Notice & Comment

Making Budget Reconciliation Great Again, by Sam Wice

With Republicans in control of the House, Senate, and the Presidency, they will try to pass many of their long desired proposals. However, with a narrow Senate majority and a Senate history of providing enhanced rights to the minority party, Senate Republicans will have to try nearly every legislative trick in the book to pass their policy goals. Against this backdrop, I argued that “the most powerful person in America” in 2017 will be Senate Parliamentarian Elizabeth MacDonough. Professors Daniel Hemel and David Herzig provide an excellently detailed response that explains in greater detail the reconciliation process and argues that I “overestimate the power of the Parliamentarian in the reconciliation process.” A lot of our disagreement might be exacerbated in the simplification of our posts because the rules and practices are highly technical and could fill an entire law review article, which they are helpfully writing. I look forward to their finished product.

I take their concerns to be threefold: 1) the Parliamentarian’s role is subject to the desires of the majority party acting through the Presiding Officer; 2) the Senate Parliamentarian’s influence is restricted regarding the budgetary impact of reconciliation matters; and 3) the imperial president is the most powerful person in America.

Although the majority party is free to disregard the advice of the Senate Parliamentarian, the Senate Parliamentarian’s view will likely decide what can pass through reconciliation. Professors Hemel and Herzig bring up that the Parliamentarian’s decisions are advisory and “the Presiding Officer retains the option to do as he pleases.” While correct, in practice the Parliamentarian’s decisions act more as the unofficial referee than as a mere advisor.

Describing Senate practice is like trying to describe Schrodinger’s Cat. Because Senate practice is not a codified rule, it is subject to change at any moment based on the desires of a simple Senate majority. As Senate Democrats recently demonstrated, even though intra-session changes to the rules of the Senate are subject to a supermajority vote, the Senate can interpret the rules and precedents on a simple majority vote. However, the majority party is usually concerned that 1) disregarding the rules could upset voters by appearing as a power grab and 2) eliminating minority rights would work against the majority party when it loses power.

Professors Hemel and Herzig mention two ways for the Senate to disregard the Parliamentarian. First, the Presiding Officer could disregard the advice of the Parliamentarian. Much like the decision of the Parliamentarian is not final, the decision of the Presiding Officer is not final. Any Senator could appeal the decision of the Presiding Officer and require a vote on the matter. Senate Republicans would then need to get 50 votes in support (using the tie vote of Mike Pence), which would not necessarily be an easy matter. The reason it took Senate Democrats so long to overturn the filibuster, and merely on most confirmations, is that enough Democratic Senators refused to support the change such that Senate Democrats could not get 50 votes. Even when Democrats successfully voted on the change, three Democratic Senators voted with the Republicans. Currently, Republicans have a much narrower majority than Democrats did when they enacted the changes and they could only afford to lose two votes.

Second, Professors Hemel and Herzig explain that the Majority Leader could fire the Parliamentarian, as has happened in the past. When statute allows a nominally “independent” official to be fired, even one with immense power, the political optics of the firing determine whether it can practically happen. For instance, independent counsels are able to act with more independence even though they can be fired because when President Nixon fired Archibald Cox, the fallout created increased pressure to impeach President Nixon.

Granted, these optics are not nearly as strong for the Senate Parliamentarian. After Senator Trent Lott fired Senate Parliamentarian Robert Dove, Senate Republicans gained seats in the next election. However, the optics are worse now. Robert Dove had previously served on Senator Bob Dole’s staff and some considered him a “Republican patronage” appointee. Conversely, Elizabeth MacDonough is a career, non-partisan employee of the Senate Parliamentarian’s Office.

