Reconciliation and the Byrd Rule

Explanation of the Senate’s Byrd Rule

The Budget Reconciliation process is particularly significant for the Senate, where legislation is generally subject to (1) unlimited debate and (2) non-germane amendments. In contrast to the normal traditions of open debate and amendment, Reconciliation bills are subject to a very strict—20-hour—time limit and very strict germaneness restrictions on amendments. Because Reconciliation is such a radical departure from the way the Senate normally does its business, Senator Robert C. Byrd in 1985 created the “Byrd Rule” (set forth in 313 of the Budget Act), which limits what can be included in a Reconciliation Bill.

Under the Byrd Rule, all legislation reported pursuant to Reconciliation instructions must be budgetary in nature. Any matter that is not budgetary is considered to be “extraneous.” Senators may use a Byrd Rule point of order to strike specific “extraneous”’ provisions from a Reconciliation bill or conference report.

Generally, the Byrd Rule defines as extraneous provisions that (1) have no cost or (2) are significant policy changes with “merely incidental” budgetary effects. Senators may challenge a lengthy provision or very small provisions down to the subsection level. The Byrd Rule, itself, is lengthy, highly technical, and quite arcane. But, in general, the following four-part test may be used in determining if a provision violates the Byrd Rule:

1. Does the provision have a budget effect? Changes in outlays or revenues brought about by changes in the terms and conditions under which outlays are made or revenues are collected are considered to be budget effects (which permitted many provisions in OBRA-93 to survive).

2. If a provision has a budget effect, it does not violate the Byrd Rule (and can remain in the Reconciliation Bill) unless

• the budget effect is “merely incidental” to the nonbudgetary (policy) components of the provision (for example, if a policy provision doesn’t have a budgetary “score” you can’t save it from the Byrd Rule by piggybacking it on a minor or “incidental” budgetary provision); or

• the provision decreases revenues (or increases spending) and the reporting committee has failed to achieve its Reconciliation instructions (this is why Senate committees are very careful to fulfill their Reconciliation instructions); or

• in a year beyond the Budget Resolution window the provision would reduce revenues (or increase spending) and that revenue loss (or spending increase) causes the relevant title of the Reconciliation Bill to become a net deficit increaser in that out-year.

3. If the provision has no budget effect, it violates the Byrd Rule.   Examples of “no-costers” that violate the Byrd Rule are reporting requirements, technical corrections, authorizations, and no-cost policy changes. Exception: Senate-originated provisions which have no budget effect during the budget window do not violate the Byrd Rule, if the Chairman and Ranking Member of the Budget Committee and the authorizing committee certify that one of the following is true:

• the provision mitigates a budgetary provision; or

• the provision will result in substantial deficit reduction in an outyear (i.e., a year beyond the budget “window” of the Reconciliation bill); or

• budgetary effects are likely to occur in the event of new regulations, court rulings, or statutory triggers; or

• budgetary effects are likely but cannot currently be estimated.

4. Also, provisions outside a committee’s jurisdiction and provisions affecting Social Security violate the Byrd Rule.

The Byrd Rule and Conference Reports. In general, the Senate’s Byrd rule effectively limits Reconciliation legislation to “budgetary” provisions. Although conference reports are normally immune from further amendment, if a Byrd Rule point of order is raised and sustained against a provision in a Reconciliation conference report, the offending provision would be automatically stripped out and the legislative vehicle would cease to be a “conference report.” By losing conference report status, the Reconciliation legislation would be sent back to the House, where it would be open to further amendment. (This actually happened in December 2005 when Democrats successfully raised Byrd Rule points of order against the Deficit Reduction Act conference report, with the effect of sending the legislation back to the House of Representatives for another vote on February 1, 2006.)