tax policy center
tax topics
 
Tax Policy Center
 
border
   Entry 4 of 6  
 

The Budget Process: What is reconciliation?

Congress uses the reconciliation process when it wants to legislate policy changes in mandatory or other direct spending or tax laws to achieve the budget resolution’s goals.

  • Budget resolutions may contain "reconciliation instructions" that tell the relevant committees how much they should alter revenue or entitlement outlays to make them consistent with the resolution’s targets.
  • The committees’ actions responding to these instructions are then bundled into a reconciliation law. Assuming they are free of points of order, reconciliation laws can be passed in the Senate by a simple majority; they do not require the sixty votes necessary to shut off a filibuster.
  • The content of reconciliation laws is limited by the Senate’s Byrd rule, which, in general, disallows items that do not affect outlays or revenue. The Byrd rule also prohibits initiatives that would increase the deficit beyond the time horizon used for the budget resolution. This is the main reason that the tax cuts of the early 2000s and certain other tax initiatives are temporary.
 
border
   Entry 4 of 6