Are Democrats About To Repeat The Mistakes The GOP Made on Budget Reconciliation In 2017?

In 2017. Republicans, in complete control of the federal government for the first time since 2005, went ahead with their campaign pledge to repeal Obamacare. Since no Democrats were willing to go along with this plan, Republicans decided to move ahead with the plan via a little known (though it has become much more common in recent years) procedural tactic called Budget Reconciliation. What followed were months of wrangling and multiple plans which ultimately failed thanks to the last minute no vote of former 2008 GOP Presidential nominee and Arizona Senator John McCain. Months later, Republicans used the same tactic to successfully pass their 2017 tax cuts (again, with no Democratic support).

At its core, budget reconciliation is a relatively uncontroversial process created as part of the Congressional Budget and Impoundment Act of 1974—the same measure that created the budget committees in both chambers, as well as the Congressional Budget Office, a nonpartisan agency to provide economic and budgetary advice to Congress. The act was passed to reassert congressional control over the spending process. The administration of then-president Richard Nixon declined to spend congressionally approved funds on programmes he disliked (by law Congress has the power of the purse, and decides how to spend federal money, but the president, through his executive agencies, is the one who actually spends it). The act compels a president who wants to spend money differently from how Congress has appropriated it to explain why, ask permission and delineate the fiscal impact of his decision.

It also creates a process, known as reconciliation, that lets Congress move quickly when considering legislation that aligns spending with fiscal priorities established in the congressional budget resolution. As mentioned before, it was used to pass the Trump tax cuts and Congress has enacted 21 reconciliation bills since 1980, the first year in which it was available.

Reconciliation bills – which can only be used once because they can only apply to the annual federal budget – have a certain set of rules which must be followed. Reconciliation bills must alter federal spending or revenue in a manner not “merely incidental to the non-budgetary components of the provision”—meaning that the fiscal impact must be the primary purpose of the proposed policy change. That disallows, for instance, using budget reconciliation to abolish a judicial circuit that the majority party dislikes, because even though that would alter federal spending, the bill’s principal purpose is not budgetary. A reconciliation bill also must raise the federal deficit by no more than the amount specified in the bill. This is why Republicans have used the tactic often for tax purposes. Bills also cannot change Social Security (meaning America’s system of state-provided old-age and disability benefits) or increase the federal deficit after ten years. Debate on such bills are limited to 20 hours (the Senate usually permits open-ended debate) and is not subject to a filibuster. This is reconciliation appeals to the Biden administration.

With Democrats holding a narrow 50 – 50 majority hinging on VP Kamala Harris’s tiebreaking vote, the only way the party is likely to pass major legislation, and avoid the 60 vote requirement of the filibuster. Getting ten Republican Senators to support in any major progressive legislation would have been a tough lift back when there were even progressive Republicans.

The Biden administration has clearly communicated it intends to pass its massive $1,9 trillion COVID Relief bill via reconciliation. Taking a page from the Obama administration’s initial actions via the ACA and the 2009 Stimulus Bill, Biden has pretended to be interested in bipartisanship. But, key tenants of the bill such as $500 billion for state and local aid (much of which would go to bankrupt blue states), and a $15 minimum wage, are non – starters for the GOP. Indeed, Biden has held two meetings with moderate GOP and Democratic Senators and recently rejected a $600 billon counterproposal, setting the stage for reconciliation to pass the bill.

Even if all key tenants of the bill pass reconciliation’s budgetary requirement and there is no guarantee the minimum wage hike would (the Senate parliamentarian would rule if it fits under reconciliation and then the full Senate approves or rejects by simple majority), Democrats could be setting themselves up for failure under their plan. Much as Republicans failed to corral their moderate members on repeal of the ACA Democrats are ignoring their moderate members opinions.

Exhibit A would be West Virginia Senator Joe Manchin. Manchin has been silent of late on the bill but last month expressed serious concerns about A) using reconciliation and b) with the size of the stimulus checks and hiking the minimum wage to $15. Other Senators such as Independent Angus King (ME) and Kyrsten Sinema (D – AZ) have expressed concerns. With Democrats bent on pushing forward with the bill as is they are hoping to drag wayward members in their wake. But due to the pink or dark red hue of some members states, the party has little leverage. Manchin recently indicated he would support the procedural move to initiate reconciliation but would vote against the current relief package as is. That, combined with no Republican Senator voicing support, would doom the bill.

If Democrats cannot get all 50 members of their caucus on – board with the bill it is doomed to fail. As is, it does not look like they even have a unified caucus around the bill which may explain why the Biden administration is slow walking the process. Plus, if Democrats use reconciliation for this plan, they cannot come back and use the procedure until 2021 and progressives have many, many, many items on their wishlist (infrastructure spending, hiking taxes on the wealthy, election reform).

It indeed does look like Democrats are repeating the mistakes the GOP made in 2017 on repealing the ACA. Due to their narrow majority in the Senate and even the House (223 – 212 at full strength), Democrats don’t really have any leverage over members in pink or red states. In essence, moderates like Manchin and Sinema hold all the power, and since their reelections rely on a bipartisan coalition their decisions will decide the fate of this bill. You can be sure they are factoring that into their decisions.


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