Prohibit Reconciliation Bills from Expanding Budget Deficits
An R Street Institute symposium on innovative budget process ideas
“What is the most important federal budget process reform that would achieve a more sustainable fiscal outcome?”
Prohibit Reconciliation Bills from Expanding Budget Deficits
Proposed budget reforms to rein in soaring federal debt typically face a trade-off between effectiveness and political feasibility. The most effective reforms—such as an airtight cap on government borrowing as a share of the economy—currently face no plausible path to enactment. On the flip side, PAYGO rules to limit deficit-expanding legislation have garnered little opposition because the ease with which they can be bypassed has rendered them useless.
Instead of forcing painful tax increases and spending cuts, one approach to thread the needle between effectiveness and feasibility would make it much more difficult for lawmakers to worsen deficits. This means banning reconciliation bills from expanding budget deficits over any five-year period.
Reconciliation bills have become a lead driver of deficit-expanding legislation. The 2001 Bush tax cuts ($1.35 trillion), 2003 tax cuts ($350 billion), 2017 Tax Cuts and Jobs Act ($1.9 trillion), 2021 American Rescue Plan ($1.8 trillion), and 2025 One Big Beautiful Bill Act ($3.4 trillion) were all passed under reconciliation. And while the 2013 permanent extension of the Bush tax cuts—costing $4 trillion over the first decade—was not a reconciliation bill, there would have been no tax relief to extend without the earlier reconciliation law. That’s a staggering $12.8 trillion in new debt passed by (or related to) reconciliation since 2001—plus trillions more in resulting interest costs.
Such costs are antithetical to the purpose of reconciliation of bills. The1974 Budget Act created the modern budget resolution to help Congress set responsible medium-term fiscal targets. Reconciliation was included as a fast track, privileged, once-per-year process to help Congress meet those targets. While this process was meant to facilitate deficit reduction, the law failed to prohibit lawmakers from instead setting looser fiscal targets and using reconciliation bills to expand deficits (although the Byrd Rule later prohibited reconciliation bills from hiking deficits in the years beyond the budget resolution window).
Lawmakers focused reconciliation bills on deficit reduction until 2001, when the process was twisted into an annual “get out of jail free” card to cut taxes and expand spending without the possibility of a Senate filibuster. Since 2001, every president except Obama has pushed through a trillion-dollar reconciliation bill shortly after taking office (Obama passed his $800 billion bill outside of reconciliation).
If the Senate is going to maintain the filibuster, there is no rational reason to exempt one annual Christmas tree bill that can be packed with every budget-busting priority that could never pass under regular order. After all, the expedited consideration privilege exists to help Congress facilitate some vital national objective, in this case deficit reduction.
The Senate’s “Conrad rule” existed between 2007 and 2015 to prohibit reconciliation bills from expanding deficits at all. Congress should codify this concept, and close the loopholes allowing lawmakers to circumvent such rules by rewriting bill scores or measuring their cost against a baseline other than current law. These reforms may not douse the debt inferno but would at least limit Congress’ ability to pour additional gasoline on it.