House and Senate pass budgets with tax reconciliation instructions

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Both the House and Senate have passed budgets that would allow the tax-writing committees to use reconciliation procedures to expedite tax legislation. The two chambers will have to reconcile their budgets and pass a combined resolution for the reconciliation instructions to take effect.

The reconciliation process protects legislation from filibusters and other 60-vote procedural hurdles in the Senate. The 2001 and 2003 so-called Bush tax cuts were passed with simple majority votes in the Senate using reconciliation, with the 2003 legislation passing by one vote cast by the Senate president, Vice President Dick Cheney.

The budget resolutions instruct the Senate Finance Committee and the House Ways and Means Committee to report legislation that would reduce the deficit by at least $1 trillion over 10 years. These instructions would generally allow the committees to advance a tax bill of nearly any size as long as the overall score was close to revenue neutral. Tax writers have the flexibility to use the reconciliation process on any tax legislation they choose, but it is an unlikely vehicle for tax reform. Any provision that loses revenues, such as rate cuts, would need to expire within 10 years. Reconciliation can be used by each committee only once per year, and Republicans are reserving it to address health care reform. It is unlikely the administration will agree to cutbacks to the Affordable Care Act.

Mel Schwarz
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Dustin Stamper
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