By now, you’ve probably heard (a few hundred times) that Democrats picked up two Senate seats in Georgia’s January 5th runoff elections. Raphael Warnock and Jon Ossoff unseated Republican Senators Kelly Loeffler and David Perdue, respectively. When Warnock and Ossoff are sworn in, the Senate will be evenly divided for the first time since 2001.
So how does a tie give Democrats a win? Under the U.S. Constitution, the Vice President serves as President of the Senate and has the authority to cast tie-breaking votes when necessary. Once she is sworn in, Vice President-elect Kamala Harris will preside over a vote to organize the Senate and elect Senator Chuck Schumer (D-NY) as the Majority Leader.
This is a big deal. In both Chambers of Congress, the majority party controls the agenda. As in the House, the Senate majority party chairs all committees, which means they determine committee agendas, priorities, and actions. In addition, the Majority Leader determines which bills are brought to the floor for consideration by the full Chamber.
However, unlike the House, Senate rules generally require 60 votes to end debate on a bill and move to a vote. Any Senator has the power to filibuster, to just keep talking in order to delay or block legislative action. The only way to end a filibuster is to achieve cloture, which requires 60 votes and ends debate on any matter.
Democrats don’t have 60 votes, they have 50 votes, plus the vote of Vice President-elect Harris in the event of a tie. So what can Democrats do with such a slim majority? This is where budget reconciliation comes into play.
Budget reconciliation is an expedited process Congress may use to bring spending, revenue, and debt limits in line with the annual budget resolution. The process begins with the budget resolution, which Congress passes each year to establish its fiscal year budget. This resolution is agreed to by both Chambers of Congress but is not presented to the President and does not become law. In that budget resolution, Congress may include instructions directing specific committees to report reconciliation legislation that achieves a specific budgetary impact. These instructions trigger the reconciliation process.
In the Senate, once the committees approve reconciliation legislation, the rules limit the duration of debate on a reconciliation bill. This eliminates the need for 60 Senators to agree to invoke cloture (or end debate), allowing a reconciliation bill to pass the Senate with just 51 votes.
At the same time, Senate rules also limit the types of provisions that may be included in the reconciliation bill. The Byrd rule, named for the provision’s chief sponsor, former Senator Robert C. Byrd (D-WV), states that the reconciliation bill and any amendments may not contain matters “extraneous” to the reconciliation instructions included in the budget resolution. The Byrd rule provides six definitions of extraneous matter; a provision meeting any one of these definitions violates the Byrd rule:
The provision does not produce a change in government spending or revenue;
The provision increases spending or reduces revenue when the instructed committee is not in compliance with the reconciliation instructions;
The provision is outside the jurisdiction of the committee that submitted it;
The provision makes a change to government spending or revenue that is merely incidental to the non-budgetary components of the provision;
The provision would increase the deficit in any fiscal year beyond the “budget window” (currently ten years); or
The provisions recommends changes to Social Security.
Even with these requirements, budget reconciliation may be used for a broad range of policy changes. For example, the 2017 tax bill was approved through the reconciliation process as were substantial portions of the Affordable Care Act (ACA).
Democrats may have up to three opportunities to use budget reconciliation before the 2022 mid-term elections. While there is only one budget reconciliation opportunity per budget resolution (and one budget resolution per fiscal year), Congress never adopted a budget resolution for the current fiscal year (2021) and it can still pass one for fiscal years 2022 and 2023.
It is possible the first attempt at budget reconciliation will focus on COVID-19 relief and economic stimulus. President-elect Biden laid out a proposal on January 14, 2021, which he hopes will achieve bipartisan support. Remember, the budget reconciliation process is not necessary if 10 Republicans join Democrats on any bill, but COVID relief talks have been quite polarized over the past nine months. Biden and Congressional Democrats will likely not hesitate to use reconciliation for this purpose if it becomes clear Republicans do not intend to work with them.
If Congress uses its first reconciliation bill to address COVID-19, it could use a second reconciliation bill to address health care priorities later this year. Biden ran on a health care platform of restoring and enhancing the ACA, and many of his policy proposals meet budget reconciliation requirements. Some of the provisions Democrats may consider advancing through the reconciliation process include:
Expanding subsidies for Affordable Care Act (ACA) plans to make them more affordable for more people;
Reinstating a nominal ACA individual mandate tax, which could undercut the legal challenge to the ACA heard by the Supreme Court last fall;
Expanding Medicaid eligibility in states that have not yet expanded;
Lowering the Medicare eligibility age from 65 to 60;
Creating a public health insurance option; and
Allowing Medicare to negotiate with prescription drug manufacturers to reduce drug prices for seniors.
Our next blog will delve into the details of these policy ideas and explore the political likelihood of Democrats including them in their agenda over the next two years.
Together, the election of Joe Biden and two Democratic Senators from Georgia will give Democrats the narrowest of majorities in the Senate. While a one-vote advantage does not mean much under regular Senate rules, it does open the possibility of using budget reconciliation to advance policies with a fiscal impact. However, Democrats cannot afford to lose even one vote, which will be a challenge in a caucus ranging from centrist Democrats like Sen. Joe Manchin (D-WV) to progressives like Sen. Bernie Sanders (I-VT). Keeping all Senate Democrats on the same page will be a challenge in and of itself.