The Delicate Dance of Budget Reconciliation

What happens after a bill passes the House? As the classic Schoolhouse Rock! song puts it, “I go to the Senate and the whole thing starts all over again.”  The next line? Something many House Republicans are currently saying, “Oh no.”

The policy and political complexities of budget reconciliation will soon take center stage.  After months of House Republican negotiations that produced a fragile agreement that passed by one vote, the Senate now gets their opportunity to put their fingerprints on the legislation and, understandably (albeit a risk to the House agreement), they want to chart their own legislative path and not be forced to take the House-passed version without amendment.  

Here are three things to watch: 

Political Risk: House Republicans took tough votes on issues like Medicaid cuts.  If those end up being reversed (in whole or in part) House Republicans would have taken on significant risk for no reason.  For moderates, this could become a real political liability - one that will be even tougher to explain should their colleagues in the Senate go a different direction. 

Unwinding Carefully Negotiated House Provisions:  There are several provisions that took months to negotiate in the House to build enough votes to get the bill across the finish line (i.e. IRA tax credits, SALT, public lands sales, etc.). Regardless of how the Senate plays these issues, movement in the House may not be possible. Margin for change is thin (at best) and some members took an understandable victory lap on at-risk priorities they championed and won, despite internal opposition among their colleagues.  

Tackling Debt, Revenue, and Savings: There are a lot of opinions around the fiscal impact of the budget reconciliation package and the evolving claims around how fiscally sound or fiscally disastrous it is –making it somewhat hard to follow.  Nonetheless, the Senate wants to make their mark, in part, on strengthening the fiscal position of the bill. While that sounds politically smart and may help to bring along some conservatives, it doesn’t come without making changes that, again, could hurt the current negotiated version.  

So, where does this leave us?  An awkward dance between the House and Senate Republicans is now underway.  A change here or a change there could completely upend the bill, but could also help get it through the Senate.  A long process of back and forth between the House and Senate helps nobody.  And the goal of July 4th is just a month away.  

Most interesting will be the constant push and pull between getting a win and advancing perfect policy and the month ahead will highlight the excitement and frustration of both.