Budget Reconciliation, the Byrd Rule and How Majorities Pass Big Bills

The ruling came on the evening of February 25, 2021, from an official most Americans had never heard of. Elizabeth MacDonough, the parliamentarian of the Senate, a nonpartisan lawyer who advises the chamber on its own rules, told senators that a provision raising the federal minimum wage to $15 an hour could not be included in the pandemic relief bill Democrats were trying to pass. Democrats controlled the House, the Senate by the vice president's tiebreaking vote, and the White House. They had made the wage increase a central promise. And yet one official's reading of a rule named for a late senator from West Virginia was enough to take it out. The relief bill, the American Rescue Plan, passed without the raise and was signed on March 11. The federal minimum wage stayed at $7.25, where it remains. To understand why, you have to understand the one process that lets a Senate majority pass major legislation without sixty votes, and the strict limits that come with it.

In short: Budget reconciliation is a fast-track process that lets the Senate pass bills changing taxes, spending and the debt limit by a simple majority, without a filibuster. In exchange, every provision must pass the Byrd rule, which bars anything whose budget effect is "merely incidental," among other tests, and the parliamentarian advises on what passes. Nearly every big partisan law of the past forty years has used it, and it will matter again in 2027.

The problem reconciliation solves

The Senate's rules allow unlimited debate on most legislation unless sixty senators vote to cut it off. In practice that means most bills need sixty votes to pass, and for decades neither party has held sixty seats for long. A majority of fifty or fifty-one senators can confirm judges and cabinet members, because both parties have changed the rules to end filibusters on nominations. For ordinary legislation, the sixty-vote threshold remains.

Reconciliation is the main exception. The process was created by the Congressional Budget Act of 1974 as a way to bring tax and spending laws into line with the targets Congress sets in its annual budget resolution, to "reconcile" existing law with the budget. Its designers seem to have imagined a technical tool for trimming deficits. But because the law limits debate on reconciliation bills, it also made them immune to the filibuster, and over time majorities discovered that was its most valuable feature.

How the process works, step by step

Reconciliation has a fixed sequence, and each step matters.

1. A budget resolution with instructions. Both chambers adopt the same budget resolution, which is not a law and does not go to the president. In it, Congress includes reconciliation instructions directing specific committees to produce legislation that changes revenue, spending or the debt limit by set amounts over a set period, usually ten years.
2. Committees write their pieces. Each instructed committee drafts its part. The Budget Committee in each chamber then combines them into one bill.
3. The House passes it. In the House, the majority can already pass bills by a simple majority, so reconciliation's main advantage there is procedural.
4. The Senate debates under a time limit. Debate on a reconciliation bill is capped at twenty hours. No filibuster is possible.
5. The vote-a-rama. When the debate time runs out, senators can still offer amendments, and votes on those amendments continue with little or no debate. The result is a marathon of back-to-back votes that often runs through the night. Many are designed to force the other side to cast politically awkward votes.
6. Final passage by simple majority. The bill needs fifty-one votes, or fifty plus the vice president.
7. Any differences are reconciled between the chambers and the bill goes to the president.

There are limits on how often this can happen. By long-standing understanding, a single budget resolution can generate a limited number of reconciliation bills, traditionally one each for spending, revenue and the debt limit, or one bill that does more than one of those things. Majorities have sometimes revised budget resolutions to unlock additional bills, but the process cannot be used for everything, all the time.

The Byrd rule: the price of speed

Robert Byrd, a Democrat from West Virginia, was the Senate's great defender of its own traditions. He served there for more than half a century and wrote a multi-volume history of the institution. By the mid-1980s he worried that reconciliation's fast track was being used to carry unrelated policy changes past the filibuster. The rule that bears his name was adopted in 1985 and later written into the Budget Act permanently.

The Byrd rule allows any senator to raise a point of order against a provision in a reconciliation bill that is "extraneous," and it defines that term with a set of tests. Roughly, a provision fails if:

• it does not change federal spending or revenue at all;
• its effect on spending or revenue is "merely incidental" to its policy purpose;
• it falls outside the jurisdiction of the committee that wrote it;
• it increases the deficit in years beyond the period the budget resolution covers, usually ten years, unless offset;
• it changes Social Security; or
• it increases spending or cuts revenue when the committee that wrote it has failed to meet its instructions.

Sixty votes are needed to waive the Byrd rule. Without them, an extraneous provision is struck.

The "merely incidental" test is the one that takes out the most ambitious ideas. A minimum wage increase certainly affects the federal budget; it changes tax receipts and spending on safety-net programs. But its main purpose is to regulate private wages, and the budget effects follow from that. MacDonough concluded in 2021 that the budget effects of the $15 provision were incidental to its policy purpose. When Senator Bernie Sanders later moved to waive the rule, the motion fell well short of sixty votes, with several members of the Democratic caucus voting against.

The deficit-beyond-the-window test explains another strange feature of modern tax law: expiration dates. The 2001 and 2003 tax cuts under President George W. Bush were passed through reconciliation, and because they reduced revenue beyond the ten-year window, they were written to expire. The 2017 tax law under President Trump did the same for most of its individual tax cuts, which were set to expire after 2025. That is why both parties have repeatedly faced "tax cliffs" years after the original vote.

The rule also shapes how bills are written long before anyone raises a point of order. Drafters of reconciliation bills learn to express policy as money. Instead of ordering a new program into existence, they appropriate funds for it. Instead of banning a practice, they impose a tax or a fee on it. Instead of requiring states to do something, they offer federal payments to states that choose to. Those design choices are why reconciliation laws often look indirect, full of tax credits, grants and penalties, rather than plain rules. A policy that can be written in the language of the budget has a path through the Senate with fifty-one votes. One that cannot needs sixty.

