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With health care and student loan reform passed, one of the next tasks Congress will soon take up is the annual budget. The “budget resolution” is a non-binding resolution by Congress outlining how they plan to spend money. The budget resolution is not law (so doesn’t need to be signed by the President), and, as a result of the Senate rules officially limiting debate time, it can’t be filibustered. From the perspective of progressives hoping to achieve policy change over Republican and Conservative Democratic obstructionism, the most important part of non-binding budget resolutions is the potential to include reconciliation instructions. Reconciliation instructions allow Congress to later take up a reconciliation bill that can’t be filibustered in the Senate, and, as a result, is one of the best hopes for passing progressive legislation.
Budget reconciliation bills follow different rules from almost any other bill in Congress. In the Senate, debate is limited to only 20 hours, and no part of the bill can violate the Byrd rule (the bill must relate to the budget). Since debate is limited in the Senate, that means budget reconciliation bills can’t be filibustered and need only simply majority to pass. As we have seen, this can be a powerful tool for progressive change. With helath care and student lending reform coming under the last budget’s instructions, we see how critical reconciliation instructions can be.
The ability to make later changes to the Senate health care bill that couldn’t be filibustered by using reconciliation played an important role in convincing House Democrats to first vote for the Senate version unchanged. A more dramatic example is the huge progressive victory scored with student loan reform, which was also part of the recently passed reconciliation bill. Student loan reform ended tens of billions of dollars in government waste going to enrich banks as part of a huge corporate welfare program, and redirected much of the money to help needy students afford college. The changes could never have passed under regular order because all the Republicans plus a few Democrats, like Blanche Lincoln (D-AR) and Ben Nelson (D-NE), were determined to use the filibuster to protect the profits of the private lenders at huge expense to the taxpayer.
To bring up a reconciliation bill, Congress must first include reconciliation instructions to deal with a specific issue in a budget resolution. This is why the reconciliation instructions included in the upcoming budget resolution are so important.
Senate Majority Leader Harry Reid (D-NV) promised Bernie Sanders (I-VT) and Jeff Merkley (D-OR) a vote on the public option in the next few months. The public option can’t overcome a filibuster, so its only hope of becoming law is using a reconciliation bill. The only way a reconciliation bill can be used to pass a public option is if Congress first passed a budget resolution with reconciliation instructions that could be used for health care-related matters. If the upcoming budget does not include reconciliation instructions that could be used for health care, then you know Reid and Sanders were just blowing smoke.
The potential progressive use of reconciliation goes well beyond possibly creating a public option. There are many “budget related” reforms that our country needs that may have majority support in the Senate, but probably can’t get 60 votes to overcome a filibuster. Reconciliation could, in theory, be used to deal with global warming by putting a price on carbon dioxide and other greenhouse gases. Potentially, reconciliation could even be used to deal with the problem in the financial sector of “too big to fail” by using taxes and fees to make it unprofitable for a financial institution to reach a very large size and/or level of inter-connectivity. It even might be possible to get a form of public campaign financing passed using reconciliation to try to deal with the “Citizens United” ruling.
Even with health care reform, adding a public option is only one of the many improvements that could be achieved using reconciliation. The new money for the high risk pool will likely run out well before 2014 (PDF), so that program will need more funding. Extra money could also be provided for states that want to institute early exchange pilot programs or expand Medicaid sooner. Reconciliation could potentially (depending on the interpretation of the Byrd rule) be used to add a state single payer opt-out, Medicare buy-in, create state or national all-payer systems, create a national exchange, increase the minimum medical loss ratio, provide more affordability tax credits, etc.
If you want a piece of progressive legislation to pass in this current political environment, you are going to want reconciliation instructions included in the upcoming budget resolution that could be potentially used to such ends. The budget reconciliation instructions alone do not guarantee that you will get the reconciliation package you want, but it is a critical first step. If Democrats don’t include any reconciliation instructions in the budget, regardless the purpose, it will be a foolish act of unilateral disarmament in the face of Republican obstructionism. It will also be proof that Reid’s promise of a public option vote in the next few months was never meant to mean anything more than a meaningless show vote, destined to fail.
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Do we know who is responsible for enabling the Student Loan fix in last year’s Budget resolution?
Seems like that bit of prescient legislation allowed FDL to get a progressive victory in the midst of passing flawed HCR.
