Including the Budget Reconciliation Process

In March 1976, Saturday morning television featured a new video segment called, “I’m Just a Bill,” using a fun cartoon aimed at children to visualize the complex path of the U.S. legislative process describing how a bill becomes a law. Maybe you remember the jingle:

“I’m just a bill, yes I’m only a bill and I’m sitting here on Capitol Hill.”

A memorable segment to many of us, but even with the aid of that video, the process is one most would agree they don’t completely understand. 

How the Process Begins

National laws are created in the legislative branch of government, made up of the House of Representatives and the Senate, known collectively as Congress. The process of creating a bill starts when a bill is proposed for a new law or a revision to an existing law. Ideas for bills originate from a variety of places, including from a representative or senator themselves, one of their staff members, the President, a committee, a citizen, or a citizen’s group.

• A bill can be written by anyone. Typically, a bill is drafted by a senator or representative or one of their staff members. Sometimes an outside expert or lobbyist initiates the text of the bill for the staff to complete.
• The originator of the bill is the primary sponsor. Prior to introducing a bill, the sponsor tries to gain additional support for the bill by finding cosponsors – sometimes this process is only within the same party (partisan) or it could be bipartisan with cosponsors from both parties.
• Sponsors of a bill often seek cosponsors to demonstrate support and improve its chance of moving forward or passing. There is no limit to the number of cosponsors a bill can have.

Introducing a Bill

Bills can be introduced only when the chamber is in session, and there are several options for submitting them for consideration. In the House, the text of the bill can be physically placed in the wooden box called “the hopper” located on the clerk’s desk on the chamber floor or it can be transmitted electronically to a dedicated email server maintained by the Office of the House Clerk. In the Senate, the bills are submitted to clerks on the Senate floor.

• A clerk assigns a bill number and includes the prefix “S” for bills originating in the Senate or the prefix “HR” for bills from the House of Representatives.
• Sometimes identical bills are introduced at the same time in both the House and Senate and are called “companion” bills.
• The chamber leader (Speaker of the House or Presiding Officer of the Senate) assigns the bill to an appropriate committee for discussion, research, and revisions.
• When a bill is “taken up,” the clerk includes it on a committee’s calendar.

Committees

Actions taken by the committees are an important part of the legislative process.

• Each committee oversees a specific topic or policy area. As an example, the Senate Committee on Health, Education Labor & Pensions reviews bills on those related topics.
• In the 119^th Congress, there are currently 25 Senate committees, with approximately 70 subcommittees, and 26 House committees, with approximately 108 subcommittees. The actual number of committees changes with every new Congress.
• Although bills are assigned to a committee, not all bills introduced ever make it to a vote and will “die in committee.” A recent estimate showed less than 1% of bills introduced became law, according to data from Quorum.
• Failure to act will also “kill a bill” in committee.

During the time in committee, debate and discussion of each bill takes place. The committee could call industry experts for in-person hearings or send the bill to a subcommittee for additional research. After initial discussion, committee or subcommittee members meet in a “markup” session where they will revise the text of the bill. This is the time where there is negotiating between members with the discussion taking the form of, “if you add or remove this topic, I’ll vote for it.”

• After discussion, the chamber must approve, reject or amend the text before a final vote is taken.  A vote can also be taken to “table” or postpone it indefinitely.
• If there are changes, the committee makes revisions before sending the bill to the chamber.
• If the committee decides not to report the legislation, the bill dies.
• If the vote is favorable, the committee “orders a bill reported” and sends the bill to the chamber to be voted on by the Senate or House.

Floor Action

When a committee votes in favor of a bill and orders the bill reported, the bill will get a larger audience of the full House or Senate.

• Bills are entered either on the House or Senate calendars. If the bill is on a pressing topic, it may be considered right away. Other bills may wait for weeks or months or may never be scheduled at all.
• The bill is read, section by section, giving members the chance to propose amendments that are either accepted or rejected.
• Additional debate and negotiation happen.
• Bills are voted on.

Voting

With every vote, it’s important to make sure there is an adequate “quorum,” or a required minimum number of members that must be present to make sure the voting is valid.

