Order Code 98-814
Updated December 8, 2006
Budget Reconciliation Legislation:
Development and Consideration
Bill Heniff Jr.
Analyst in American National Government
Government and Finance Division
Budget reconciliation is an optional two-step process, provided by the Congressional
Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344, 88 Stat. 297-332), that Congress
may use to assure compliance with the direct spending, revenue, and debt-limit levels set
forth in a budget resolutions agreed to by Congress. First, Congress includes
reconciliation instructions in a budget resolution directing one or more committees to
recommend changes in statute to achieve the levels of direct spending, revenues, and debt
limit agreed to in the budget resolution. Second, the legislative language recommended
by committees is packaged “without any substantive revision” into one or more
reconciliation bills, as set forth in the budget resolution, by the House and Senate Budget
Committees. In some instances, a committee may be required to report its legislative
recommendations directly to its house. For more information on budget process, see
[http://www.crs.gov/products/guides/guidehome.shtml].
Development of Reconciliation Legislation
The reconciliation process begins with the inclusion in a budget resolution of
instructions to committees to change spending and revenue laws. The instructions
typically indicate the committee(s) directed to recommend changes and a date by which
the committee(s) must submit its recommended legislation to its respective Budget
Committee. The House directives usually specify recommended levels of direct spending
and revenue by committee, while the Senate directives usually specify the amount of
change. Reconciliation directives may also specify the amount by which the statutory
limit on the public debt is to be changed and instruct the House Ways and Means
Committee and the Senate Finance Committee to recommend such a change.
The dollar amounts in reconciliation directives are based on assumptions about
existing policies and the budgetary impact of certain policy changes. In some instances,
the assumed changes in existing laws are printed in the committee or conference report
accompanying a budget resolution. Committees, however, are not bound by these
assumptions or suggestions.
If only one committee is required to recommend legislative changes, the committee
reports its recommended legislation directly to its chamber. If more than one committee
is directed to report legislative changes, which has often been the case, those

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recommendations are submitted to the Budget Committees. The House and Senate
Budget Committees are responsible for assembling the committee recommendations into
one or more omnibus bills. The CBA does not allow the Budget Committees to make any
substantive changes to these recommendations, even when they do not comply with the
reconciliation instructions. Any lack of compliance, however, may be addressed during
floor action, usually by an amendment offered to achieve compliance.
Consideration of Reconciliation Legislation
Once the Budget Committees report reconciliation legislation to their respective
chambers, consideration is governed by special procedures. These special rules serve to
limit what may be included in reconciliation legislation, to prohibit certain amendments,
and to encourage its completion in a timely fashion.
Section 310(g) of the CBA prohibits the House or Senate from considering any
reconciliation legislation, or any amendment to a reconciliation bill, recommending
changes to the Social Security program. In the Senate, Section 313, commonly referred
to as the Byrd rule, prohibits extraneous matter in a budget reconciliation bill. Under the
Byrd rule, extraneous matters generally include those that would have no direct budgetary
effect, that would increase spending or decrease revenue when a committee is not in
compliance with its reconciliation instructions, or that would increase the deficit (or
reduce the surplus) for a fiscal year beyond those covered by the reconciliation legislation.
Section 310(d) of the CBA bars the House or Senate from considering any
amendment to a reconciliation bill that would increase the deficit. For example, an
amendment that would increase spending above the level set forth in the bill must be
offset by an equivalent amount of spending reductions, revenue increases, or a
combination of both. However, Section 310(d)(2) provides that in the Senate an
amendment to strike out a provision in the bill is always in order. Also, the Congressional
Budget Act prohibits nongermane amendments to a reconciliation bill.
During floor action on reconciliation legislation, the Senate and House follow
different procedures and practices. In the Senate, debate on a budget reconciliation bill,
and on all amendments, debatable motions, and appeals, is limited to not more than 20
hours. After the 20 hours of debate has been reached, consideration of amendments,
motions, and appeals may continue, but without debate. The Senate often will consider
a substantial number of amendments. The CBA does not provide any debate limitations
on a reconciliation bill in the House. The House, however, regularly adopts a special rule
establishing the time allotted for debate and what amendments will be in order. The
House special rule typically has allowed for consideration of only a few major
amendments.
The congressional budget process timetable outlined in Section 300 of the CBA, as
amended, sets June 15 as the deadline for Congress to complete action on any required
reconciliation legislation. However, Congress frequently does not meet this deadline.
Final action on reconciliation legislation usually depends on whether or not there is
substantial agreement between Congress and the President on the substantive provisions.