The Obscure Senate Rule That Will Dictate Tax and Health Care Policy

The Obscure Senate Rule That Will Dictate Tax and Health Care Policy

Why you should care

Because your health coverage and tax burden could depend on it.

The numbers make a world of difference in the U.S. Senate: When do you need 60 votes, and when do you need 51? With the Republicans holding 52 seats and the Democrats almost universally holding together in anti-Trump formation, the guardrails defining how two mammoth undertakings of health care and tax reform will — or won’t — happen are these confounding words:

The Byrd Rule

In 1974, Congress passed the Budget Act, which created a streamlined “reconciliation” process to carry out a yearly budget blueprint. Budget reconciliation in the Senate limits amendments and debate time and prevents a filibuster, the 60-vote hurdle needed to end debate. By the mid-1980s, leading senators were using this back door around the filibuster to tack on all sorts of policies that couldn’t get 60 votes on their own. In 1985, a fed-up Sen. Robert Byrd, D–W. Va., an institutionalist who served a record 51 years in the Senate, got bipartisan support to tackle “the Pandora’s box which has been opened to the abuse of the reconciliation process,” as he said in a speech.

His rule, which had support from both parties and became permanent law in 1990, dictates that each aspect of a reconciliation bill must affect spending or revenue and must not increase the deficit outside of the budget outline’s 10-year span. It also cannot touch Social Security. Any senator may raise a point of order against a bill he or she believes violates the Byrd Rule, and the question goes to the Senate’s parliamentarian. Loathed in the House — as the Senate often is, as a whole — the rule’s application can be difficult to predict. For example, the requirement that fiscal effects not be “merely incidental” to a provision’s nonbudgetary effects leaves plenty of wiggle room.

So how will this shape Congress’ marquee plans? Senate Republicans will use reconciliation to attempt their version of an Obamacare replacement. (In 2010, Democrats used reconciliation to pass final alterations to Obamacare, but the original law cleared a filibuster when Democrats held 60 seats.) Even carefully drafted bills carry no guarantee of survival in the process called, yes, the “Byrd bath.”

If Republicans include House-passed language blocking federal funds from going to Planned Parenthood, Democrats are sure to challenge, even though the parliamentarian did allow it in a 2015 reconciliation Obamacare repeal effort. The battles depend on the whims of parliamentarian Elizabeth MacDonough, an attorney who’s been on the job since 2012. The role is nonpartisan, and MacDonough has earned praise from both sides of the aisle, though as a young lawyer she did advise Democrat Al Gore during the 2000 recount.

Republican dreams of blowing open the tax code also rely on the Byrd Rule — and the fate of health care reform. The Trump outline to cut and consolidate tax rates, jack up the standard deduction and slash corporate taxes to 15 percent is likely to juice the budget deficit, in the eyes of Congress’ nonpartisan scorekeepers. Therefore, like the George W. Bush tax cuts, they would have to end within 10 years in order to be Byrd-compliant and pass with 51 votes. (Some Republicans have floated the idea of extending the budget “window” to 20 or 30 years to make the temporary tax cuts longer, according to the Wall Street Journal.)

If Republicans want to make the cuts permanent, they’d likely have to repeal Obamacare’s taxes — including surcharges on capital gains and Medicare taxes for couples making more than $250,000 — to bring down expected revenues by roughly $1 trillion. Another $1 trillion-plus could come in with a “border-adjustment tax” on imports, proposed by House Republican leaders. Put them together, and $2 trillion would be in range of the House GOP’s tax-cut plan, though Trump wants to cut corporate taxes further and has sent mixed signals about the border-adjustment tax.

As the reconciliation bills prepare to hit the Senate floor, representatives from each party will make their case behind closed doors to MacDonough, who then delivers a verdict. Her ruling technically is just a recommendation to the presiding officer — in this case, a Republican senator or Vice President Mike Pence, who could ignore an unfavorable ruling and allow the bill to proceed as is. This would be a rule-changing “nuclear option” in miniature that could set a dangerous precedent if and when Democrats regain power. “There seems to be some talk in Republican circles about possibly ignoring what the parliamentarian has to say,” says Gregory Koger, a University of Miami professor and congressional expert.

It remains an unlikely route for Senate GOP leaders, though a tantalizing one for those who want to force major accomplishments onto President Trump’s desk — Byrd Rule be damned.

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