utilize the reconciliation process, reconciliation directives (also referred to as reconciliation instructions) must be included in the annual budget resolution. These directives trigger the second stage of the process by instructing individual committees to develop and report legislation that would change laws within their jurisdiction related to spending, revenue, or the debt-limit. These directives detail which committee(s) should report reconciliation legislation, the date by which the committee(s) should report, the dollar amount of budgetary change to be achieved in the reconciliation legislation, and the time period over which the impact of the budgetary change should be measured. If a single committee is directed in the budget resolution to develop reconciliation legislation, it will likely be instructed to report this language directly to its full chamber. If, however, several committees are directed to report reconciliation legislation, they typically will be directed to submit the language to their respective Budget Committee for packaging, without any substantive change, into an omnibus measure. During the second stage of the reconciliation process, the specified committee develops legislation in response to the reconciliation directive included in the budget resolution. The committee will then meet to vote whether to report that language. The committee may vote to report the language favorably or unfavorably, the latter meaning that although it satisfied its directive, the committee did not support the language. As stated above, if more than one committee has been directed to report reconciliation legislation, they are directed to submit such language to their respective Budget Committee. The Budget Committee then packages all committee responses into an omnibus budget reconciliation bill without making any substantive revisions and votes on whether to report the omnibus reconciliation bill to the full chamber. In this way, both the legislative committees and the Budget Committees in both chambers have important roles to play in the reconciliation process. During the final stages of the reconciliation process, the reported legislation is considered under expedited procedures in both the House and Senate. As with all legislation, any differences in the reconciliation legislation as passed by the two chambers must be resolved before the bill can be sent to the President for the final stage of the process, either approval or veto. Sometimes the reconciliation process triggered in the annual budget resolution of a specific year is not completed until the subsequent year. For instance, the FY2006 budget resolution , agreed to on April 28, 2005, included reconciliation directives that resulted in the enactment of two reconciliation bills, but these bills were not signed into law until February and May of 2006. As described above, Congress has the option of including reconciliation directives in its annual budget resolution. These directives trigger the reconciliation process, and without their inclusion in a budget resolution, no measure would be eligible to be considered under expedited reconciliation procedures. When reconciliation directives are included in an annual budget resolution, their purpose is to require committees to develop and report legislation that will allow Congress to achieve the budgetary goals set forth in the annual budget resolution. These directives detail which committee(s) should report reconciliation legislation, the date by which the committee(s) should report, the dollar amount of budgetary change that should exist within the reconciliation legislation, and the time period over which the impact of the budgetary change should be measured. They might also include language regarding the type of budgetary change that should be reported as well as other procedural provisions, contingencies, and programmatic direction. As described above, reconciliation directives in a budget resolution direct a specific committee or committees to develop legislation within its jurisdiction achieving a desired budgetary outcome. In both the House and Senate, reconciliation instructions in a budget resolution have directed either a single committee to report, or multiple committees to report. In cases when only one committee has been directed to report, the process directs the committee to report its reconciliation legislation directly to its full chamber. If the budget resolution instructs more than one committee to report reconciliation legislation, then those committees have been directed to submit their legislative recommendations to their respective Budget Committee. The Budget Committee then packages the committee responses into an omnibus budget reconciliation bill without making any substantive revisions, and votes on whether to report the omnibus reconciliation bill. Any legislative committee with jurisdiction over spending, revenues, or the debt limit may be directed to report reconciliation legislation, and many have been instructed to report reconciliation legislation at some point. Because the Senate Finance Committee and the House Committee on Ways and Means each have jurisdiction within their respective chamber over all revenue and debt-limit legislation, as well as some direct spending legislation, these committees are often directed to report some type of reconciliation legislation when reconciliation directives are included in a budget resolution. Since the 101 st Congress, 13 budget resolutions have included reconciliation directives to Senate committees. Twelve of those thirteen budget resolutions directed the Senate Finance Committee to report reconciliation legislation. Similarly, in that same period, 13 budget resolutions have included reconciliation directives to House committees. Twelve of those thirteen budget resolutions directed the House Ways and Means Committee to report reconciliation legislation. In current practice, reconciliation may include mandatory spending legislation, but does not include discretionary spending. Discretionary spending is subject to other enforcement mechanisms. The Appropriations Committees have only been directed to report reconciliation legislation on two occasions, the last of which was in 1981. Individual committees sometimes are given several separate reconciliation directives within a single budget resolution. In 2000, for instance, the budget resolution included four separate reconciliation instructions