This all assumes that Senate Republics would be inclined to alter the interpretation of the reconciliation rules, as provided by the Senate Parliamentarian. First, Senate Republicans would likely want to avoid the optics of changing many precedents at once. If, as is likely, Senate Republicans eliminate the filibuster on judicial nominees, they would likely want to avoid going too far in destroying Senate culture by changing the interpretation of budget reconciliation rules at the same time. Second, Senate Republicans would likely not want to set a precedent of passing regulatory reform through budget reconciliation because Democrats are the party most likely to benefit from the change. Democrats generally support more regulatory proposals and Republicans oppose expanding government regulatory authority. Thus, there will likely be more opportunities for Democrats to pass a form of regulation light through budget reconciliation. That Senate Republicans did not attempt to eliminate any of the more regulatory parts of Obamacare through budget reconciliation in their most recent proposed repeal of Obamacare shows that they are at least attuned to these concerns.

Turning to Professors Hemel and Herzig’s second concern, even though the Parliamentarian’s influence is limited with the “authoritative guidance” regarding the budgetary impact of reconciliation measures, Senate Republicans are still in practice highly constrained in using this authority. I did not discuss this issue fully in my original post because 1) budgetary “gimmicks” are not unique to budget reconciliation interpretation, but also a general quirk of PAYGO calculations regarding whether a bill would increase the deficit and 2) budgetary gimmicks will likely not play a role in approving any of the proposals I discussed.

In practice, the Senate Budget Committee chairman has little direct authority over determining the budgetary impact of reconciliation measures. As Professors Hemel and Herzig point out, the Senate Budget Committee Chair by practice performs this “authoritative guidance.” Like with the official and unofficial roles of the Senate Parliamentarian and Presiding Officer, even though the Senate Budget Committee sets the rules (whether to use dynamic scoring or not) for determining how a cost estimate is calculated, the Chair by practice defers to the decisions of the Congressional Budget Office (“CBO”) and Joint Committee on Taxation (“JCT”) for the actual cost estimate, including the amount of any offset from a budgetary gimmick. Granted, the Chair is free to disregard the CBO and JCT estimates and Congress may fire the head of CBO or JCT. However, to my knowledge the House and Senate have never disagreed with a CBO or JCT estimate or fired the head of either group (although Congress has refused to reappoint directors). This might be a worthwhile inquiry for Professors Hemel and Herzig to more fully explore in their forthcoming article.

Even though the Senate could use a budgetary gimmick as an offset to make a proposal appear to meet the reconciliation requirements, Republicans are unlikely to rely heavily on this gimmick. Because Dodd-Frank is largely a regulatory bill, there are no increases in the deficit that would need to be offset. However, if Republicans only propose to replace portions of Dodd-Frank, causing CBO to estimate an increase in the deficit of a few billion dollars, Republicans may need to use a budgetary gimmick. For Obamacare, Senate Republicans have already proposed and passed a bill under reconciliation that would remove most of the spending and revenue matters that it wants to eliminate and thus the proposal does not require offsets. For the Trump tax cuts, budgetary gimmicks could not offset the costs. President-elect Trump is proposing an estimated $4.6 trillion tax cut (not including eliminating Obamacare) over the next 10 years. Budgetary gimmicks can only get you a few billion dollars at most and even actual reductions in spending could not easily offset that amount. To offset $4.6 trillion, the Senate would have to gimmick the rough equivalent of 75% of all non-defense discretionary spending for the next 10 years. By comparison, Republicans in 2003 could not find sufficient budgetary gimmicks to offset the $320 billion Bush tax cuts. Granted, as a standalone, one of the many examples of a proposed Trump tax cut that Professors Hemel and Herzig mention could individually be offset at least partially with a budgetary gimmick, but these would not be the yuge Trump tax cuts.

In conclusion, Professors Hemel and Herzig state that President-elect Trump will be the most powerful person in America. I admit, my original post might have been hyperbolic, but then again, when does hand size lie?

 

Sam Wice is an attorney adviser for the U.S. Government, a former analyst at the Congressional Budget Office, and a former Council Member of the American Bar Association Section of Administrative Law and Regulatory Practice. The views expressed herein are those of the author and do not necessarily reflect the views of the U.S. Government.