• A “quorum call” is a vote making sure there are enough members present to have a final vote. If no quorum exists, missing members will be “rounded up” to come and vote.
• If the vote is passed by the majority, the bill moves to the other chamber, unless there is already another similar bill under consideration.
• If the vote is unfavorable, the bill dies.

Bill Sent to the President

If the House and Senate both pass the same bill, the bill is sent to the President.

• The President has four options:
  • Sign the bill into law.
  • Not sign the bill within 10 days of receiving it.
  • Veto the bill within 10 days of receiving it and send it back to its chamber of origin while the chamber is still in session with objections noted.
  • Not sign the bill nor send it back to the chamber within 10 days while the chamber is still in session. With this inaction, the bill becomes a law.
• If the chamber of origin adjourns abruptly without giving the President 10 days to sign or veto the bill, the unsigned bill does not become law. This is known as a “pocket veto.”

If the President vetoes the bill and notes the reasons why, Congress can still attempt to override the veto.

• The chamber leader can then:
  • decide to kill the bill
  • postpone or table for the future
  • send it back to committee, or
  • open another debate on the floor and call for another vote.

Bill Becomes a Law

All of the above processes are followed so that a bill becomes a law. Once a bill is signed by the President, it becomes a law. Or, if both the House and Senate pass the bill by a two-thirds majority, the President’s veto is overridden, and the bill becomes law.

The Reconciliation Process

While the above steps address a bill becoming a law in the normal manner, reconciliation is a separate path for legislation. Reconciliation was first used in 1980 after being created by the Congressional Budget Act of 1974. It’s been used to enact 23 bills into law since, including the Inflation Reduction Act in 2022.

Federal budget reconciliation is an optional procedure used by the Senate to fast-track and pass legislation on the debt limit, spending and taxes (revenue) with a simple majority as a faster way of getting to the President for signature. Because it can only be used for specific topics, legislation can move forward quickly rather than be subject to a filibuster, used as a delay tactic by prolonging debate on a subject, or a 60-vote supermajority (three-fifths majority) to pass the legislation.

Budget Resolution Plan

The Congressional Budget Act allows the reconciliation process if both the House and Senate agree on a budget resolution. So, before Congress works on the reconciliation bill, the first step is to develop and pass a budget resolution framework for annual spending and tax bills. It is not required to get the President’s signature nor does it become a law. However, it’s still a crucial part of the reconciliation process because it identifies spending requirements.

Budget committees in both the House and the Senate work to establish the fiscal year budgets and then provide general instructions, known as reconciliation directives, to various other committees for their recommendations on deficit reduction and spending plans. After the committees finish their review, the House and Senate budget committees review the recommendations and compile the larger reconciliation bill, also known as an omnibus bill.

Limitations on the Reconciliation Process

There are limits on what can be included in the reconciliation process. Only topics on the debt limit, spending, and taxes can be part of this process. Discretionary spending cannot be part of this process, including provisions that are part of the normal appropriations process such as annual funding for the various departments.

The Byrd Rule

Another limitation of the reconciliation process is known as “The Byrd Rule”, named for former Senator Robert Byrd, first adopted in 1985. Because reconciliation bills use an expedited process, the Byrd rule was meant to limit the use of reconciliation to move an agenda not focused on spending and taxes. In addition, the rule only applies to the Senate so that members of the House don’t include provisions that could be struck out and that would require additional time for voting multiple times.

The Byrd rule limits the scope of provisions in the reconciliation bills, preventing “extraneous” provisions that do not have budgetary significance. The Byrd rule uses six tests to identify the extraneous provisions. Provisions that are extraneous (i.e. cannot be part of a reconciliation bill) fall under one or more of the following criteria:

1. Provision would be outside of the committee jurisdiction
2. Committee would not be complying with its reconciliation directives
3. Would have no budgetary effect
4. Would increase the deficit beyond the current year
5. Would produce a change in revenues that is incidental to non-budgetary components of the bill
6. Would change the Social Security Act.

(See Q&A 6 of the Reconciliation Process: Frequently Asked Questions on Congress.gov.)

Additional Resources for Legislation

• Log into the International Foundation website for access to our U.S. Legislative Tracker webpage featuring selected legislation related to employee benefits.
• The Congress.gov website offers a video interpretation of the legislative process.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.