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Health Care Debate Makes New Budget More Likely This Year

It was only a few weeks ago that budget process watchers, implementers and aficionados were all saying it was going to be difficult for Congress to adopt a budget resolution this year. That’s still true, of course; even in the best of times budget resolutions are very hard to get through the House and Senate, and this is anything but the best of times.

[IMGCAP(1)]But recent events have changed the political calculus so significantly that, today, the adoption of a budget resolution is far more likely than most imagined at the start of the year and seemed possible just a few weeks ago.

The difficulties in getting a budget resolution adopted this year are obvious. There will be a large deficit in fiscal 2011, and on general principles that will be very hard for many Representatives and Senators to go on record supporting. This will be true even if they think the fiscal policy is correct given the economy or if their state or Congressional district is benefiting directly from tax and spending policies that will contribute to the deficit. This has been the case since the first budget resolution — for fiscal 1976 — was considered, and that deficit was far less than the one projected to occur 35 years later.

But there’s more this year that complicates the situation. The obviously strong possibility that there will be few or no Republican votes in favor of any budget-related legislation proposed by the White House or Democratic Congressional leadership indicates that Democrats will have to get the majority they need to adopt a budget from their own ranks. Even though budget resolutions can’t be filibustered and only a simple majority will be needed in the Senate, the margin for error will be extremely tight, and any one issue could tip the scales against passage.

We knew all this is when the year began. What we didn’t know, and what seemed inconceivable until just a few weeks ago, was that the Democratic attitude toward using reconciliation to pass at least part of health care reform would change so dramatically and quickly. Unless there is a very unexpected change in GOP legislative strategy, using reconciliation now looks like the preferred (or at least accepted) way forward even for some Senators who previously argued vociferously against it. For example, Senate Budget Chairman Kent Conrad (D-N.D.), who expressed serious reservations earlier in the year about using reconciliation, endorsed its use on a talk show this past Sunday.

Frankly, I’ve wondered all year why Senate Democrats have been so adamantly against using reconciliation and, in the process, so willing to give up one of the major strategic advantages the budget statutes provide. (For those who don’t know, reconciliation is a provision of the Congressional Budget Act.) Some Senators genuinely seemed to prefer not to go down the reconciliation road because they thought of it as an abuse of power when it was used when they were in the minority. Others appear to have wanted to demonstrate to their GOP colleagues that, by refusing to use reconciliation, they were hoping to work with them.

But the growing GOP willingness to make reconciliation the issue has changed the calculus substantially. Sen. Lamar Alexander’s (R-Tenn.) statement at last week’s health care summit that the Republicans had nothing to discuss if the White House insisted on reconciliation appears to have convinced the leadership and, more importantly, a number of individual Democratic Senators both that the GOP fears its use and that it will be the only way to get a bill enacted this year.

This important change in attitude and strategy is what makes it more likely that a fiscal 2011 budget resolution will be adopted.

If reconciliation is used for health care reform, using it again for other priorities this year will be more obvious and less offensive to Senate Democrats. But Congress can’t consider a bill under reconciliation rules, that is, according to the procedures that prevent filibusters in the Senate, unless it first adopts a budget resolution that provides reconciliation instructions. No fiscal 2011 budget resolution means no reconciliation.

What makes reconciliation and, therefore, a budget resolution, even more likely is what it would be used for: something that will be called a tax cut. By the end of this year or, more likely, before Election Day, the White House and Congressional Democrats want to extend most of the tax cuts that are set to expire at midnight on Dec. 31. Even though the bill will reduce taxes compared with current law for most Americans, it is not hard to conceive of a situation where Senate Republicans would try to hold up its consideration. It might be because some existing tax cuts might not be extended in the bill, because other tax cuts are not included, or simply to prevent Democrats from getting any credit before the elections for extending any tax-reduction provisions. Much like the situation that occurred last week in the Senate on the jobs bill, it’s not difficult to envision a GOP filibuster if the bill is considered under anything but reconciliation procedures.

That makes reconciliation necessary for a tax cut this year. That, in turn, means that a fiscal 2011 budget resolution becomes critical.

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”

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