With the return of unified government in Washington, the Republican majorities in the House and Senate are getting ready to use one of the most powerful tools in the budgetary toolbox: budget reconciliation.
In doing so, the new majority will undoubtedly try to pack as many of its policy priorities as possible into this filibuster-proof legislative vehicle, thereby requiring only a bare majority in the Senate. But what they certainly shouldn’t do is use the reconciliation process to make our exploding national debt even worse.
Budget reconciliation, in simple terms, is a special legislative process created 50 years ago by the Congressional Budget Act of 1974. This process provides Congress a simple-majority path to “reconcile” the proposed budget levels it seeks with the tax and mandatory spending changes necessary to achieve them. Historically, Congress has managed to use the reconciliation process to bring down the deficit. For example, the 1990 and 1993 Omnibus Budget Reconciliation Acts each reduced deficits by nearly $500 billion over five years. The 2022 Inflation Reduction Act is estimated to reduced deficits by more than $200 billion over 10 years.
Other uses, though — including the 2001, 2003 and 2017 tax cuts passed under Republican control and the 2021 American Rescue Plan under Democratic control — have instead increased the deficit. Amid an increasingly polarized and gridlocked atmosphere in Washington, reconciliation has become a fast-track route to accomplishing policy wins rather than getting our budget in order.
Speaking from experience as a former chair of the Senate Budget Committee, I know this process needs guardrails to avoid worsening America’s debt addiction. There are thankfully some barriers in place to prevent misuse.
The “Byrd Rule,” for example, forbids reconciliation bills from including non-budget-related changes or increasing the deficit outside the reconciliation window, imposing a 60-vote point of order for violations. But with a process this complicated, procedures and gimmicks abound to add substantial amounts of borrowing.
The “Conrad Rule,” which I helped put in place in 2007, helped to avoid these pitfalls. It simply stated that reconciliation bills cannot add to deficits — period.
The Conrad Rule was used successfully from 2007 until 2015, when the Senate ultimately repealed it. Given the enormous fiscal challenges we now face, and the temptation lawmakers will face to cut deals and jam through new deficit-increasing policies, we should reinstate the Conrad Rule and take an important step in the direction of budget responsibility.
There are several arguments in favor of bringing back the rule, perhaps the most obvious being that it has been shown to work. In 2010, during my tenure leading the Budget Committee, we used the rule to fix the Affordable Care Act by lowering health care costs while improving Medicare solvency without negatively affecting the deficit. Once the rule was gone, we saw massive reconciliation bills that added trillions to deficits.
It’s also important to note that new policies that lawmakers might wish to implement through reconciliation are better served in the long run by paying for them; paid-for policies are guaranteed not to increase deficits, which will boost wages and incomes by even more than if they we borrowed to invest. Paying for new policies also eliminates the uncertainty around “arbitrary sunsets,” where lawmakers set policies to expire arbitrarily to fit within the rules of reconciliation. Paid-for policies can be made permanent under reconciliation, whereas unpaid-for policies cannot.
But the most compelling argument in favor of reinstating the Conrad Rule is that we simply cannot afford not to. America faces immense fiscal challenges in the years ahead — debt is projected to reach a new record share of the economy within the next presidential term, deficits are still near $2 trillion despite a positive economic outlook, and interest costs on our debt are second only to what we spend on Social Security, surpassing what we spend on Medicare, defense, or programs that benefit children at the federal level.
Meanwhile, next year lawmakers will need to contend with the return of the debt ceiling, the expiration of the Fiscal Responsibility Act’s spending caps, and the massive cliff of tax cuts set to lapse at the end of 2025 — and down the road, our major trust funds face looming insolvency with next to no one in Washington willing to talk about it seriously.
These moments demand fiscal stewardship and a clear-headed approach to correct our current trajectory. Putting in place the kind of safeguard we had with the Conrad Rule would pre-empt the temptation to worsen our situation even further. I urge my former Senate colleagues to make the responsible choice and implement the needed safeguards as we head into these pivotal moments.
Kent Conrad served as a U.S. senator from North Dakota from 1992 to 2013 and as chairman of the Senate Budget Committee from 2001 to 2003, and 2007 to 2013. He is a board member of the Committee for a Responsible Federal Budget.
