Politics & Policy

Myths about Reconciliation

Using reconciliation to pass Obamacare would be inappropriate and unprecedented. Here's why.

How could you tell when the Democrats had finally settled on the reconciliation route? It was at some point between the time Harry Reid told Republicans at the health-care summit that “nobody has talked about reconciliation” and the time the White House stopped uttering the word altogether.

But though their diction has changed, the Left continues to perpetuate a number of myths about reconciliation that should be dispelled before Democrats in Washington use the procedure to force-feed the American people this $2.3 trillion behemoth.

Myth: Reconciliation is simply “majority rule.”

Democrats have referred to the maneuver that dare not speak its name as simple “majority rule.” In his March 3 speech, President Obama called for an “up-or-down vote” on health-care reform requiring “nothing more than a simple majority.” White House Press Secretary Robert Gibbs told MSNBC the next day that in most American households, “51 percent represents a majority viewpoint. I don’t think that’s a crazy concept.” Ezra Klein claimed that “a simple majority process” has been “key to getting anything done” in the Senate since the 90s.

But this isn’t about lowering the thresholds for passage, as most reconciliation measures initially pass the Senate with sizeable majorities — sometimes even by voice vote or unanimous consent. Rather, the process is explicitly about bypassing the Senate’s usual order of business — an open debate and amendment process with an emphasis on consent and consensus and robust protections for minority rights — to ensure the speedy passage of budget-balancing legislation. As a result, reconciliation measures are “privileged,” meaning that the Senate must consider them when they come to the floor. Likewise, debate on their substance is strictly limited to 20 hours and amendments are allowed only insofar as they address the contents of the measure itself (though, as author Foster notes here, there is nothing to stop a determined minority from gumming up the works indefinitely by forcing votes on the germaneness of extraneous amendments).

There is nothing wrong with the principled use of this “front-of-the-line” treatment for measures meant to bring budgetary outlays in line with revenues, but in a Congress that demonstrably no longer takes its duty to balance budgets seriously, reconciliation is once again being abused as a matter of political convenience.

The truth is that every single piece of successful legislation to emerge from the Senate — via reconciliation or otherwise — has done so via a final, up-or-down vote with a 50-plus-one threshold. The debate about reconciliation is a debate about the path to that vote. It’s about whether the Senate is and ought to be something more than a slightly smaller, slightly crustier House of Representatives.

When Harry Reid took over the majority leadership of the Senate, he vowed that “as our founding fathers intended, the Senate will perform its role as the ‘cooling saucer’ where debate and amendments play a role in forging consensus and compromise.”

Would that he lived up to those words.

Myth: Obamacare is in the main about cutting deficits, and therefore justifiably considered under reconciliation.

First, it’s important to understand why reconciliation might be necessary. The Senate bill includes an excise tax on high-cost employer-provided health-insurance plans — the kind that unions have acquired for their members through years of collective bargaining. The inclusion of this tax was almost an accident. Like many Democratic ideas, it started as a way to demagogue against the rich. Only later, after unions started voicing objections, did the Democrats realize what they had done, but by then it was too late. Health-care economists liked the idea of an excise tax on high-cost employer-provided plans, because the fact that these plans are otherwise untaxed is one of the great distortions in our health-care system that drive up the cost of insurance. Plus, the tax provided a real source of revenue to pay for new spending in the bill, thus improving its CBO score. The excise tax — dubbed the “Cadillac tax” by some — proved impossible to remove from the Senate bill without rocking the boat that was moving the bill toward passage.

But in the House, where union-backing progressives are stronger, objection to the tax made rubber-stamping the Senate bill impossible for Nancy Pelosi. Democratic leaders met with President Obama to devise a carve-out to protect the unions from the tax, and they had almost achieved a deal when a certain truck-driving Republican from Massachusetts won an election and upset the balance. Things fell apart for a while. The Democrats panicked. Health-care reform looked dead. Then Obama put forward a plan that would allow the Democrats to scrap the Cadillac tax through reconciliation. That’s where things stand.

As we’ve said, reconciliation is a process devised to ensure an easier process for shrinking budget deficits. Liberals have argued that according to the CBO, Obamacare would reduce the deficit, so amending it through the reconciliation process is appropriate. There are two problems with this argument. First, even taking the administration’s numbers at face value, its reconciliation plan would amend the legislation so that it reduces the deficit by less than the original bill. The CBO has not had time to score the president’s proposal, but the administration says that combined with the original legislation, the president’s plan would reduce the deficit by $100 billion. The CBO scored the Senate bill as reducing the deficit by $131 billion. Neither is a significant sum, but the point is that reconciliation in this case would actually move us backwards in terms of deficit reduction.

Second, the president’s plan replaces new revenue (the Cadillac tax) with revenue that is double-counted and, according to the CBO, cannot be used to offset new spending. Instead of the Cadillac tax, the president’s plan would raise revenue through a 2.9 percent Medicare excise tax on the investment income of people making more than $200,000. But as the CBO noted in objecting to a previous attempt to do this, that money must go into the Medicare trust fund, and the government must use it to pay out future Medicare benefits. It cannot simultaneously count that money as savings to be spent on a new health-insurance entitlement for the uninsured. So the president’s numbers are not to be taken at face value — by replacing Cadillac-tax revenue with double-counted revenue, his reconciliation plan would likely increase the bill’s cost by much more than $30 billion, increasing deficits in a manner contrary to the spirit of reconciliation.

