Budget reconciliation is not ideal, but it could work.
The US federal government is rapidly falling behind on climate change and clean energy policy. If Republicans keep the presidency or either house of Congress in 2020 — if they retain veto power over federal legislation — it will continue falling behind. They’ve made that very clear.
But what if Democrats take all three branches?
They will have a brief window to act. Voters typically tack back after a sweep election, punishing the president’s party (see: 2010; 2014; 2018). So Democrats will likely have two years in which to get something big done.
What kind of climate policy could they get passed?
One looming obstacle is the Senate filibuster. Use of the filibuster — which requires a 60-vote supermajority to overcome — used to be rare, but during Obama’s administration, Republicans in the Senate, led by Mitch McConnell, made it routine. As things now stand, effectively all Democratic bills are filibustered, meaning that all bills require a supermajority to pass.
Even Democrats’ most optimistic 2020 projections have them winning 51 seats in the Senate, maybe 52. That means they would need eight or nine sympathetic Republican votes to get anything past a filibuster. They are … not going to get those votes. For anything.
So Democrats are not going to pass anything unless they kill the filibuster, right?
That is certainly what many people think. It’s the reason several presidential candidates, among them Elizabeth Warren, Jay Inslee, and Pete Buttigieg, have advocated for scrapping the filibuster. (Other Democrats, like Sen. Jeff Merkley of Oregon, have proposed changing the rule to restore the “talking filibuster,” which would force objecting senators to actually stay on the floor, talking, as long as they wanted to delay a bill.)
But there is another possibility, one less often touted in public by Democrats but frequently discussed behind closed doors: budget reconciliation.
The idea of using reconciliation as a vehicle for climate policy has been floating around since at least 2009, and as 2020 approaches, it has returned with a vengeance. I’ve spent the past week or so discussing it with a variety of Senate scholars and current and former aides. In this post, I’ll summarize what they told me about what budget reconciliation is, what type of climate policy might pass through it, and the political implications of using it.
The TL;DR version: It’s a special kind of bill meant to reconcile the federal budget that only requires a majority vote in the Senate to pass. In an age of partisan gridlock, the boundaries of its use have been pushed by both parties. “As polarization has made it harder to legislate under regular order,” says Molly Reynolds, a congressional scholar at the Brookings Institution, “the pot of gold at the end of the reconciliation rainbow has become more and more valuable as a way to pursue party-defining achievements.” To get Green New Deal-size things done through reconciliation, Dems would have to push its boundaries even further.
Pursuing policy objectives “is not what the drafters envisioned for the reconciliation process,” says Bill Hoagland, a onetime Senate staffer now at the Bipartisan Policy Center, but these days “reconciliation is being used by both sides to carry out much broader public policy goals.”
It is yet another norm, crumbling, and it forces Democrats to make a decision they’ve faced again and again in the face of Republican radicalization: Do they take advantage of crumbling norms to get things done? Or do they respect and attempt to restore the norms? As ever, there is no good answer.
My take — what Ezra Klein concluded in his recent piece on reconciliation and health care — is that even in terms of norm-busting, abusing reconciliation seems less defensible than simply restoring majority rule by scrapping the filibuster. To get truly adequate climate policy, or health care policy, or any policy at all, the majority needs to be able to legislate. It’s fundamental.
Still, if it’s to be reconciliation, there is quite a bit of room to maneuver — different levels of ambition and chutzpah that Democrats might bring to bear on the process. We’ll get into that in a minute, but first, we must pause for a brief civics lesson.
Have a sip of coffee. We’re going to talk budget.
What is budget reconciliation?
If you want a deep dive into the history and purpose of reconciliation, I highly recommend Dylan Matthews’s explainer on the subject. Here I’ll just try to cover the basics.
It all goes back to the Congressional Budget Act of 1974, which attempted to impose some order on the way Congress passes a federal budget. (Among other things, it created the Congressional Budget Office, which provides lawmakers with objective budget analysis.)
Here’s how the budget process works, as laid out by the CBA. First, the House and Senate budget committees produce and pass a budget resolution, which sets an overall cap on federal discretionary spending and allocates spending to various areas (note, this first step alone has been no easy task in recent years).
Then Appropriations Committees pass bills on various subjects, within those spending parameters.
But wait. Appropriations committees only control discretionary spending. A huge chunk of the federal budget is taken up by mandatory spending, prescribed by previous laws, things like Medicare, Medicaid, and food stamps. Mandatory spending falls under the purview of other committees. And then there’s the tax code, controlled by the Senate Finance and House Ways and Means committees.
