Can House leadership force the Freedom Caucus’s hand on the budget?

When Congress returns from recess after Labor Day, one of the many items on its agenda will be adopting a budget resolution.  While members’ immediate attention will be directed at raising the debt limit and avoiding a government shutdown at the end of September, the budget resolution represents an important and necessary step in tackling a major Republican legislative priority: tax legislation.

Republican congressional leaders have indicated that they intend to use the budget reconciliation process to move a tax bill.  Reconciliation bills can’t be filibustered in the Senate, but considering the bills requires Congress to first agree on a set of reconciliation instructions as part of the annual budget resolution. The instructions are a key feature of the reconciliation process, specifying which congressional committees are supposed to develop proposals to be considered under reconciliation’s procedural protections. Including Congress’ agriculture committees in the instructions, for example, opens up the possibility of changes to farm price supports and food stamps. The size of the instructions—how big of a budgetary change a committee is to make—also matters; in my recent book, I show that a larger instruction to a committee corresponds to a greater chance that a program overseen by it is cut.

The current version of the budget resolution—as reported out of the House Budget Committee—contains instructions to 11 House committees calling for at least $203 billion in deficit reduction over 10 years, including a $52 billion directive to the House Ways and Means Committee. It is this component of the instructions that would unlock the ability to use reconciliation for tax legislation, and congressional Republicans are reportedly considering a maneuver that could help them cut taxes while still meeting that deficit reduction requirement.

The House Budget Committee’s draft, however, may just be a starting point; both chambers must agree on the same version of the budget resolution for it to take effect.  Since 1981, when it first made significant use of the reconciliation process, Congress has completed a budget resolution in 27 of the 36 years.  In two-thirds, or 18 of these years in which Congress has finished a budget resolution, there has been at least one change to the reconciliation instructions between the initial version reported by the House Budget Committee and the final version adopted by both chambers. In 2015, for example, the initial House draft named 13 committees, as compared to three in the final document.  This isn’t a new phenomenon either.  Earlier years saw both similar sizable reductions—from 14 to one in 2003 and from eight to zero in 1984—and smaller adjustments, like the elimination of the instructions for the Ways and Means Committee in 2008.

Might we expect something similar this year? Evidence from past uses of reconciliation suggests that differences between the initial and final versions of the measure are affected by the relative ideological positions of the two chambers. On the spending side, reconciliation is meant to be a deficit-reduction tool, so we would expect more conservative party coalitions to use the tool more aggressively. And indeed, in roughly 80 percent of the years that saw revisions to the House-reported instructions, the changes between the House’s opening offer and the final conference version were in line with this logic. When the House had a more conservative majority party than the Senate, more committees were included in the House Budget Committee’s version than in the final conference measure, and vice versa.

It’s possible, then, that this year’s opening offer by the House Budget Committee may be geared more towards building a coalition to get the measure out of the chamber now, with the expectation that the final version will be more tailored.  House Speaker Paul Ryan (R-Wisc.) is dealing with a particularly divided caucus, including members of the House Freedom Caucus who have been calling for major cuts to mandatory spending programs like Medicaid and food stamps for several years.  Their votes could prove pivotal to adopting the budget resolution in the House. Including spending reductions in the House budget resolution may be an attractive way to shore up their support at this stage—especially since these same legislators are likely to be frustrated by a potential debt ceiling increase without corresponding spending cuts this fall. Given the centrality of tax legislation to the GOP’s agenda, House leaders may believe that if a budget resolution came back from the Senate without the same deficit reduction instructions as the lower chamber’s initial draft, House conservatives—not wanting to stand between the party and a tax bill—would be reluctant to oppose it.

As the budget resolution moves forward, the reconciliation instructions are likely to be at the center of the debate.  Do Republicans revise the resolution to allow them to pursue a different strategy on tax legislation?  Do the instructions calling for spending cuts make it into the final version?  Can a simple majority in both chambers eventually reach an agreement at all?  The answers to these questions and more will depend on not only on intra-party dynamics within the House and Senate, but also how interactions between the chambers play out.