Created in a budget resolution in 1974 as part of the congressional budget process, the reconciliation process is utilized when Congress issues directives to legislate policy changes in mandatory spending (entitlements) or revenue programs (tax laws) to achieve the goals in spending and revenue contemplated by the budget resolution. First used in1980 this process was used at the end of a fiscal year to enact legislation to fine tune revenue and spending levels through legislation that could not be filibustered in the Senate. The policy changes brought about by this part of the budget process have served as constraints on the levels of mandatory spending and federal tax revenues which also has served since 1981 as a vehicle for deficit reduction. The reconciliation process is an optional procedure and not a required action by Congress every fiscal year as is passage of the concurrent budget resolution. However, during the eighteen year period from 1980 to 1998 thirteen reconciliation measures have been enacted into law and numerous others have been considered by Congress. Occasionally, reconciliation legislation has included certain such enforcement mechanisms as extensions of the discretionary spending limits and PAYGO requirements or even reforms to the budget process. Whether for tax reduction, tax increases, deficit reduction, mandatory spending increases or decreases or adjustments in the public debt limit, this process has been used to focus many agents on one goal.

Reconciliation Instructions: The process begins with the inclusion of reconciliation instructions in the budget resolution. These instructions require authorizing committees with jurisdiction over mandatory spending and revenue policies (usually more than one) to make legislative changes in those programs to effect a specified level of budgetary savings provisions. The instructions typically cover the same fiscal years as the budget resolution, with separate dollar amounts specified for each of the years in the budget resolution. While the Budget Committees develop these instructions based on policy assumptions for changes in programs and laws (which are often printed in the committee reports on the budget resolution), the authorizing committees have complete discretion over the specific programs to be changed and the substance of those changes. An authorizing committee must only meet the specified spending and/or revenue directive given it. The budget resolution normally includes a timetable by which the authorizing committees must report legislation that meets these saving targets. These committees generally hold hearings and mark-up these legislative products which are sent to the Budget Committees.

Budget Committees' Role: Once the relevant authorizing committees have reported their legislation to the Budget Committees, it is the Budget Committees?responsibility to combine those bills into an omnibus package (or packages) as specified by the budget resolution. The legislative products of the authorizing committees are packaged together with report language and the Congressional Budget Office��s and the Joint Committee on Taxation��s cost estimates. This function of the Budget Committees is largely administrative, since the Budget Act provides that the Budget Committees may not make substantive changes in the legislation. However, if one or more authorizing committees do not meet these targets, certain procedures are used to bring the legislation into compliance. In the House, these legislative "fixes" are usually incorporated into the reconciliation package via a special rule granted by the Rules Committee. In the Senate, these violations of the reconciliation instructions may be remedied through the adoption of an amendment on the Senate floor or the adoption of a motion to recommit the bill with instructions to report back forthwith with an amendment containing legislative language which satisfies the original instruction.

House and Senate Floor Consideration: The Budget Act specifies that Congressional Action on reconciliation legislation should be completed by June 15. It provides specific expedited procedures and restrictions for floor consideration of reconciliation measures, to ensure timely completion. In the House, reconciliation legislation is normally brought from the Budget Committee to the Rules Committee, which grants a special rule governing floor consideration of the measure. Under the Budget Act and traditionally under these special rules no amendment is in order that would increase spending or decrease revenue levels relative to the base bill without equivalent decreases in spending or increases in revenues. In other words, amendments must be deficit neutral. Also, non-germane amendments may not be offered to the package absent a waiver from the Rules Committee.

In the Senate, total debate on a reconciliation bill is limited to 20 hours, although the actual time for consideration of the omnibus package often exceeds this time limit set in the Budget Act. Motions and amendments may be offered and considered without debate at the end of this time period. There are also restrictions on the content of a reconciliation package and on the amendments which may be offered to it. For example, any amendment to the bill that is not germane, would add extraneous material, would cause deficit levels to increase, or that contains recommendations with respect to the Social Security program, is not in order. The Budget Act also maintains that reconciliation provisions must be related to reconciling the budget. For example, section 313 of the Budget Act, more commonly known as the "Byrd Rule", provides a point of order in the Senate against extraneous matter in reconciliation bills. Determining what is extraneous is often a procedural and political quagmire navigated in part by the Senate Parliamentarian. The Byrd Rule and other points of order in the Budget Act may only be waived in the Senate by a three-fifths vote. Furthermore, the Budget Act prevents reconciliation legislation from being filibustered on the Senate floor.

Conference Process: Once a reconciliation bill is passed in the House and Senate, members of each body meet to work out their differences. A majority of the conferees on each panel must agree on a single version of the bill before it can be brought back to the full House and Senate for a vote on final passage. Approval of the conference agreement on the reconciliation legislation must be by a majority vote of both Houses. In the House, the conference report is usually given a special rule from the Rules Committee to govern floor consideration. In the Senate, the floor debate is governed by Senate rules and specific provisions of the Budget Act. In contrast to the concurrent budget resolution, a reconciliation bill is sent to the President for approval or disapproval.