Myth: We already passed health care with 60 votes in the Senate. Reconciliation is just for a few “fixes.”

In his March 3 speech, President Obama said that “reform has already passed the House with a majority. It has already passed the Senate with a supermajority.” Robert Gibbs has said “we got health-care done not with 51 but with 60 votes” in the Senate. By contrast, the Democrats argue, reconciliation will only be used to pass a small package of “fixes” introduced by the president to resolve the House and Senate versions of the bill. Ezra Klein and others have adopted the term “micro-reconciliation” to describe this strategy.

But to say that both chambers have already passed “reform” is deeply misleading, considering that reconciliation is necessary precisely because neither body’s bill is acceptable to the other. Indeed, the greatest impediment to the Democrats’ reconciliation strategy is not the Republicans, but the House’s mistrust of the Senate. Since the Senate acting first to “reconcile” a bill that has yet to become law would create a sort of legislative paradox, the White House and Senate Democrats have spent weeks trying to assure their colleagues in the lower chamber that they won’t be hung out to dry if they act first and pass the Senate bill before the reconciliation measure.

We’ve already noted the excise tax as a major source of tension between the chambers, but the Senate’s more permissive language on the federal funding of abortion is also a non-starter in the House, with Rep. Bart Stupak (D., Mich.) promising that a dozen or more pro-life House Democrats who voted yes on the House bill would balk at the Senate language. Since it will be nearly impossible to shoehorn a compromise into a reconciliation measure, the abortion issue could well doom Obamacare.

In short, the House and Senate are as far away from each other on reform as they were before Massachusetts, only now they’ve lost the supermajority that gave them the luxury of working out their differences in a conference report. So as it stands, there is not one health-care reform bill but two, and neither is in any shape to make it to the president’s desk without reconciliation.

Myth: This is just like when the GOP used reconciliation for the Bush tax cuts.

As we have noted, reconciliation would likely worsen the bill’s impact on the deficit, but the president’s supporters might say, “So what? The Bush tax cuts added to the deficit, and the GOP used reconciliation for those.” Here they have a point. But there are two reasons why health care is different. One, perhaps semantic, is that the Bush tax cuts were temporary — their impact on deficits was limited to the ten-year window specified by the Byrd Rule, which states that reconciliation bills cannot add to the deficit beyond the period covered by the budget resolution. Obamacare is designed to be a permanent new health-insurance entitlement. Second, and more important, is that the Bush tax cuts in addition to being temporary were strictly limited to fiscal policy — the kind of thing reconciliation was designed to handle — and therefore easy to score. As mentioned above, it is hard to know the true budgetary cost of Obamacare, because it is a tangled nest of tax hikes, regulations, twice-counted revenues, and unknowable costs tied to hard-to-predict factors such as health-care cost inflation.

Will Obamacare increase the deficit in a fiscal year after the ten-year period covered by the Byrd Rule? The answer is almost certainly yes. But unlike the Bush tax cuts, Obamacare will not sunset. Unless Republicans are able to repeal it — a difficult task, to put it mildly — its costs will be with us for good.

Myth: This is no different than what the Republicans did on Medicare Part D.

Again, charges of hypocrisy leveled at Republicans who object to using reconciliation to pass health-care measures have some force. It is true that reconciliation has been used more often by Republicans than Democrats since its adoption. And it is true that reconciliation has been used to pass big-ticket health-care measures such as COBRA and CHIP.

But most of the health-care measures passed via reconciliation did so with broad, bipartisan support. And as mentioned above, virtually all of the votes that were tight and/or partisan dealt with straightforward fiscal policy, without the massive unintended consequences that attend to a measure of the size and scope of Obamacare.

Perhaps the closest parallel to the Democrats’ current effort — and the one most often carted out in service of the hypocrisy charge — is Medicare Part D, which passed with 54 votes in a Republican-controlled Senate. But in fact it isn’t much of a parallel at all. For one thing, Medicare Part D wasn’t passed via reconciliation. Rather, Democrats could not or would not sustain a filibuster, and cloture on the conference report was secured 70–29 via the usual order of business. And when then-senator Tom Daschle (D., S.D.) tried to raise a point of order under the Congressional Budget Act — from which reconciliation rules stem — he was overruled with 61 votes.

Moreover, though the Republicans only had 54 votes, eleven Democrats (plus one Independent) voted with the majority, including the likes of Max Baucus, Kent Conrad, Mary Landrieu, Blanche Lincoln, and Ben Nelson.

During the floor debate, then-senator Pete Domenici (R., N.M.) raised the possibility of pursuing the bill under reconciliation, and rejected it:

Let me just tell you, without trying to take much time, that our distinguished leader had an opportunity to move this bill under what is called a reconciliation bill. Do you know what that would have done, Mr. President? That would have limited debate, and it would have made the bill almost not amendable and, indeed, besides that, there would be no points of order. He chose, as the bill progressed through, to do otherwise.

Medicare Part D is hardly a shining example of good legislation, but it passed under the standing rules of the Senate, under which the minority was afforded an open and extended debate. And it passed with significant support from that minority. Neither will be said of Obamacare if it is pushed through via reconciliation.

Daniel Foster is National Review Online’s news editor. Stephen Spruiell is an NRO staff reporter.

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