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Posted at 4:17 PM ET, 12/ 6/2010

Why aren't the Democrats using reconciliation to pass the tax cuts?

By Ezra Klein

Lots of questions about this in my inbox lately, so here's the answer. Actually, scratch that. Here are the two answers.

1) They already used it: You can't call an audible and switch over to budget reconciliation in the middle of a legislative fight. Reconciliation instructions have to be written into the budget for the year in which they're used. That means planning about a year in advance. When Democrats passed the 2010 budget, in April of 2009, they did include reconciliation instructions, but they were for health care and student-loan reform. And they passed that bill back in March. You can only use reconciliation once a year, so that's that.

2) They passed a rule making it impossible to use reconciliation for bills that increase the deficit: When George W. Bush passed his tax cuts through budget reconciliation, Democrats were horrified. It was the first time reconciliation had been used to increase the federal budget. So when they took back power, they decided to prove their commitment to fiscal rectitude by passing a new rule: Henceforth, budget reconciliation could only be used for legislation that would reduce the deficit. This provided Democrats with precisely no protection against the charge that they loved deficits, and it'll likely be changed back as soon as Republicans retake the Senate, but for now, a rule's a rule.

So it's not just that Democrats didn't write the tax cuts into the 2010 reconciliation instructions, but that they actually couldn't have written the tax cuts into the 2010 reconciliation instructions.

Related: A reconciliation primer. And here's a more historical look.

By Ezra Klein  | December 6, 2010; 4:17 PM ET
Categories:  Senate, Taxes  
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Next: An imperfect, but not-that-bad, deal on the tax cuts

Comments

Thankyou.

As for the second point though, using reconciliation to extend only a part of the tax cuts would decrease the deficit as compared to allowing all tax cuts expire. Just as Ryan got the CBO to declare his plan would reduce deficits if certain assumptions were made, so could it happen inthis instance.

Also, since the Dems failed to imagine a year ago the need to use reconciliation to achieve their tax goals, this is further proof the Dems don't actually want to allow certain tax cuts to expire despite their public assertions otherwise. They are liars.

Posted by: lauren2010 | December 6, 2010 4:28 PM | Report abuse

"this provided the democrats with precisely no protection against the charge that they love deficits". why do the republicans even have a leg to stand on, and why dont the democrats feature the actual data? from carter through the 2007 budget, the average deficit for republican presidents was about $250 billion per year. for democratic presidents, about $55 billion per year. i am constantly amazed that the democrats dont use this result in the time-tested republican way---repeat it at every opportunity.

Posted by: copelandglenn | December 6, 2010 4:41 PM | Report abuse

I just read Ezra's reconciliation primer and I had never realized that before 1984 reconciliation could be used for anything, not just budgetary matters that reduced the deficit.

It seems to me that the elimination of Byrd's Rule would be a great way to reform the filibuster, basically allowing the majority party to use reconciliation for anything. It would still be an inconvenience to break a filibuster, and the majority party would still have to get minority support for maximum efficiency, but the minority party couldn't totally break the senate since the majority could still get around the filibuster.


This might actually make the filibuster what everyone seems to think it should be, a rhetorical weapon used sparingly. Anyone else agree?

Posted by: DKOSullivan | December 6, 2010 4:42 PM | Report abuse

"this provided the democrats with precisely no protection against the charge that they love deficits". why do the republicans even have a leg to stand on, and why dont the democrats feature the actual data? from carter through the 2007 budget, the average deficit for republican presidents was about $250 billion per year. for democratic presidents, about $55 billion per year. i am constantly amazed that the democrats dont use this result in the time-tested republican way---repeat it at every opportunity.

Posted by: copelandglenn | December 6, 2010 4:43 PM | Report abuse

@lauren,

i honestly had numerous snarky comments i was going to post but I'll instead be nice and point you again to the fact that Ezra mentioned that reconciliation (i assume by rule) can only be used once per Congress and the 111th congress chose to put it forth for healthcare and student loan relief as I would guess they thought it would be needed more there and a priority over taxing the wealthy. But to confirm that you'd have to bug Harry Reid (I'd guess) and not Ezra.


"So it's not just that Democrats didn't write the tax cuts into the 2010 reconciliation instructions, but that they actually couldn't have written the tax cuts into the 2010 reconciliation instructions"

or more to the point they couldn't if they chose to do it for healthcare.