Might we do well to find that champion and others to assure we have a vehicle to improve HCR and other issues?
I wonder how the Representative that put the student loan provisions into last year’s budget resolution ultimately voted on HCR.
Anybody going to bring up a jobs bill a real FDR one if not the Dems have lost the election.
Citizen wmd1961:
That’s a great question. The problem with the rise of the “neoliberal” corporatists in the Democratic Party is that the “good guys” hafta work on the qt and not benefit from the success of popular measures that pass under the radar. This serves the corporatists, they win even by losin’ because progressives who get their bills through this way don’t get to rally the troops behind them or throw a shadow over the rulin’ corporate toadies.
The best tool in the world is worthless without the will and the skill to pick it up and USE it.
Obama supported student loan reform and wanted it included. Sen. Tom Harkin and Rep. George Miller really pushed heavy for it.
Thanks Jon. Among many other significant values, this post highlights the incredible parliamentary complexity of anything the Senate does.
Thats been our problem the Dems lack the Stones to do anything they want everything to have GOP approval first.
The thing is the GOP wants to stop the Dems from doing anything thats their reelection plan.
Harold Washington Chicago’s First African American Mayor had the same problem the racist City Council would not let anything pass still Harold kept trying and then the election came.
People voted in Harold’s people to the City Council why they saw that Harold was trying and they wanted Government more than they hated a Black Mayor.
Obama and Rahm are suppose to be Chicago Pols funny the example of our first African American Mayor is not their inspiration.
Powerful tools, but this Congress isn’t interested in ‘em.
It remains axiomatic that the student loan reform did not nothing about education costs charged by the higher education providers and the excessive profit models which have come into vogue in US higher education. Conversely, Mr. Walker would criticize the health reform legislation for doing nothing to lessen the costs of healthcare or to wrest control of healthcare profits from the insurers. I guess Rome was not built in a day.
Thanks. Obama, Tom Harkin, George Miller. Looking at old Whip counts Miller never promised to vote against a bill without a public option, and supported HR676 (single payer). Quietly gets things done, doesn’t lie in order to get FDL whipped support. The link is to an ActBlue page for him.
I’m having some difficulty seeing how to address Citizen’s United via the budget. I think ending unlimited corporate independent expenditures on political advertising is an important goal going forward… I just have trouble seeing how to fit it into a budget resolution.
Job creation does seem to fit into a budget resolution – do reconciliation instructions specifically have to reduce the long term deficit? Green energy and conservation retrofit construction is a good idea, but can it pass Byrd Rule muster?
The student loan reform bill was just that “loan reform” I was meant to simply eliminate one wasteful corporate welfare program. I would criticize if they called college reform but it was never bill or attempted as anything less than changes to a loan program.
No reconciliation does not technically need to reduce the deficit. Bush jr set the precedent by doing tax cuts through reconciliation with instructions to increase the deficit.
by “dealing” with Citizens united I was thinking of more eliminating all special tax treatments for corporate political spending and use the money to publicly finance federal elections with a matching fund.
I don’t know if we can ever truly keep all corporate money out but if we can allow members to win without relying on big corporate donors and all good clean uncorrupted members to win re-election without spending 30% of their time in office raising money it would be big improvement.
Instructions to increase the deficit, wow!
That would be demagogued by the deficit peacocks today.
Nevertheless the argument that infrastructure spending has been deficient for decades could win out. Especially if the productivity aspects of good infrastructure can be emphasized, and the tax revenue enhancing benefit of more people working can also get attention.
The progressive legislation for the past year has already bankrupted the country, so the budget is broken. Not even the coming VAT (Value Added Tax) – a Federal tax of 23-25% on everything except maybe food – will help. BTW, everyone will have to pay the VAT…
The deficit isn’t due to progressive legislation passed recently.
It’s due to Social Security, Medicare, Unemployment Insurance. All of which were passed a long time ago, not last year.
Tax cuts during W’s tenure also are a problem, as were the unfunded wars in Iraq and Afghanistan, and the unfunded Medicare part D benefit.
Spending last fiscal year came in lower than GW Bush had expected due to Obama cutting some discretionary spending. Stimulus decreased some revenue last year by cutting taxes by $300B, so I suppose you can blame a small portion of last year’s deficit on “progressive” tax cuts.