In order to keep federal spending within the cap set by the budget resolution, sometimes mandatory spending programs and the tax code must be futzed with. Thus, reconciliation, a process to make sure all the spending numbers from all these committees add up.
Typically once a year, a budget reconciliation bill is passed in the Senate by a simple majority vote. Debate is limited to 20 hours, and non-germane amendments are prohibited — it is, as Matthews says, much easier to pass than most bills.
Because it is so much easier to pass, reconciliation has carried increasing freight throughout the years. It was used to pass programs important to Bill Clinton and George H.W. Bush. It was used to pass the George W. Bush tax cuts. It was what allowed Obamacare to pass and what enabled Trump’s recent tax cuts for the wealthy.
Not just anything can be passed via reconciliation, though.
The Senate is limited only by the Senate
Here’s where things start to get fuzzy. It’s important, when discussing the boundaries of Senate procedure, to remember that the Senate largely imposes those boundaries on itself, through self-adopted rules and norms.
Over the past decade, as Republican Senate Majority Leader Mitch McConnell has trampled on one Senate norm after another in pursuit of power, those boundaries have begun to look less like fixed features of the landscape and more like choices.
The filibuster itself was one such norm. When McConnell needed it to block Democratic bills, he made it routine. Now he is jamming through right-wing judges at the rate of several a week, on a simple majority vote, with debate limited to two hours. Yes, two hours.
McConnell saw that he needed to scrap the filibuster — in the case of judges, a particular interest of conservatives — in order to accomplish his goals. So he did. He values those goals more than precedent or procedure.
The same is ultimately true of any of the rules discussed below: They are imposed on the Senate by the Senate, and could be changed by a majority vote in the Senate. Whether to respect them and leave them unmolested is not a choice about law; it’s a choice about norms. And the question, in the end, is whether the importance of those norms outweighs the benefits of the policies that might be passed by violating them.
Over and over again, Republicans have chosen outcomes over norms. If Dems take power, they will face the same choice, repeatedly.
With that said, let’s talk about the current boundaries of reconciliation.
What restrictions limit budget reconciliation?
The big and most obvious limitations are that a budget reconciliation bill is typically only passed once a year, cannot create or change regulations, and cannot create or direct any discretionary spending (things like research, defense, and environmental protection). It can only mess with mandatory spending or the tax code.
Within that basic framework, the biggest limitations are imposed by the “Byrd Rule,” introduced by then-Senate Minority Leader Robert Byrd in 1985 (and subsequently incorporated into the CBA in 1990). He wanted to prohibit “extraneous” measures in reconciliation bills. He defined as extraneous any measures that (quoting Matthews): “change Social Security; don’t change the overall level of spending or revenue, or where such a change is merely ‘incidental’; increase deficits outside the 10-year budget window, and/or are outside the jurisdiction of the committee recommending them.” All reconciliation bills receive a special analysis to see if they abide by these restrictions, a process known semi-affectionately as a “Byrd bath.”
This set of restrictions creates a kind of conceptual puzzle into which reconciliation policies must fit. They must materially affect spending or revenue, but they must balance out over the budget window (typically 10 years). Any new spending or tax expenditure must be paid for within that window.
Remember how George W. Bush passed a bunch of tax cuts for the wealthy and then during Obama’s first term there was an enormous battle over whether to reauthorize them? Bush’s tax cuts were set to lapse abruptly after 10 years. They had to, in order to balance out the 10-year budget window, pass a Byrd bath, and be included in a reconciliation bill. (Donald Trump’s tax individual tax cuts also expire after 10 years.)
Beyond the Byrd Rule, there are other, more recent rules governing reconciliation. Matthews summarizes:
From 2007 to 2011, Democrats and Congress further banned reconciliation from being used to increase deficits; Republicans junked that rule upon retaking power in the House. Since 2011, Republicans have adopted rules that block reconciliation’s use to expand mandatory spending at all, even if such spending is offset or more than offset by other cuts or taxes. That would effectively rule out using reconciliation to set up programs like SCHIP or boost Obamacare subsidies or expand the EITC, as it’s been used to do in the past.
In addition to rigging the rules in their favor, Republicans egregiously violated a number of longstanding congressional norms to get their 2017 tax cuts passed. That bill explicitly pursued ideological goals — to enrich the already rich and undermine public health care — and was passed in an unprecedentedly rushed and chaotic fashion.
