Democrats’ Go-It-Alone Strategy

So if Democratic leaders and the White House decide to use special “reconciliation” budget rules to try to pass health care overhaul legislation this fall without Republican support, how would it work?

Every year, the House and Senate draft a concurrent budget resolution   – a joint blueprint of anticipated federal spending and revenues for the coming fiscal year. In order to get the reconciliation process going, the House and Senate Budget Committees may include a “reconciliation directive” in the budget resolution. The budget committees agreed to include a directive for health care legislation last spring at the behest of Democratic leaders and White House Chief of Staff Rahm Emanuel.

The directive, if used, would instruct the authorizing committees with jurisdiction to produce legislation by Oct. 15 that meets the mandatory spending or tax targets set out by the budget committees. In the case of health care, the authorizing committees would be Finance and the Health, Education, Labor and Pensions in the Senate and Ways and Means, Education and Labor and Energy and Commerce in the House. It is expected that the Democratic leadership would use the current bills as the basis for the new legislation.

If included, the reconciliation time frame would be the same as the budget resolution, with separate dollar amounts specified for each of the five years in the budget resolution.

Under the terms of the reconciliation directive, the Senate Health and Finance committees each must report back to the Budget Committee with changes in the law within their jurisdictions that would save $1 billion over the next five years.  That should be relatively easy for the Finance Committee, which oversees the tax code and Medicare and Medicaid. But the Health Committee, which oversees student loans and labor laws, might find that task more difficult. That committee might, for example, have to make changes in the guaranteed student loan program to claim savings, according to G. William Hoagland, a former Republican staff director of the Senate Budget Committee.

The House committees would face a similar deficit-reduction challenge.

Once those committees finish drafting their sections of health care reform, the House Budget Committee would package the measures from the three committees into one giant bill and send it to the floor for a vote, while the Senate Budget Committee would do the same with the work of Finance and health committees.

When those combined bills reach the House and Senate floors, members would have a maximum of 20 hours to debate them – and almost no opportunity to offer amendments – before taking a vote.  But here’s where it gets complicated – and potentially daunting if the Democrats decide to go this route.

The bill immediately becomes subject to challenges on the floor from any senator who asserts that a provision runs afoul of the “Byrd Rule.” That rule makes any provision vulnerable to a point of order if it is deemed extraneous to the purpose of amending entitlement programs, such as Medicare and Medicaid, or changing the tax law.

The Byrd rule bars any increases in entitlement spending or tax cuts that would cost the government beyond the five years covered by the reconciliation directive, unless the out-year costs are fully offset by other provisions in the bill. Some of the health care proposals that have been approved by House and Senate committees are designed to be phased in over the coming decade and might not have any budgetary impact during the five years covered by the reconciliation bill. These provisions could be vulnerable to a challenge. Moreover, the Byrd Rule bars any authorization of discretionary (non-entitlement) spending.

Assuming that the House and Senate bills survive the gauntlet on the floor, they would then be sent to a conference of House and Senate negotiators to be melded into a single piece of legislation. That final conference report, as it is called, would be returned to the floor for a final vote by the two chambers – under strict rules that set a timetable for action and that prohibit any amendments. Here again, the compromise measure is also subject to Byrd Rule objections that could force the bill back into conference, or ping-pong between the chambers as was the case with some recent Republican reconciliation bills. If it survives all of that, the bill would then be sent to the president for his signature.