Posted by: visionbrkr | December 6, 2010 4:43 PM | Report abuse

Hey Ezra, I have a very technical correction regarding part 1 of this post. You're right that reconciliation can only be used once a year. However, the relevant year is not the calendar year; it's the budget year. Every year, Congress passes a budget resolution that sets overall tax and spending levels for the coming fiscal year. This is typically passed in March or April for the fiscal year that starts in October. Reconciliation instructions, if there are any, must be included in that budget resolution. So in April 2009, Congress passed a budget resolution for Fiscal Year 2010 (which actually ran from October 2009 to September 2010). That FY2010 budget resolution included reconciliation instructions on health care and education. And during FY2010, Congress used those reconciliation instructions to pass health care reform and student loan reform.

Now we're in Fiscal Year 2011. Congress has not passed a reconciliation bill during FY2011 so we haven't used up our once-a-year shot at it. However, there's a different problem: Congress never passed a budget resolution for FY2011. Back in the spring, the Democratic leadership didn't feel they'd be able to garner a majority for any kind of budget resolution because it would have required Democratic members to vote for a bill that called for a massive deficit. And so the leadership simply opted not to pass a budget resolution at all for FY2011. And with no budget resolution, there can't be a budget reconciliation bill in FY2011.

Posted by: HBurton1 | December 6, 2010 4:43 PM | Report abuse

@lauren2010:

Yes, the Democrats secretly want to extend all the tax cuts, which is why they all... voted to extend only some of the tax cuts. It must be some new form of 11th dimensional chess!

What actually happened was the house didn't officially vote on the budget (since the blue dogs didn't want to vote for an Obama budget in an election year) so the reconciliation rules were never established for this year.

Posted by: DKOSullivan | December 6, 2010 4:48 PM | Report abuse

Once again, I think the Democrats made the correct choice in this regard. Financial regulations, changing student loans, passing HCR, these are generational achievements. Tweaking the tax code to increase revenue by $70B per year (for two years!) just isn't in the same ballpark. I'm as disappointed as anyone about how Reagonomics has destroyed the middle class and made us all, in effect, Kardashian Kard holders. But really, piddling around with the tax code just isn't going to change that.

Posted by: klautsack | December 6, 2010 5:04 PM | Report abuse

Let's face it.
Using reconcilliation is an end-run around the democratic process and is a bastardization of what it was intended for.

I, for one, will be glad to see the Dems go. The ObamaCare bills was the dirtiest politics I have ever seen in my life from bribes to backroom dirty deals.

Now, Ezra et al wishes they could do even more dirty tricks.

I think the public has had enough of Democrats.

Posted by: WrongfulDeath | December 6, 2010 5:11 PM | Report abuse

DKO

Votes that fail mean NOTHING.


They in fact had a supermajority 2009 and did nothing to fix this.

Thus they CHOSE not to fix it when they had a chance.

Posted by: lauren2010 | December 6, 2010 5:12 PM | Report abuse

Wrongful

You must be a visitor from another planet who arrived after bush left office. Bush helped $100s billions get stolen from western states in the fake energy crisis of 2001, he allowed energy companies to meet secretly with the white house to create an energy plan, his admin coordinated an outing of a covert CIA agent as political reprisal for her husbands role in divulging secretly planned falsehoods regarding Iraq, he worked secretly with telecoms to spy on Americans, he worked secretly with downing street to fabricate justification for the Iraq war, and that's just off the top of my head.

Try not to be such an idiot.

Posted by: lauren2010 | December 6, 2010 5:29 PM | Report abuse

But (2) also means that any extension of the Bush tax cuts can't use reconcilliation and can thus be stopped by just 41 Senators (the Democratic caucus has 53).

No one talks about this, I guess because everyone thinks the Democrats won't go against Obama's stated plans, or they just don't have the huevos. One things for sure, in an analogous situation the Republicans certainly would, a key reason why the filibuster hurts the Democrats far more than it helps them.

You throw brass knuckles into the ring, who does it help more, the opponent who tends to follow Marquis of Queensbury rules and cower in the corner, or the fighter who will kick you in the tool bag and knee you in the face.

Posted by: RichardHSerlin | December 6, 2010 5:36 PM | Report abuse

Well, it's not necessarily the case that reconciliation can only be used once per year. The House Republican Rules Committee site says you can use it once per budget cycle. March of 2010 was, of course, during Fiscal Year 2010. Fiscal Year 2011 began on Oct. 1 of this year.

Nor is it the case that the FY2010 reconciliation instructions are somehow "expired." The very, very conservative Republican Study Committee says:

"The reconciliation instructions from a budget resolution only “turn off” upon the earlier of the adoption by both the House and Senate of the next fiscal year budget resolution, or the end of the Congress."