to the House Ways and Means Committee. There are several reasons why a budget resolution may include multiple directives to a single committee. First, a committee may be directed to report more than one kind of reconciliation legislation (revenue, spending, or debt-limit legislation) with a separate directive given for each type. The Budget Act also recognizes that committees may be directed to report a combination of spending and revenue legislation, including a directive to achieve deficit reduction. If a committee is given more than one directive, for instance to increase revenues and decrease spending, then the committee may respond with separate pieces of legislation. A committee may also be asked to report reconciliation legislation that achieves budgetary goals over different periods of time. Lastly, reconciliation directives may be separated to make clear that the directives are intended to achieve separate policy goals. Reconciliation directives set forth the dollar amount that reconciliation legislation should alter spending or revenue levels. Directives that would reduce spending or increase revenues are typically aimed at reducing or eliminating a deficit. These types of directives include a dollar amount that in practice is considered a minimum amount of deficit reduction, sometimes referred to as a floor, meaning a committee may report greater spending cuts or tax increases, but not less. Conversely, directives that would increase spending or reduce revenues are typically aimed at reducing or eliminating a surplus. These types of directives include a dollar amount that in practice is considered a maximum , sometimes referred to as a ceiling, meaning that the committee might report a lower level of spending increases or revenue reductions, but not greater. Further, the Budget Act provides that it is not in order in the Senate to consider reconciliation legislation that includes extraneous matter. One definition of extraneous is a provision that would increase the deficit beyond the period specified in the reconciliation directive. Compliance with the dollar amount set forth in a reconciliation directive is measured on a net basis. This means that legislation responding to a directive to reduce spending, for instance, might have a provision that would increase spending for a certain program. This would be considered in order as long as the legislation, taken as a whole, would satisfy the overall spending decreases set forth on the reconciliation directive. If a committee does not respond to its directive, each chamber has methods that it may employ that would allow it to include legislative language that falls within the non-reporting committee's jurisdiction to satisfy the committee's directive. For more information, see the section on "Enforcement of Reconciliation Directives," below. Section 310 of the Budget Act recognizes three types of reconciliation legislation that committees may be directed to report: spending, revenue, and debt limit. The Budget Act also recognizes that committees may be directed to report a combination of the three, including a direction to achieve deficit reductions, which may result from an unspecified combination of revenue increases and spending decreases. If a committee is given more than one directive, for instance to increase revenues and decrease spending, then the committee may respond with separate pieces of legislation. Under current Senate practice, however, this provision has been interpreted to mean that no more than one reconciliation measure of each type is permitted. Reconciliation instructions, therefore, may result in the creation of as many as three reconciliation bills that may be considered on the floor under expedited procedures, but no more than one each for spending, revenue, and the debt limit. In current practice, reconciliation directives pertain to direct spending which is in the jurisdiction of House and Senate legislative committees, rather than discretionary spending, which is in the jurisdiction of the Appropriations Committees. Such direct spending directives may instruct a committee to report legislation that would effect spending levels. A committee may respond to the directive by reporting changes to direct spending programs or by recommending changes in offsetting collections. Offsetting collections, such as user fees for water or mineral rights on federal land, are treated as negative spending rather than as revenues. Reconciliation directives pertaining to direct spending generally refer to changes in outlay levels. The outlay level is the projected level of dispersed federal funds. Outlays differ from budget authority (which gives agencies the authority to incur obligations) and are used to assess the impact of the legislative changes on the federal budget. In practice, if a reconciliation directive instructs a committee to report legislation reducing spending by a specific amount, that amount is the minimum by which the legislation should reduce spending. Conversely, if a reconciliation instruction directs a committee to report language increasing spending, that amount is a maximum by which spending should be increased. An example of a spending instruction is as follows: The Senate Committee on Energy and Natural resources shall report changes in laws within its jurisdiction that provide direct spending ... to reduce outlays $6,000,000 in fiscal year 2002 .... Reconciliation directives may instruct a committee to recommend legislation that would increase or decrease revenues. Reconciliation directives to alter current revenue laws fall under the jurisdiction of the Senate Finance Committee and House Ways and Means Committee. Similar to spending directives, in practice, if a reconciliation directive instructs a committee to report legislation increasing revenues by a specific amount, that amount is the minimum by which the legislation should increase revenues. Conversely, if a reconciliation directive includes instructions to decrease revenue, that amount is a maximum by which revenue should be decreased. An example of a revenue instruction is as follows: The Committee on Finance shall report changes in laws within its jurisdiction necessary to reduce revenues by not more that $122,400,000,000 for the period of fiscal years 1997 through 2002. There is a statutory limit on the total amount of debt that the federal government may incur at any time. In the event that Congress determines the debt