Federal Budget Rules Are Deepening Societal Divisions
Many Americans now live in dread that a slight tilt of public sentiment away from their favored candidates might mean a wholesale change in important aspects of American life. That fear pushes them to view every election as bordering on the existential in its importance. With the stakes seemingly so high, societal tensions are permanently elevated.
The US Capitol in wintertime
The current Republican majority’s top legislative priority in Congress is the passage of the so-called “megabill”—a sprawling budget-centric measure that would lower business and individual income taxes, impose work requirements on non-disabled adults seeking to enroll in Medicaid, cut student aid for higher education, scale back green energy subsidies, increase spending on immigration enforcement, and much else. It is an agenda that seems to have been assembled to ignite maximum horror outside of GOP-aligned circles. On cue, Democratic leaders are spreading the word through their various allied channels that what is afoot is apocalyptic in its implications. About half of the country agrees with them.
Not very long ago, the roles were reversed. In 2021 and 2022, Democrats controlled both elected branches of the federal government and were determined to use that power, which even many from within their ranks expected to be fleeting, to pursue an agenda that required no cooperation from Republicans. The result was the passage of two measures that were in many ways the inverse of this year’s GOP agenda. Instead of tax and spending cuts, the Biden administration worked with a slim Democratic majority to expand social welfare spending, discourage fossil fuel use, and direct capital investments in the economy to industries favored by the party. It was the GOP’s time in the wilderness—a period it used to marshal its forces for a counterattack when its opportunity came around again, which it now has.
In both instances, the party in power believed there was no time to waste and no reason to be tepid given the likelihood that the political pendulum would soon swing against them. And, as was widely predicted, the Democrats did lose control of the House in the 2022 midterm election, which put an end to that particular run of unilateralism. It remains to be seen if the same fate awaits the GOP in 2026.
Although the partisan back-and-forth cycles of recent years have been particularly dramatic and jarring, the pattern of alternating power plays when one party has the upper hand goes back three decades. More recently, the intensity of the battles has increased, but the instinct for partisan legislating, when that option is available, has been visible for some time.
What is less well appreciated is that federal budget rules are playing a role in this phenomenon, and in a way that was not the intention of those who wrote them a half-century ago. Indeed, they would be surprised and likely unsettled at what has become of their effort to give Congress a shot at competing with the executive branch on fiscal stewardship.
A Budget for Congress
In 1972, as he geared up for re-election, President Richard Nixon identified a short list of foils to run against, including the Democratically controlled Congress from which his opponent, South Dakota Senator George McGovern, had emerged. In Nixon’s telling, it was the nation’s profligate and irresponsible legislature and not him that was to blame for fueling deficits and inflation, and he was promising to do battle with it if given a second term. One of the tools he would wield was the impoundment, or withholding, of appropriated funds in a clear challenge to the constitutional delegation of spending authority to Congress.
This power grab added more fuel to what was already a growing sense in Congress that it was losing control of important fiscal decisions because of the increasing dominance of executive governance. In an era of mass media, presidents have substantial advantages over Congress because of their ability to command attention and project a single perspective. Congress is by design a fragmented body that often accommodates conflicting and discordant messages.
“In an era of mass media, presidents have substantial advantages over Congress because of their ability to command attention and project a single perspective. Congress is by design a fragmented body that often accommodates conflicting and discordant messages.”
Nonetheless, many in Congress from both parties were determined to do what they could to reset the balance of power with the White House by changing how budgets were produced. Their focus was on building a parallel process to the annual production of the president’s budget. In time, that impulse led to the passage of the Congressional Budget and Impoundment Control Act of 1974, or CBA.
The architects of the CBA were cognizant of the tendency for stalling tactics by minority factions to have undue influence over the outcomes of important bills. Their goal was an orderly process that would avoid this fate, which led them to put time limits on debate on congressional budget plans—called budget resolutions—and follow-on implementing bills, called budget reconciliation. Most importantly, these time limits would prevent Senate filibusters from permanently blocking progress.
In practical terms, the CBA rules have meant that a budget-focused reconciliation bill, which can make major changes to tax policy, Medicare, Medicaid, student loans, and many other matters, can pass in the Senate with a simple majority of 51 votes instead of 60. That nine-vote differential is now a defining feature of American politics.
Reconciliation’s Emergence
The CBA was enacted in an era of less partisan homogeneity. At that time, many southern Democrats voted more conservatively than did their northern liberal Republican counterparts, which meant cross-party coalitions were often necessary to get anything approved. In that context, the CBA’s limitations on debate in the Senate were not seen as fast-tracking hyper-partisanship.
The revised budget process played an important role in the legislative history of the 1980s, which was a period of split partisan control of government. During the entirety of the Reagan administration, Democrats ran the House, and in 1987 and 1988 they had a majority in the Senate too. This division of partisan control did not lead to stasis. Quite the contrary. Congress approved many important tax and spending changes during these years, but always with bipartisan votes, and often while using the CBA process to tee up significant budget-related adjustments.
Similarly, when the George H.W. Bush administration pushed for a significant deficit-cutting measure in 1990 while Democrats were in the majority in Congress, the deal that was finally struck was by necessity bipartisan and included tax hikes that undermined the president’s 1992 re-election effort. The bill was approved under the CBA’s rules for reconciliation.