The budget resolution has to give reconciliation instructions to specific committees to increase or decrease revenue, however the only one that really counts is the Finance Committee, the authorizing committees must usually must spend through the Appropriation Committee, which never gets reconciliation instructions (not sure if that’s statutory or b/c of the Byrd Rule). The HELP Committee’s student loan program was an odd duck in that qualified for reconciliation.
But the Finance Committee’s jurisdiction is pretty damn wide– the two biggies are the Social Security Act (not just old age pensions, that’s the part of the US Code containing Medicare, Medicaid and CHIP) and the Internal Revenue Code (most notably, the $1.1 trillion in annual tax expenditures). If Len Burman’s tax expenditure freeze were implemented, the $3.5 trillion saved over 10 years saved could be applied to healthcare.
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/01/AR2010020103072.html
Let’s see, if the new HCR law’s $940 billion in funding was supplemented by an additional $3.5 trillion (without increasing the deficit or imposing next taxes), I doubt the insurance companies could raise premiums fast enough to make health coverage unaffordable. Though competition from a strong public option that started next year would certainly help keep them in check. :o)
One way to address Citizens United via reconciliation-legal measures would be to tax the hell out of corporation contributions, as Grayson’s proposal suggests, and use the revenue to support public campaign financing.
Most recently, the deficit has been exploded BY A FACTOR OF TEN TIMES. There are other accurate charts in that post at A Goy and his Blog, but you’ll probably ignore them until you start having to pay the VAT, along with higher Federal Income taxes, higher Social Security taxes, higher State Income taxes and/or higher sales taxes, higher property taxes, etc. Costs of your health care, transportation, food, clothes and everything you buy will also be going a lot higher…a lot higher since producers will have to add in their additional Gov’t costs…
Uh huh.
I like the pretty charts. But the data they’re showing isn’t based in reality.
There will be no public option via reconciliation. Obama does not want one; never has; never will. It’s just more smoke, and I am tired of getting revved up by teasers that the PO will be introduced, or the medicare buy in and so on. The only way there will ever be a PO will be to get rid of Obama.
[Mod Note: At the ballot box, right?]
Indeed one could give a special category to corporations that use Citizens United, and then treat that category as not qualifying for wage and bonus deductions in the corporate FIT above $100,000 for any individual.
Indeed I rather like that.
Or tie deductions for employee cost to a max of smaller of 30 times average wage in US and 30 times lowest paid employee.
Of course corporate America would not allow this – but it is a nice dream.
never hurts to float ideas. Congressmen really hate fund raising. It might, just might be possible to convince them to make their own lives easier by adopting some form of public campaign financing.
Papau has the right idea. Its all but impossible to get corporate or labor law reform past the 60 vote threshold, using a reconciliation bill to change the tax laws is the only feasible route and even that would take some horse trading. For example, Real Estate Investment Trusts (REITs) are publicly traded companies that owe no corporate taxes so long as they pass 90% of their earnings on to the shareholders as dividends. Likewise, Congress could give C Corporations the same deal on condition they comply with a list of labor law and corporate governance reform measures, such as adopting Montana’s “just cause” Wrongful Discharge law.
Assuming the dividend rate isn’t too low (its only 15% now because corporate dividends have already been taxed at the entity level), the government doesn’t lose too much money and the Fortune 500 might go for that (especially since they’d face shareholder pressure if they didn’t). Small business wouldn’t be directly affected since there’s no corporate tax carrot for entities like LLCs and S Corporations that don’t pay corporate taxes. So after big business is on the bus, come back in the next year’s reconciliation bill to use a stick, small business loses tax breaks (that they pass through to owners) unless they abide by the reform measures.
As to my point above about tax expenditures, I see Michael Lind wrote a column on the issue last year.
The political scientist Christopher Howard calls the tax expenditure system the “hidden welfare state.” It might just as well be called the Blob That Ate the Economy. If only non-business subsidies to individuals are counted, the IRS-administered subsidy sector costs around $800 billion a year. That’s about 6 percent of U.S. GDP… To put that number into perspective, according to official figures the U.S. spends about 30 percent of its GDP on government at all levels — well below the OECD average of around 36 percent and the EU average of about 39 percent. But add in the “dark matter” of tax expenditures, and federal-state-local spending goes up to around 36 percent of GDP — close to the international average among developed countries and within range of European norms.