“They abandoned all the congressional processes that have been developed over the years to promote transparency and encourage informed policymaking,” says law professor and former congressional staffer Greg Dotson. “They didn’t hold hearings on the legislative proposals. They didn’t negotiate with, or even adequately inform, the minority party. They didn’t collect expert views on the legislative language before it was acted upon. They disregarded the Congressional Budget Office. The full list of precedential breaches is really quite impressive.”
It’s clear that the longer Republicans retain power, the less they will allow rules or precedent to restrain them. “They’ve already demonstrated that they have no restraint,” says Sen. Jeff Merkley of Oregon.
If Democrats take power, are they going to treat that rushed and chaotic process as precedent? Or will they attempt to restore the norms Republicans have trampled? The answers to those questions create the parameters in which Democrats might act on climate policy through reconciliation.
What sort of climate policy might pass through reconciliation?
With a majority, Democrats can fairly easily change the recent rules Republicans have imposed on reconciliation. “Republicans got a ruling of the Senate parliamentarian [the congressional officer who adjudicates disputes over rules] that enabled them to increase deficits by using reconciliation,” says Merkley, “the exact opposite of what it was intended for. That’s a very significant change and a demonstration of the fact that this loophole can move in different directions.”
Let’s assume for the moment that Democrats will abide by the Byrd Rule: All reconciliation provisions must materially affect federal spending or revenues (and that budget impact must be more than “incidental” to the purpose of the provision), and the bill as a whole cannot raise the budget deficit outside the budget window covered by the bill, typically 10 years.
What can Dems do on climate policy within those parameters? The answer seems to be: a lot. But exactly how much depends on how aggressive they are willing to be in pushing the boundaries of reconciliation.
Ambition level 1: ambitious
There is an enormous amount possible within Byrd parameters. Just about any kind of tax charge or expenditure is fair game, along with existing and new mandatory spending.
Congress could create a federal Green Bank and unleash a huge round of green infrastructure spending — new transmission lines, smart-grid upgrades, high-speed rail, public transit — across the country. It could help fund state climate action plans. It could increase, improve, and extend tax rebates for zero-emission vehicles, renewable energy, energy storage, and carbon capture. It could create new tax rebates, to encourage everything from distributed energy to green manufacturing, regenerative agriculture, and community-based resilience.
Medicare, Medicaid, food stamps, and unemployment benefits are all mandatory spending. “This may be where a just transition can begin,” says Greg Carlock of Data for Progress, “by adding funds and eligibility requirements for states to open up entitlements to workers leaving fossil fuel industries.” Similarly, mandatory spending in other departments (think Education or Energy) could be tweaked to support a comprehensive climate agenda.
Jay Inslee’s recent Evergreen Economy Plan contains dozens more ideas for how to channel federal investment for maximum climate impact.
How to pay for all this? One obvious idea is a carbon tax, which is likely to be on the table if it comes to reconciliation. Perhaps a tax-and-dividend system that returns tax revenues to citizens on a per capita basis will be discussed, though I think that would be a huge mistake in this context — the spending should go to clean energy!
To help raise revenue, the bill could also raise excise taxes on fossil fuels, roll back fossil fuel subsidies, roll back the recent Trump tax cuts, or implement any number of new taxes on wealthy people or financial institutions. (Elizabeth Warren has a few ideas.)
With some thought and a modicum of ambition, a reconciliation bill could be hugely significant for climate. Some Green New Deal activists are urging Chuck Schumer to start any new Democratic term with something like this, using reconciliation to pass a “greener American Recovery and Reinvestment Act, on steroids,” as Evan Weber of the Sunrise Movement puts it. (It’s not often remembered this way, but Obama’s stimulus was, among other things, the largest clean energy bill in US history.)
This would mean a different way of thinking about climate strategy. Rather than viewing climate policy as a liability, a one-shot-only act of falling on the sword (which is how many legislators view the House passing the Waxman-Markey climate bill in 2009), Democrats could make their opening bid on climate something positive and popular, i.e., spending money!
These investments would span the country, stimulate the economy, and create millions of jobs. People like that sort of thing. It might even expand the political map for Democrats and enable them to do more climate policy.
Ambition level 2: super ambitious
One of the toughest restrictions on reconciliation is that it can only tax and spend — it cannot be used to make regulatory policy changes. (That’s why, when Republicans were attempting to repeal Obamacare in 2017, they were only going after the taxing and spending portions. They could not repeal the rules on health insurers through reconciliation. In the end, they failed anyway, because they couldn’t find 50 votes for it.)
