Reconciliation Mechanics
Research for Online Investors

by John Dalt

3/5/10

Health care reform appears dead to your editor.  There are two ways for supporters of Health Care Reform to accomplish their goal.  The House could pass the Senate version as is, which would then go to the President and become law.  The House will not pass the Senate bill because it has language in it that members do not agree with.  The popular alternative is to use the “reconciliation” process.

This process still requires the House pass the current Senate bill, then, the House Budget Committee will report an Omnibus Reconciliation bill to the House floor.  The key to this process is that the House must pass the Senate version of health care reform.  Once the Senate version is passed, it can go to the President with or without the reconciliation bill passing.

This makes the discussion over reconciliation a red herring.  If House members approve the Senate bill they have no control over the outcome.  The Senate may ignore their reconciliation bill which will leave them hanging.

Members of the House have “deal breaking” problems with the Senate bill.  The most contentious issue is abortion funding, but the most liberal representatives have said they will not support a bill without a public option.  Deals were made with each of these groups in the House bill, which are not included in the Senate bill.

You have no doubt heard the talk about “reconciliation” in the Senate.  It might be helpful to understand what this is.  The Reconciliation Process was created by the 1974 Congressional Budget Act.  It was intended to be used in the Budget process, to avoid filibusters when the congress was reconciling spending with revenue.  By including reconciliation instructions in a bill in a budget resolution, leadership of the congress limits debate, amendments and use of a filibuster to delay or kill the measure.  Reconciliation rules concerning amendments and debate apply in the House and Senate.

Reconciliation was intended to apply to a single fiscal year.  Since 1980, reconciliation has been used 23 times.  President Clinton wanted to use reconciliation to pass health care in 1993, but Senator Robert Byrd objected because health care reform was outside the bounds of budget reconciliation.

Here is a list of every Reconciliation Bill:

Name of Bill (Senate Majority)  Vote, if available   President

1. Omnibus Reconciliation Act 1980 (D) Carter
2. Omnibus Budget Reconciliation Act 1981 (R) Reagan
3. Omnibus Budget Reconciliation Act 1982 (R) 80-15 Reagan
4. Tax Equity & Fiscal Responsibility Act 1982 (R) Reagan
5. Omnibus Budget Reconciliation Act 1983 (R) Reagan
6. Deficit Reduction Act of 1984 (R) Reagan
7. Consolidated Omnibus Budget Reconciliation Act 1985 (R) Reagan
8. Omnibus Budget Reconciliation Act 1986 (R) Reagan
9. Omnibus Budget Reconciliation Act 1987 (D) Reagan
10. Omnibus Budget Reconciliation Act 1989 (D) Reagan
11. Omnibus Budget Reconciliation Act 1990  (D) 54-45 (35 Democrats & 19 Republicans voting Yea, 20 Democrats & 25 Republicans voting Nay) Bush
12. Omnibus Budget Reconciliation Act 1993 (D) 51-50 (50 Democrats voted Yea, 45 Republicans & 5 Democrats voted Nay.)  Al Gore broke the tie as Vice President   Clinton
13. Balanced Budget Act of 1995 (R) 52-47 52 Republicans voted Yea, 46 Democrats & 1 Republican voted Nay) Clinton veto
14. Personal Responsibility & Work Opportunity Act 1996 (R) 78-21 (54 Republicans & 25 Democrats voting Yea, 21 Democrats voting Nay) Clinton
15. Balanced Budget Act of 1997 (R) 85-15 (12 Republicans & 3 Democrats voting Nay) Clinton
16. Taxpayer Relief Act of 1997 (R) 92-8 (8 Democrats voting Nay)  Clinton
17. Taxpayer Refund and Relief Act 1999 (R) 54-46 (54 Republicans voted Yea, 43 Democrats & 3 Republicans voted Nay) Clinton veto
18. Marriage Tax Relief Reconciliation Act 2000 (R) 60-34 (53 Republicans & 7 Democrats voting Yea, 1 Republican & 33 Democrats voting Nay) Clinton veto
19. Economic Growth and Tax Relief Reconciliation 2001 (D) 58-34  (12 Democrats & 46 Republicans voted Yea, 31 Democrats & 2 Republicans Nay) Bush
20. Jobs and Growth Tax Relief Reconciliation Act 2003   (R) 51-50  (48 Republicans & 2 Democrats Yea, 3 Republicans & 47 Democrats Nay) Vice President Cheney Broke Tie  Bush
21. Deficit Reduction Act 2005 (R) 51-50 (50 Republicans Yea, 4 Republicans & 46 Democrats Nay) Vice-President Cheney Broke Tie Bush
22. Tax Increase Prevention and Reconciliation Act 2005  (R) 54-43 (51 Republicans & 3 Democrats Yea, 2 Republicans & 41 Democrats Nay) Bush
23. College Cost Reduction and Access Act 2007             (D) 79-12 (50 Democrats & 38 Republicans voting Yea, 12 Republicans voting Nay) Bush

The above information may help you understand and give you more knowledge than 90% of the blowhards that don’t know “reconciliation” from “repo man.”  Not one close vote was strictly along party lines.  Many votes were not close, the process was used to force through tough decisions on budget and taxes (as intended).  The process has wondered from the original intent to balance planned spending with actual revenue, but congress does not worry about that anymore.

I have spent some time researching, but cannot find the votes for most bills prior to 1990 on the internet.  Given more time and unlimited resources, this could be overcome, I do not have either.

Recapping the health care reform legislation currently pushed by the White House, it would be very difficult to push it across first base in the House of Representatives.  The Senate bill has been attacked by many house members, so its approval to start the process is dead.  Member’s public announcements combined with public anger over approval of sweeping health care legislation present insurmountable obstacles.  Have a great weekend.  Buy healthcare stocks next week.  We like UNH.

To the mailbag:

“So what do we do?  Buy land, gold & silver bars, coins, and guns...then, run for congress for the retirement plan?”

. ..subscriber M.C.

Latest news shows almost all government jobs pay better than private sector…where would I fit in?  Love to be on the Federal Open Market Committee, work to shut it down.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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