Who decides, and the parliamentarian's awkward power

The Byrd rule is enforced by the presiding officer of the Senate, who rules on points of order, and the presiding officer almost always follows the advice of the parliamentarian. Before a reconciliation bill reaches the floor, staff from both parties argue each contested provision before the parliamentarian's office in a ritual known in the Capitol as the "Byrd bath." Provisions that fail are usually rewritten or dropped before the vote.

The parliamentarian's advice is just that: advice. The presiding officer, including the vice president when he or she is in the chair, could ignore it, and the Senate could vote to overturn a ruling. In 2021, some progressive members urged Vice President Kamala Harris to overrule MacDonough on the minimum wage. The White House said she would not, and she did not.

The reason is the institution's long memory. A majority that overrules the parliamentarian to pass its priority sets a precedent the next majority can use to pass anything it wants through reconciliation, in effect ending the filibuster for any bill that touches the budget. Majorities of both parties have been tempted, and they have mostly declined. In 2001, Senate Republican leaders went as far as dismissing the parliamentarian of the time after rulings they disliked, a move that drew criticism across party lines and has rarely been repeated.

There are fair points on both sides of this. Critics on the left argue that an unelected official should not be able to block the agenda of an elected majority, and that the Byrd rule is a choice the Senate can change. Defenders answer that the parliamentarian is not blocking anything; she is applying a rule the Senate adopted and can change in the open, and that a neutral referee protects the minority today and the majority tomorrow. I think the defenders have the better institutional argument and the critics have the better political one. The honest answer is that the Byrd rule reflects a bargain both parties still choose to keep.

Forty years of big bills

Look at the list of laws passed through reconciliation and you have much of the history of modern economic policy.

In 1981, Ronald Reagan's first budget used reconciliation to make sweeping spending cuts. In 1993, Bill Clinton's deficit-reduction plan, which raised taxes on high earners, passed the Senate only with Vice President Al Gore's tiebreaking vote. The 1996 welfare overhaul went through reconciliation. So did the Bush tax cuts of 2001 and 2003. In 2010, a reconciliation bill made changes to the Affordable Care Act after the main law passed. The 2017 Republican tax law used it. That same year, Republicans tried to repeal much of the Affordable Care Act through reconciliation, and a final, narrower version failed in the Senate in July 2017 when three Republican senators, including John McCain, voted no.

In 2021, Democrats passed the American Rescue Plan through reconciliation. In 2022, they passed the Inflation Reduction Act the same way, with Vice President Harris breaking a tie. That law allowed Medicare to negotiate prices for some drugs, capped insulin costs for people on Medicare and made the largest climate investment in American history. It also showed the Byrd rule at work: a cap on insulin costs for people with private insurance was knocked out because it failed the rule's tests, while the Medicare cap survived. In 2025, Republicans used reconciliation to pass the law President Trump called the One Big Beautiful Bill Act, which he signed on July 4, 2025. It made the expiring 2017 tax cuts permanent and cut Medicaid and food assistance. To get around the deficit test, Senate Republicans relied on a budget baseline that treated extending current tax policy as costing nothing, an approach critics said stretched the rules past their purpose.

What reconciliation means for the new majority

Democrats won the House and the Senate on November 3, 2026, and the new Congress takes office on January 3, 2027. The president is Donald Trump, and a reconciliation bill, like any other bill, needs his signature or a two-thirds override of his veto. That sharply limits what reconciliation can do for the new majority before 2029. It does not make the subject academic.

First, reconciliation will shape the 2027 budget fights even without a law at the end. A budget resolution is not subject to veto, and the instructions it contains are a public statement of the majority's priorities. Second, any future majority that hopes to undo parts of the 2025 law, especially its cuts to Medicaid and food assistance, will almost certainly use reconciliation to do it, and the drafting will have to survive the Byrd rule. Third, the progressive priorities that failed the Byrd rule before, like a minimum wage increase, will need another vehicle. That probably means either a bipartisan bill, a change to the filibuster or a rewrite designed to pass the "merely incidental" test.

Here's the argument I'd make to progressives. Treating the parliamentarian as the villain is satisfying and mostly beside the point. The real constraint is the sixty-vote rule for ordinary bills, which the Senate could change by majority vote if a majority wanted to. Reconciliation is the workaround a Senate built when it would not change that rule. A movement that wants a higher minimum wage, paid leave or voting protections has to decide whether to fight for a Senate that can pass them by majority vote, or to build the bipartisan support to get to sixty. Both are long fights.

What you can do

• Know the wage you are fighting over. The minimum wage table shows every state's current minimum, so you can see where the $7.25 federal floor still sets the wage and where states have gone further.
• Ask your senators where they stand on the filibuster and reconciliation. The representative finder gives you their phone numbers and contact forms. Ask a specific question: would they support a rule change for a particular bill, or which priorities would they put in a budget resolution?
• Track the safety-net fights. Our topic page on the safety net follows the changes to Medicaid and food assistance made in 2025 and the efforts to reverse them, the most likely subject of the next reconciliation bill.
• Follow the new majority's budget plans. The page on the new majority gathers coverage of what Democrats intend to do with their control of Congress, including the budget resolution that will set their priorities on paper.

The ruling of February 2021 did not end the fight for a higher minimum wage. It moved the fight to a different question: not whether a majority wanted the raise, but whether it was willing to change the rules that stood in the way. That question will be waiting for the new Congress in January.