This rules out quite a bit of important climate policy, most notably performance standards, which have proven enormously effective in reducing greenhouse gas emissions. A reconciliation bill can’t change federal fuel economy standards, appliance standards, building codes, or anything of that sort.
But reconciliation might still be configured to reach similar goals.
One key fact here is that while reconciliation cannot direct discretionary spending — those year-to-year decisions are still in the hands of appropriators — “you can create new entitlements that act in many ways like discretionary spending,” says Zach Moller, a former Senate Budget Committee staffer now at Third Way. And, of course, the tax code is fair game.
Imagine, if you will, a system of federal tax fees and rebates on vehicles. For each vehicle class, vehicles that fall under the average fuel efficiency of the class pay a proportionate fee; those that exceed the average receive a proportionate rebate. Each year, automatically, the average for each vehicle class is recalculated and the fees and rebates are adjusted accordingly. (You could implement it at the level of the individual vehicle or at the level of vehicle manufacturer, whichever worked best.)
This kind of “feebate” program would certainly affect federal spending and revenue, thus presumably satisfying the Byrd Rule. But it would have the effect of imposing a perpetually rising fuel economy standard on vehicles. It would be CAFE standards by other means.
Or imagine a federal clean energy standard for utilities, but instead of being imposed directly, it is tied to the federal wire charges utilities pay to move electricity over long-distance transmission lines. Just adjust the charges so that it costs less to transport clean energy. (Thanks to Mike Carr, a former senior counsel to the Senate Energy and Natural Resources Committee, for this idea.)
You could do something similar with performance standards on appliances, buildings, factories, or what have you — translate the standard into a feebate program, and voila, it affects spending and revenue. And because feebate programs automatically balance out financially, there’s no worry about the 10-year budget window.
Similarly, pollution standards could be translated into fees. “Congress wouldn’t be able to use reconciliation to require natural gas producers to use state-of-the-art technology to prevent fugitive methane emissions,” says Dotson, “but they could levy stiff and appropriate fees on any producer not using state-of-the-art technology.”
If you really stretch your brain, you can imagine ways of translating just about any climate policy into some kind of revenue or spending equivalent. Is there any limit to this kind of bankshot policymaking in reconciliation?
Well, yes. Her name is Elizabeth MacDonough. She is the Senate parliamentarian, the congressional officer charged with advising the Senate on rules and procedures, and has been since 2012. (She is the first woman to hold the position.) If Democrats introduce a reconciliation provision and Republicans challenge it under the Byrd Rule, she advises the chair, who then issues a ruling. “No one’s opinion matters more than hers,” says Moller.
The fuzzy area, where MacDonough will likely be called upon, has to do with whether a provision’s changes in spending and revenue are “incidental” to its purpose. There’s no clear definition of “incidental,” so she will be making some judgment calls, and it’s difficult to know how far she would let this kind of policymaking-by-proxy go on.
Which brings us to …
Ambition level 3: berserker
If Democrats truly wanted to declare all-out partisan warfare, they could fire the parliamentarian and replace her with someone committed to the widest possible scope for reconciliation.
Or they could have a Democratic VP do what Bernie Sanders staff director Warren Gunnels threatened on Twitter: rule that any judgment of the parliamentarian that goes against Democrats can be overruled by a simple majority vote. (This is what Ted Cruz advocated during the Obamacare repeal debate, though his colleagues didn’t take him up on it.) That would effectively throw the budget reconciliation process open to anything that could get a majority vote, including, Gunnels says, Medicare-for-all.
Everyone I spoke to views this strategy as both unlikely and unpleasant to contemplate. Josh Huder, a scholar of congressional procedure at Georgetown’s Government Affairs Institute, calls it “dangerous, bordering on authoritarian.” It would destroy one of the last Senate norms still standing.
“The principle here is that the presiding officer in a deliberative assembly isn’t supposed to make procedural rulings according to the views of whoever sits in the chair,” says political scientist Sarah Binder of George Washington University. “The expectation is that the chair will rule according to existing rules and past interpretations. So in that sense, I do see it as a quasi-nuclear move in itself.”
Among other things, it would definitively destroy any possibility of even a small handful of Republican votes on any provision. “You will create a toxic situation where all members of the other party will band together,” says Moller.
