Friday, July 15, 2022

A Narrow Path Forward on Reconciliation

David Super

    Last night, Senator Joe Manchin announced that he would no longer support including revenue increases and provisions addressing climate change in a reconciliation package.  That meant that those provisions – along with deficit reduction – would fall out of the bill.  This would leave a health-only package that lowers prescription drug prices and devote some or all the savings to continuing the American Rescue Plan Act’s enhanced premium tax credits under the Affordable Care Act and other coverage-enhancing measures.  Although a far cry from the reconciliation bill the House passed a year ago, this would still be arguably the most important piece of non-coronavirus social services legislation in over a decade. 

     This morning, Senator Manchin clarified that he still would like to move the energy/climate change package but wanted to await July inflation data before making a final decision to do so.  As Congress will be on its August recess when that data becomes available, this would mean pushing the reconciliation bill into September.  Thus, Senator Manchin is offering the Democratic leadership the choice between a health-only reconciliation bill now or the possibility of a reconciliation bill that addresses climate change and reduces the deficit, as well as the health issues, is September if July’s inflation report is encouraging. 

     This is, to say the least, an uncomfortable choice.  With the temporary enhanced premium subsidies expiring soon, delaying action risks chaos that will burden moderate-income people and tarnish the ACA in the public’s mind.  Delaying the health package also will give the pharmaceutical industry more time to pick apart the proposed prescription drug savings.  As more and more Democratic Members find themselves in difficult races and desperately needing campaign funds – or vulnerable to threats to fund their opponents – the extremely wealthy pharmaceutical industry will become increasingly difficult to resist. 

     Yet as climate change increasingly contributes to supply-chain problems that fuel inflation, passing on any opportunity to make a transformational down-payment on switching to renewable energy is a bitter pill to swallow. 

     In point of fact, Congress can do both:  pass a health-only reconciliation bill now and another to address climate change and reduce the deficit in September.  This post explains how that would work. 

     Under the Congressional Budget Act, the privilege to move legislation under special “reconciliation” rules – which preclude a filibuster – can only be bestowed by “reconciliation instructions” included within a congressional budget resolution.  Last year, Congress duly passed a budget resolution for federal fiscal year 2022 that included reconciliation instructions sufficient to enact the ambitious Build Back Better legislation. 

     Since then, all its work on reconciliation has been under the auspices of those reconciliation instructions.  The Congressional Budget Act has provisions preventing Congress – mostly the Senate – from passing legislation that is would reduce revenues below, or raise spending above, levels specified in reconciliation instructions.  It does not, however, prevent reconciliation from yielding more revenues or less spending than the reconciliation instructions envision.  Therefore, as the reconciliation package has shrunk over the past year, the reconciliation instructions have been no obstacle.  If you lose a lot of weight, you can still wear your old pants – although you may have trouble holding them up.  Therefore, last year’s reconciliation instructions can easily accommodate a health package, an energy/climate change package, or both. 

     The Senate Parliamentarian, however, has interpreted the Congressional Budget Act as allowing each budget resolution to authorize only one reconciliation bill of each of the three types permitted:  revenues, spending, and debt limit increases.  Because either a health package or an energy/climate change package would include both revenue and spending measures, it would use up the reconciliation opportunity and hence prevent the other package from moving under reconciliation rules based on last year’s budget resolution. 

     Congress could, however, pass another budget resolution:  one for federal fiscal year 2023.  Because it had still not used the reconciliation instructions in last year’s budget resolution, and because passing a budget resolution is an unpleasant and time-consuming process, Congress did not attempt to do so this Spring. 

     Under this scenario, Congress would take up and pass a health-only reconciliation bill this month and then return after Labor Day to pass a new budget resolution for the upcoming federal fiscal year 2023.  This would contain reconciliation instructions crafted narrowly to accommodate the anticipated energy/climate change package.  That legislation could then be enacted later in the month before Congress adjourns for the election. 

     This approach does have significant drawbacks.  First, it likely would put passage of the energy/climate change package off into the second half of September, after the August inflation data becomes available.  Given Senator Manchin’s repeatedly demonstrated sensitivity to monthly inflation reports, that could cause him to walk away from a deal he might have been willing to take if July’s CPI report is favorable. 

     Second, it would triple Republicans’ opportunities to force Democrats to vote on politically awkward amendments.  Although the Congressional Budget Act limits Senate debate on both budget resolutions and reconciliation bills, it allows an unlimited number of amendments.  Once the allowable time for debate is exhausted, this results in an unpleasant process known as “vote-a-rama.”  Amendments are brought up in rapid succession, with proponents and opponents each having just one minute to offer an elevator pitch, followed immediately by a vote.  This can go on for many, many hours. 

     Senate rules do impose fairly strict germaneness constraints on amendments.  For example, Republicans could not offer an amendment to fund former President Trump’s border wall on a reconciliation bill that only addresses health care.  And the Byrd Rule applies to amendments as much as to the underlying bill:  thus, Republicans could not offer amendments for unfunded upper-income tax cuts (because this would likely violate the budget resolution’s minimum revenue assumptions) or to change the Immigration and Nationality Act (because the impact of such changes would not be primarily fiscal).  Still, creative minds can devise of superficially appealing amendments that meet procedural requirements but would cause great damage to vulnerable people and institutions.  And germaneness is much less helpful in fending off amendments on a budget resolution, whose topic is the entirety of the federal budget (even if its reconciliation instructions are much narrower). 

     In years when the party moving a budget resolution or reconciliation bill has a more comfortable margin in the Senate, moderate and endangered senators take turns getting to cast politically popular votes while their colleagues ensure that the amendment still fails.  This, year, with no votes to spare and no Republicans likely to break with their leadership, Democrats need every single vote to defeat destructive amendments in vote-a-rama.  (As an aside, part of why attempts to bludgeon Sen. Manchin into supporting a reconciliation bill he did not like were foolish is that they did not take into account vote-a-rama:  Republicans would surely force him to vote on amendments to strip the very parts of the bill he has said he thought were misguided.) 

     Separating the health and energy/climate change packages and moving the latter under reconciliation instructions from a second budget resolution would therefore force Senate Democrats, including Senators Manchin and Sinema as well as vulnerable incumbents up this Fall, to participate in three vote-a-ramas:  one on each of the reconciliation bills and a particularly wide-open one on the second budget resolution.  And through all this, Democrats could not afford a single loss, could not license a single tactical defection.  (In theory, Senate Democrats could accept some particularly popular destructive amendments in vote-a-rama, go to conference with the House, and drop them there.  In practice, it is dubious whether they have time to go through all the steps that a House-Senate conference entails this late in the session.)   

     In reality, a reconciliation package that lowers prescription drug prices, dumps some of President Trump’s most egregious upper-income tax cuts, and spends the proceeds on renewable energy, health care access, and deficit reduction would help with the fight against inflation (in both the short- and the long-term) while addressing serious, urgent challenges facing our society.  Whether we can do both in the current political environment, however, is very much an open question.


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