As for the notion that majority rules passage for legislation is "an end-run around the democratic process" well, that's just laughable on its face.

That still doesn't solve the problem of the Byrd rule, but passing all the extensions and then using reconciliation to repeal the extensions for the top tax brackets does.

Posted by: djwaldman1 | December 6, 2010 5:36 PM | Report abuse

"Tweaking the tax code to increase revenue by $70B per year (for two years!) just isn't in the same ballpark"

Would have been longer than two years. But now that you mention it, reconciliation tweaks expire at some point.

Posted by: lauren2010 | December 6, 2010 5:38 PM | Report abuse

lauren2010- But that's the compromise. Right now they're saying two more years for everyone and then we'll talk.

Posted by: klautsack | December 6, 2010 5:50 PM | Report abuse

""this provided the democrats with precisely no protection against the charge that they love deficits". why do the republicans even have a leg to stand on, and why dont the democrats feature the actual data? from carter through the 2007 budget, the average deficit for republican presidents was about $250 billion per year. for democratic presidents, about $55 billion per year. i am constantly amazed that the democrats dont use this result in the time-tested republican way---repeat it at every opportunity."

This, friends, is what is known as cherry picking.

The numbers 2009, 2010, 2011, and 2012 will tell a very different story.

Posted by: krazen1211 | December 6, 2010 5:53 PM | Report abuse

@lauren2010 "As for the second point though, using reconciliation to extend only a part of the tax cuts would decrease the deficit as compared to allowing all tax cuts expire."

This is false. I'm pretty sure CBO scores extending the tax cuts for just those under $250,000 filing jointly or $200,000 for singles as increasing the deficit over current law which is that they all expire at the end of 2010.

Also, reconciliation for 2010 was addressed earlier by the Ezra Klein & the Dylan Matthews Research Desk:

Note Ezra's prescient post title:

"Are Democrats setting themselves up for failure in 2011 by not passing a budget?"

http://voices.washingtonpost.com/ezra-klein/2010/07/are_democrats_setting_themselv_1.html

http://voices.washingtonpost.com/ezra-klein/2010/08/research_desk_investigates_cou.html

Posted by: jnc4p | December 6, 2010 6:39 PM | Report abuse

Jnc45

No, you are incorrect. You misunderstood.

Allowing all tax cuts to continue is more expensive than just allowing those under $250,000 (as I said).

But yes, allowing any tax cuts to expire is mote expensive than current law (as you said). But that's not what I said.

Posted by: lauren2010 | December 6, 2010 7:06 PM | Report abuse

HBurton1: You're exactly right when you point out that we are now in FY 2011, not FY 2010 as Ezra suggested. The Democrats still have not passed a budget for FY2011 yet (which is ridiculous on their part), but if they had passed one, and if they had written budget reconciliation instructions for the Bush tax cuts into the FY 2011 budget, than, yes, they would have been able to get around the first reason that Ezra provides for why Democrats couldn't use reconciliation.

Of course, even if they had passed a FY2011 budget, and written in instructions to use reconciliation to extend the Bush tax cuts, the second reason that Ezra gives for why the Democrats cannot use reconciliation--that extending the tax cuts would result in increasing the debt, which is not allowable--would still prevent the Democrats from being able to employ reconciliation.

Posted by: cullenvolvo9 | December 6, 2010 8:25 PM | Report abuse

Ezra,

Thanx for the info.

Posted by: piniella | December 6, 2010 8:44 PM | Report abuse


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Posted by: lindamckee | December 7, 2010 1:20 AM | Report abuse


You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price check http://ow.ly/3akSX .If you have health insurance and do not care about cost just be happy about it and trust me you are not going to loose anything!


Posted by: mitchellherr | December 7, 2010 5:09 AM | Report abuse

@lauren2010 "No, you are incorrect. You misunderstood.

Allowing all tax cuts to continue is more expensive than just allowing those under $250,000 (as I said).

But yes, allowing any tax cuts to expire is mote expensive than current law (as you said). But that's not what I said."

Your original statement was:

"As for the second point though, using reconciliation to extend only a part of the tax cuts would decrease the deficit as compared to allowing all tax cuts expire."

The whole issue with reconciliation is (as the Democrats have modified it with the deficit reduction rule) it has to be used to lower the deficit over current law. You can't use it in comparison with some other alternative that hasn't been enacted.

Posted by: jnc4p | December 7, 2010 9:59 AM | Report abuse

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