limit to be too high or too low, legislation can be enacted to alter it. The reconciliation process is one of three methods Congress has utilized to consider debt-limit legislation in recent years, although it is the least frequently used, being employed only four times. Reconciliation directives to amend the public debt limit fall under the jurisdiction of the Senate Finance Committee and the House Ways and Means Committee. An example of a public debt-limit directive is as follows: (D) The Senate Committee on Finance shall report changes in law within its jurisdiction which provide for an increase in the permanent statutory limit on the public debt by an amount not to exceed $1,900,000,000,000. Reconciliation directives may also instruct a committee to recommend legislation achieving a certain level of deficit reduction without specifying the method. This option allows a committee to respond with legislation that includes spending decreases, tax increases, or a combination of the two. Only the Senate Finance Committee and the House Ways and Means Committee would receive such a directive since they are the only two committees with jurisdiction over revenue legislation. An example of a deficit reduction directive is as follows: ...the Senate Committee on Finance shall report changes in laws within its jurisdiction sufficient (1) to reduce outlays, (ii) to increase revenues, or (iii) any combination thereof, as follows $2,000,000,000 in fiscal year1991.... Similarly, when either the House Ways and Means Committee or the Senate Finance Committee is instructed to report both spending and revenue legislation, they are granted some flexibility under the "fungibility rule." An example of such a directive is as follows: ...the Committee on Ways and Means of the House of Representatives shall report to the House of Representatives a reconciliation bill not later than May 18, 2001, that consists of changes in laws within its jurisdiction sufficient to reduce revenues by not more than $1,250,000,000,000 for the period of fiscal years 2001 through 2011 and the total level of outlays may be increased by not more than $100,000,000,000 for the period of fiscal years 2001 through 2011. The fungibility rule deems a committee to have satisfied both parts of the reconciliation directive even if the committee's recommendations cause either the spending changes or the revenue changes to exceed or fall below its directive by more than 20% of the sum of the two types of changes, as long the total amount of changes reported is equal to the total amount of changes instructed. Reconciliation directives may specify either a single year or a period of years over which the impact of budgetary change should be measured. For example, an instruction might direct a committee to report legislation decreasing spending by a certain amount in the upcoming fiscal year, as well as an amount for a more extended period, typically the entire period covered by the budget resolution. An example is as follows: (A) COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY- The Senate Committee on Agriculture, Nutrition, and Forestry shall report changes in laws within its jurisdiction that provide direct spending (as defined in section 250(c)(8) of the Balanced Budget and Emergency Deficit Control Act of 1985) to reduce outlays $86,000,000,000 in fiscal year 1997 and $251,000,000,000 for the period of fiscal years 1997 through 2002. Reconciliation directives included in an annual budget resolution direct a committee to report (or submit to the Budget Committee) legislation by a specific date. For example (b) Not later than June 20, 1980, each committee specified in subsection (a) shall submit its recommendations to the Committee on the Budget of its House. (1) Not later than July 23, 1999, the Senate Committee on Finance shall report to the Senate a reconciliation bill.... These dates may vary in several respects. In some years, they have been the same for both the House and Senate committees. Due dates have sometimes been as early as April or as late as October and have fallen within every month between except August. In some cases, staggered deadlines may be used to regulate the pace of legislative activity. Committees have typically responded to their directives early and on time. Committees have also responded to their directive after the date specified, with no impact on whether the resultant legislation was considered as reconciliation legislation. In other words, late responses to a reconciliation directive did not cause the bill to lose its privileged status as a reconciliation bill. There is no procedural mechanism, such as a point of order, for enforcing the date specified in the reconciliation directive. Each chamber, however, has methods it can employ to allow it to move forward with reconciliation legislation and include legislative language that falls within the non-reporting committee's jurisdiction to satisfy the committee's directive. For more information, see the section on "Enforcement of Reconciliation Directives," below. Budget resolutions have sometimes included contingent provisions in reconciliation directives. Such provisions typically dictate that certain things within a reconciliation directive may be altered, contingent on the occurrence of a specific event. For instance, the budget resolution for FY1996 stated that a certain reconciliation directive would be valid only after the Congressional Budget Office (CBO) certified that the recommendations would balance the budget for a specific time period. (1) CERTIFICATION- In the Senate, upon the certification pursuant to section 205(a) of this resolution, the Senate Committee on Finance shall submit its recommendations pursuant to paragraph (2) to the Senate Committee on the Budget. After receiving those recommendations, the Committee on the Budget shall add these recommendations to the recommendations submitted pursuant to subsection (a) and report a reconciliation bill carrying out all such recommendations without any substantive revision. Reconciliation directives are included in an annual budget resolution with the purpose of achieving budgetary goals, and instructions are given to committees to recommend legislation within their jurisdiction that would have a specific budgetary effect. The programmatic details of the legislation, and how those budgetary goals should be met, therefore, are left to the discretion of the specified committee. In general, committees may report any matter within their jurisdiction. Reconciliation directives do, however, sometimes include programmatic expectations or detail, although they are not binding. Including programmatic direction in a reconciliation instruction allows the Budget Committee to communicate policy preferences or assumptions, but does not compel the specified legislative committee to comply with them. Examples of policy instructions include the following: It is the sense of the Congress that of the total amount reconciled in subsection (a), $100,000,000,000 will be for an economic stimulus package over the next 2 years, and (a) Health Care Reform.