The first fully partisan reconciliation bill emerged in 1993, when newly elected President Bill Clinton pushed for a major tax hike and expansion of social welfare support programs. With Democrats still running Congress, the party was able to push its agenda into law using the CBA, which meant there was no need to water down their plans to secure Republican support. The final vote in the Senate was 51-50, with Vice President Al Gore breaking the tie. A new era had begun.
The Democrats’ success in 1993 fueled a GOP-led political counter-movement, which in the 1994 midterm election handed Republicans full control of Congress for the first time in four decades. The new majority promptly put together a budget reconciliation measure that moved in precisely the opposite direction from the 1993 bill, with deep spending cuts and no input from the Democratic minority. That measure never became law because it was vetoed by President Clinton, but the process by which it was assembled and presented to the president was further proof of what the congressional budget process was capable of producing when the stars were fully aligned.
In 2010, reconciliation played an especially important role in policymaking when a special election in Massachusetts reduced the Senate Democratic majority from 60 to 59 members. With consideration of the Affordable Care Act then reaching its final stage, Democrats could no longer get it through the Senate using the normal rules for legislative debate (a GOP filibuster was certain). To get around that obstacle, they created a second bill using the reconciliation procedure that allowed them to pass two bills which, when taken together, met their objectives.
In 2017, Republicans vowed to undo the ACA using the reconciliation process but fell short owing to intra-party disagreements. Later in the year, however, they did succeed in passing a significant GOP-only tax cut using the CBA’s fast-track rules. As noted previously, that was followed in 2021 and 2022 by Biden-era spending increases that also passed as reconciliation measures and thus with no need for support from the minority party.
An additional consequence of using the CBA to pass so many partisan bills is that neither party sees much use in producing budget plans when there is split control of the elected branches. During those periods, Congress reverts to its normal state, which is to avoid anything that is politically risky, like spending cuts or tax hikes. The expectation is that normal bipartisan deal-making can handle consideration of pressing matters, while big changes can wait for the next occasion when one of the parties has full control.
Existential Stakes
Both parties have internalized the lesson from this history, which is that they are never more than one or two elections away from having the power to pass sweeping partisan agendas. Even with very slim majorities, the CBA provides a pathway to approve new budget-related changes affecting taxes, health care, education, energy, agriculture, immigration, and other federal programs. That prospect is so tantalizing that it discourages the development of proposals that might attract bipartisan support but which also would be less attractive to die-hard partisans.
Voters, in a sense, have gotten the memo too. Many Americans now live in dread that a slight tilt of public sentiment away from their favored candidates might mean a wholesale change in important aspects of American life. That fear pushes them to view every election as bordering on the existential in its importance. With the stakes seemingly so high, societal tensions are permanently elevated.
Regular Order
Although the architects of the CBA did not foresee what would come from the process they created, perhaps they should have. Political competition always has been intense in the US, with the parties continuously looking for ways to gain leverage over their opponents. At enactment, the CBA offered a clear opportunity for a unified majority to use its position to pass bills that the minority would find unacceptable but also could not stop. That it took two decades for the law to be used in this manner was likely more the result of historical circumstances than an unwillingness to use the tools available for partisan advantage (Democrats controlled Congress and the White House from 1977 through 1980, but the party was more diverse in those years and thus not in a strong position to completely ignore the views of their Republican colleagues). When unified partisan control of both Congress and the White House became more common after 1992, and also alternated between the parties, budget reconciliation quickly became the vehicle for moving important components of the majority’s agenda.
Relatedly, it is clear that the current trend of strictly partisan budgeting has been adverse for the nation’s fiscal position. When the GOP is in power, taxes get cut without commensurate restraint of spending. When the Democrats are in charge, programs are expanded but not taxes. That combination has been disastrous for the fiscal outlook over the coming decades.
The remedy for the deleterious effects of the today’s process is clear enough. If reconciliation is only going to be used to pass partisan bills that inflame societal divisions and further widen budget deficits, it is time to consider getting rid of it altogether. Doing so would not mean an end to legislating. Congress would have to do what it always did in the pre-reconciliation era, which was to pass important bills through messy deal-making processes that generally involve cross-party compromise.
In 1983, when a bipartisan majority used traditional legislative rules and not reconciliation to amend Social Security and extend the solvency of its trust funds for several decades, the debate was intense, but the final resolution was broadly accepted by the public as an acceptable way to address an important and politically challenging problem. Since the enactment of the 1983 plan, neither party has seriously criticized its contents or proposed to reverse its key provisions. Among other changes, that law phased in a hike in the normal retirement age from 65 to 67, which has occurred without excessive public controversy.
Jettisoning partisan reconciliation bills will not by itself diminish polarization. The causes of the emergence of that societal dynamic likely run far deeper than the unintended effects of budget rules Congress adopted a half century ago. But eliminating reconciliation as an option for further policymaking might change how the parties conduct their affairs. If every major bill will require some level of cross-party cooperation, elected leaders and candidates for office may be less inclined to promise their core supporters that they will deliver one-sided transformations of important aspects of American life.
Nor will eliminating reconciliation solve the fiscal problem. Congress will still have to realign its priorities toward matching long-term spending commitments with tax laws that can provide sufficient revenue, which neither party currently sees as conducive to their goals and electoral interests. The problem today is not a lack of potential solutions but rather an unwillingness among those elected to office to look carefully at the options available to them.
Of course, watered down compromises are not always better than more principled plans developed by like-minded partisans. But the experience of recent years indicates that one-sided bills carry the substantial risk of inflaming societal tensions. That by itself is a strong argument for making it harder for partisan impulses to find an unobstructed pathway toward changing federal law.
