What is reconciliation − the legislative shortcut Republicans are using to push through their ‘Big Beautiful Bill’?

The word “reconciliation” sounds benign, even harmonious.

But in Washington, D.C., reconciliation refers to a potent legislative shortcut that allows the party in power to avoid opposition and enact sweeping changes to taxes and spending with a simple majority vote. Democrats used the process^[1] to pass the Inflation Reduction Act in 2022. Reconciliation helped Republicans pass large tax cuts in 2017.

Reconciliation is also at the heart of the current budget debate, as Senate Republicans rush to advance their version of the “One Big Beautiful Bill Act,” also known by its acronym OBBBA, which passed the House^[2] in May 2025.

I served as assistant secretary of Commerce for management and budget during the Clinton administration, when my colleagues and I helped forge bipartisan legislation that balanced the federal budget and produced surpluses^[3] over four years, from 1998 to 2001. We were even able to pay off some debt.

But since 2001, the country’s fiscal situation has deteriorated significantly. And the reconciliation process has strayed from its original purpose as a mechanism to promote sound fiscal policy. Instead, it is now used to pass partisan legislation, often without regard to its economic impact on future generations of Americans.

Reconciliation 101

The reconciliation process was created by the Congressional Budget Act of 1974^[4], which was overwhelmingly supported by both parties^[5]. It was designed to align policy goals with budget targets to help rein in deficits.

The rules specify that a bill using the reconciliation process must pertain directly to budgetary or fiscal matters, cannot change Social Security, Medicare or the budget process itself, or deliberately extend deficits beyond a 10-year window. As part of the process, the parliamentarian goes through each element of the bill and determines whether it meets the requirements, removing any that don’t.

In the Senate, reconciliation has special procedural advantages. Debate is limited to 20 hours^[6]. Conveniently for the party in power, the final bill can pass with a simple majority of 51 votes. This avoids the usual 60-vote threshold needed to overcome a filibuster.

Over its 50-year history, 23 reconciliation bills have become law^[7].

Reconciliation on rise as budget process breaks down

Over time, reconciliation has become the dominant method for enacting major tax and spending legislation, as the regular congressional budget process has broken down.

Since 1974, there have been multiple government shutdowns^[8], near-shutdowns and short-term, stopgap “continual resolutions” instead of annual budgets, accompanied by rising deficits and national debt^[9].

With few other tools at its disposal, Congress has used reconciliation^[10] to push through many pieces of major economic legislation, including the 2001 and 2003 tax cuts under President George W. Bush, the 2017 tax cuts during President Donald Trump’s first term, and the American Rescue Plan in 2021 and the Inflation Reduction Act in 2022 during the Biden administration.

However, reconciliation has significant flaws. Because debate is limited, senators often vote on bills over 1,000 pages long with little time to review the details. And once tax cuts are enacted under reconciliation, it is devilishly hard to get rid of them.

Given the compressed timelines and lack of transparency inherent in such huge, messy spending bills, it is fairly easy for lawmakers to slip in earmarks, tax loopholes and other extraneous items that that don’t get removed by the parliamentarian.

What’s in the bill?

At the heart of the One Big Beautiful Bill Act, passed by the House, is an extension of President Trump’s tax cuts^[12] from his first term, which would otherwise expire at the end of 2025, according to the procedural rules for reconciliation.

But it also includes multiple new tax cuts – such as an end to taxes on overtime and tips and lower estate taxes – introduces new Medicaid work requirements and repeals various energy credits. In line with the Trump administration’s policies, the bill slashes federal funding for education, Medicaid, public housing, environmental programs, scientific research and some national park and public land protection programs. It also boosts defense spending.

The bill would sharply worsen the nation’s fiscal outlook, according to analyses by the nonpartisan Congressional Budget Office^[13] and other organizations^[14].

Currently, the national debt exceeds US$36 trillion^[15], according to the U.S. Treasury, and net interest payments account for some 16% of federal revenue, based on the Congressional Budget Office’s projections for 2025^[16].

In its analysis, the Congressional Budget Office – which was also created by the 1974 act – said the House-passed version would increase deficits by more than $3.1 trillion over the next decade^[17]. The overwhelming share of this cost comes from the permanent extension of individual tax cuts initially enacted in 2017.

According to the Congressional Budget Office’s analysis, by 2035 households earning at least $1 million would receive an average annual tax cut of about $45,000. Most middle- and lower-income households would receive a cut of less than $500 per year, if anything.

The costs of reconciliation

A number of Senate Republicans have questioned some aspects^[18] of the reconciliation package. Since they hold only a 53-47 majority, and with all Democrats expected to vote “no,” they need to use reconciliation to pass their version.

Although it differs from the House version in many ways, the Senate version still favors tax cuts for high-income households and large corporations.

Senate Republicans also employ a flawed accounting gimmick^[19] to minimize its apparent cost. It assumes the 2017 Trump tax cuts, which are set to expire, have already been extended^[20] and embeds that assumption into the budget baseline.

This makes extending the tax cuts appear costless, even though it would grow the debt substantially. The move violates normal scorekeeping conventions and misleads the public. Honest accounting would show that the Senate plan would add to the debt about $500 billion more than the House version.

Abusing the process

Lots of wrangling and changes are expected before the Senate is able to pass its version. After that, the House and Senate will need to resolve their differences in a conference committee of Republicans from each house of Congress.

Once they agree on a final version, each house votes again – and the Senate version will still need to meet the terms of reconciliation in order to pass with a majority vote. President Trump is pressuring Congress to deliver^[21] the bill to his desk before he goes on July Fourth vacation.

In my view, while reconciliation remains a powerful budgetary tool, its current use represents a fundamental inversion of its original purpose. Americans deserve an honest debate about trade-offs, rather than more debt in disguise. Some estimates of the fiscal impact of the Senate’s version of the bill are as high as $3.8 trillion over a decade^[22]. Simply waving a magic accounting wand won’t make them go away.

References

1. ^{^} used the process (www.congress.gov)
2. ^{^} passed the House (waysandmeans.house.gov)
3. ^{^} balanced the federal budget and produced surpluses (theconversation.com)
4. ^{^} was created by the Congressional Budget Act of 1974 (journalofethics.ama-assn.org)
5. ^{^} overwhelmingly supported by both parties (www.congress.gov)
6. ^{^} Debate is limited to 20 hours (www.cbpp.org)
7. ^{^} 23 reconciliation bills have become law (bipartisanpolicy.org)
8. ^{^} there have been multiple government shutdowns (www.pgpf.org)
9. ^{^} rising deficits and national debt (www.pgpf.org)
10. ^{^} has used reconciliation (www.cbpp.org)
11. ^{^} AP Photo/J. Scott Applewhite (newsroombeta.ap.org)
12. ^{^} extension of President Trump’s tax cuts (www.bbc.com)
13. ^{^} nonpartisan Congressional Budget Office (www.cbo.gov)
14. ^{^} other organizations (www.crfb.org)
15. ^{^} national debt exceeds US$36 trillion (fiscaldata.treasury.gov)
16. ^{^} Congressional Budget Office’s projections for 2025 (fiscaldata.treasury.gov)
17. ^{^} $3.1 trillion over the next decade (www.cbo.gov)
18. ^{^} have questioned some aspects (www.nbcnews.com)
19. ^{^} flawed accounting gimmick (www.thefiscaltimes.com)
20. ^{^} have already been extended (www.bloomberg.com)
21. ^{^} is pressuring Congress to deliver (thehill.com)
22. ^{^} as high as $3.8 trillion over a decade (www.bloomberg.com)