-(1) The House Committee on Energy and Commerce shall report changes in laws to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. The Budget Act includes a budget process timetable stating that Congress is to complete action on reconciliation legislation on or before June 15. There is no corresponding enforcement mechanism, however, for ensuring that reconciliation legislation be completed by that date, and Congress has instead followed a timetable established by the committee due dates in reconciliation directives in the budget resolution. Another provision in the Budget Act, prohibits House consideration of any resolution providing for adjournment of more than three days during the month of July if the House has not completed action on any required reconciliation legislation. There is no procedural mechanism, such as a point of order, for enforcing the date specified in the reconciliation directive as it appears in the budget resolution. Committees sometimes have reported reconciliation legislation in response to their directives after the date specified in the directive with no impact on whether the resultant legislation was considered as reconciliation legislation. In other words, the late response of one or more committees did not cause the bill to lose its privileged status as a reconciliation bill. In the case of omnibus reconciliation measures, the House and Senate Budget Committees have at times delayed reporting a bill until tardy committee submissions were received. In some years, committees have not formally responded to the reconciliation directive instructing them to report legislation. There may be several reasons for the lack of a formal committee submission. For instance, there may have been a shift in policy priorities and Congress no longer desired to pass reconciliation legislation. It could also be that a committee fails to approve reconciliation language or it may be that although committees did not respond formally to the directive, they reported freestanding legislation that was not considered under reconciliation procedures but that may have satisfied the goal of the reconciliation directive. As explained above, there is no procedural mechanism for requiring a committee to report reconciliation legislation on time, or at all. Each chamber, however, may employ methods of moving forward with reconciliation legislation, and to include legislative language that falls within the non-reporting committee's jurisdiction, in the event that the committee has not yet reported. These methods vary by chamber. In the House, if a committee has not responded to a reconciliation directive, it still may be possible to consider reconciliation legislation on the House floor that would satisfy the committee's directive. In the case of omnibus reconciliation legislation, the Budget Act states that the House Rules Committee may make in order amendments to a reconciliation bill to satisfy reconciliation directives if a committee has not submitted reconciliation legislation to the House Budget Committee. In the Senate, if a committee has not responded to a reconciliation directive, it still may be possible to consider reconciliation legislation on the Senate floor that would satisfy the committee's directive. This would be in order on the floor in the form of a motion to recommit the bill to that committee with instructions that it report the measure back to the Senate forthwith with an amendment. Unlike amendments to the reconciliation bill, the motion to recommit would not have to be germane if it were made in this situation. Such a motion to recommit would allow any Senator to craft legislative language within the directed committee's jurisdiction on the floor.

Summary:
The purpose of the reconciliation process is to enhance Congress's ability to bring existing spending, revenue, and debt-limit laws into compliance with current fiscal priorities established in the annual budget resolution. When Congress adopts a budget resolution, it is agreeing upon its budgetary goals for the upcoming fiscal year. In some cases, for these goals to be achieved, Congress must pass legislation that alters current revenue, direct spending, or debt-limit laws. Reconciliation instructions are the means by which Congress can establish the roles that specific committees will play in achieving these goals. Budget reconciliation is an optional, congressional process that consists of several different stages. The first stage in the reconciliation process is the adoption of the budget resolution. If Congress intends to utilize the reconciliation process to achieve its budgetary goals, reconciliation directives (also referred to as reconciliation instructions) must be included in the annual budget resolution. To achieve the budgetary goals set forth in the budget resolution, reconciliation directives designate which committee(s) should report reconciliation legislation, the date by which the committee(s) should report, the dollar amount of budgetary change to be achieved in the reconciliation legislation, and the time period over which the impact of the budgetary change should be measured. They might also include language identifying the type of budgetary change that should be reported as well as other procedural provisions, contingencies, and programmatic direction. This report discusses these various components of reconciliation instructions. There is no procedural mechanism for requiring a committee to report reconciliation legislation on time, or at all. Each chamber, however, has methods that it can employ to allow it to move forward with reconciliation legislation and to include legislative language that falls within the non-reporting committee's jurisdiction, in the event that a committee has not reported. These methods vary by chamber.