Every provision would be challenged; every overriding of precedent would require another vote. Almost every single Democrat in the Senate would have to vote in favor of violating the rules, again and again.
It’s like killing the filibuster, but doing it in the least defensible and most extended way possible. “I would conclude the budget process is truly dead and the last nail has been pounded into its coffin,” Hoagland says.
Senate Democrats are extremely unlikely to support this kind of norm-trampling, despite seeing their counterparts across the aisle do it repeatedly. And no amount of Sanders revolution-speak is likely to change their minds.
“They will want to reinstate a modicum of process,” says Dotson. “They’ll hold hearings and try to enlist some GOP support.” (Sanders undoubtedly knows this; he is, after all, the ranking member on the Senate Budget Committee.)
One reason many Senate Dems support the filibuster is that it gives them cover and conceals differences within the party. “If conditions are ripe — new Democratic president and ambitious, cohesive Democratic House and Senate on a particularly salient issue to the Democrats — the Byrd Rule could well be undermined,” Binder says. “But absent that partisan wave, the Byrd Rule is a convenient way for a new majority to blame the other party for inaction.”
Anyone who has followed politics for a few decades knows that Democrats in a majority are rarely cohesive. “Democrats would almost certainly be forced to go on record in a way that could be described as ‘breaking the rules’ and ‘ending the filibuster’,” says Reynolds, “and whether there would be some Democrats who are unwilling to do that, even if they support the underlying legislation, is an important possibility to consider.”
Moller is less equivocal: “You would lose that hypothetical majority.”
Senate Democrats will not enjoy, and are unlikely to accede to, being forced to vote over and over again on a series of Republican amendments meant to peel them off from an aggressively partisan course of action. There are any number of provisions that would have difficulty gathering 51 Democratic votes even in the best of circumstances.
No, it’s likely that Democrats will respect the traditional contours of the reconciliation process and be cautious about pushing its limits. (Remember, with only one reconciliation bill a year, many interest groups will be jostling to have their priorities included, and all will be keen for it to pass.) Egregiously violating the rules of reconciliation would be wildly out of character.
Just scrap the damn filibuster
Budget reconciliation might be an appropriate venue for an opening bid on climate policy. Ambition level one — the stimulus on steroids — is plenty ambitious.
But to truly pass a complete climate policy, the kind appropriate to the challenge, Democrats (assuming their far-from-certain victories in 2020) would have to stretch the reconciliation process well beyond its traditional bounds, a pure partisan play for which they and the parliamentarian are likely to have little appetite.
Even if they were willing to do that, it’s not going to result in particularly good policy. Hoagland says that Senate staffers used to refer to reconciliation as making policy into Swiss cheese, once the Byrd-prohibited provisions were removed. It’s the reason Republicans’ Obamacare repeal bill was so “awkward and kludgy,” Reynolds says — it could cancel spending but not reverse regulations.
And even the provisions that do qualify under Byrd are not optimal. It is not healthy to continue channeling policy through the tax code, where its impacts are obscured.
NYT EDITORIAL: “The best way to end the Senate’s sorry history of inaction is to end the silent filibuster” http://t.co/sTzmZZtf
— Senator Jeff Merkley (@SenJeffMerkley) January 22, 2013
Which brings us back, again, to the filibuster.
“One of the things that puzzles me” about passing ambitious policy through reconciliation, says Moller, “is why are we doing this instead of, at the start of the Senate term, repealing the filibuster? It’s a simple process, where this is kind of convoluted.”
“Presumably if they have the votes to sustain these kinds of rulings, they have the votes to nuke the filibuster,” says Huder. “That advances their cause without violating laws and rules of procedure.”
The filibuster needs to go. In a modern society, the majority needs to be able to legislate. As long as the majority in the US is unable to implement its policy preferences, nothing — not reconciliation, not Sanders’s revolution, not Joe Biden’s magical bipartisanship powers — will save the country from multiple ongoing crises, climate change most notable among them.
And it’s not just the filibuster. There is a whole range of reforms needed to the rickety US system of elections and governance, changes that make ambitious policy, on climate or anything else, possible. Democrats need to pass those reforms, by simple majority if necessary.
“Mitch McConnell and President Trump are shredding the Constitution using simple majority. They’re packing the courts by simple majority,” says Merkley. “We would not be fulfilling our responsibilities if we did not defend the constitution by simple majority.”
When it comes to climate policy, reconciliation is a hack. To get the job done, US democracy’s source code needs to be rewritten.