Biden’s Stimulus Hopes May Depend on ‘Reconciliation’

(Bloomberg) -- President-elect Joe Biden says he hopes for quick approval of his sweeping economic stimulus plan that would pump $1.9 trillion into the economy in the form of direct household assistance, jobless benefits and money for vaccine distribution, schools and child care. His first choice is for the measure to get the bipartisan support necessary to achieve the 60-vote supermajority needed to pass most legislation in the Senate. If not, there’s an alternative route: a fast-track process known as budget reconciliation, under which Democrats could use their slimmest-possible majority to pass at least parts of the bill on their own.

1. What is budget reconciliation?

It’s a procedure created by the Congressional Budget Act of 1974 that allows for expedited consideration of legislation related to spending, taxing and the federal debt limit. First, the House and Senate must agree to a budget resolution, which contains instructions to specific committees in each chamber and usually includes a deficit impact. Then, bills advanced in the name of “reconciling” tax and spending practices with that budget resolution need only a simple majority vote to win approval in the 100-seat Senate, rather than the 60-vote supermajority required to pass most measures. There are limits on what qualifies for reconciliation and on how many bills can be deemed as reconciliation each year.

2. Is it unusual?

Congress has passed more than 20 budget reconciliation bills since 1980, including deficit-reduction packages during the 1980s and 1990s, welfare reform in 1996, parts of the Affordable Care Act in 2010 and President Donald Trump’s 2017 tax-cut law.

3. Why would Democrats use it for a stimulus bill?

When they take control of the Senate in coming days, Democrats will hold just 50 of the 100 seats (counting two independents who vote with Democrats). They will be the majority party only because the vice president breaks ties in the Senate, and as of Jan. 20 that will be a Democrat, Kamala Harris. Finding 10 Republicans to support any Democratic initiative will be a tall task, and time is of the essence: Biden says the stimulus funds are needed right now. Should particularly contentious elements of the bill -- like Biden’s proposal to more than double the federal minimum wage to $15 -- bog down negotiations with Republicans, Democrats could try to pass what they can on their own, through reconciliation. It’s important to note that in that scenario, Democrats couldn’t afford to lose even a single vote among their members.

4. What can and can’t be in a budget reconciliation bill?

Ironically, it’s the legacy of a Democrat that could end up preventing some of Biden’s plans to become law through reconciliation. The Byrd rule -- named for Robert Byrd, a Democratic senator who represented West Virginia for 51 years -- requires that all provisions in a reconciliation bill have an impact on federal revenue, spending and deficits, and that no extraneous provisions are included. The rule has been a nuisance to both parties in recent history. For instance, Republicans had to ditch their preferred (and PR-friendly) title for their 2017 tax-cut law, the Tax Cuts and Jobs Act, because jobs aren’t directly related to revenue, spending or deficits -- though that name has stuck unofficially.

5. Which elements of Biden’s plan could fit within budget reconciliation?

Proposed stimulus payments of up to $1,400 per person, an extension and expansion of unemployment benefits and an expansion of several tax credits -- including those for children, dependent care and paid leave -- would in all likelihood pass muster as legitimate elements in a budget reconciliation bill. Proposed new spending on vaccines, virus testing, state and local aid, schools and child care might be acceptable, depending on how they’re crafted. Usually, reconciliation bills are aimed at curbing deficits, not expanding them, but there’s no reason the process can’t be used for additional funding, said Gordon Gray, a former Senate Budget Committee aide.

6. Which elements would likely not qualify for reconciliation?

Harder to justify as appropriate parts of a reconciliation bill are Biden proposals to mandate that employers provide paid leave for employees during the pandemic and to ask the Occupational Safety and Health Administration to create a new Covid-19 protection standard for frontline workers. The bill likely could approve funding for those measures but couldn’t create the programs if there isn’t a direct budget connection. In the past, lawmakers have been able to work around that requirement by portraying program language as the terms and conditions attached to the money. So while funding for rental assistance would likely be fine, a proposed moratorium on evictions would require some justification. There is a heated debate in particular over whether raising the federal minimum wage can be done via reconciliation.

7. What can Republicans do to prevent Democrats from using reconciliation?

Any senator can challenge any part of a reconciliation as extraneous by raising a point of order or offering an amendment to strike the provision. The Senate parliamentarian rules on whether the objection is valid; if so, the offending provision is typically deleted from the bill. While the Senate has traditionally deferred to the rulings of the parliamentarian on interpreting arcane rules, the actual ruling is made by the chair -- which, when Democrats need her in the chamber, will be Harris, the vice president. It would take 51 senators to overturn a ruling of the chair, and Republicans only have 50 votes. Budgets are also subject to what is known as a vote-a-rama, when senators can offer theoretically unlimited amendments to try and force Democrats to take tough votes. At some point, however, Harris could shut down those efforts as dilatory.

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