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1 (December 8, 2006)

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                                                                    Order Code  98-814
                                                            Updated  December   8, 2006





         CRS Report for Congress



         Budget Reconciliation Legislation:

            Development and Consideration

                               Bill Heniff Jr.
                Analyst  in American  National Government
                    Government and Finance Division

    Budget reconciliation is an optional two-step process, provided by the Congressional
Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344, 88 Stat. 297-332), that Congress
may use to assure compliance with the direct spending, revenue, and debt-limit levels set
forth in a budget resolutions agreed to by Congress. First, Congress includes
reconciliation instructions in a budget resolution directing one or more committees to
recommend  changes in statute to achieve the levels of direct spending, revenues, and debt
limit agreed to in the budget resolution. Second, the legislative language recommended
by committees is packaged without any substantive revision into one or more
reconciliation bills, as set forth in the budget resolution, by the House and Senate Budget
Committees. In some instances, a committee may be required to report its legislative
recommendations directly to its house. For more information on budget process, see
[http://www.crs.gov/products/guides/guidehome.shtml].

Development of Reconciliation Legislation

    The  reconciliation process begins with the inclusion in a budget resolution of
instructions to committees to change spending and revenue laws. The instructions
typically indicate the committee(s) directed to recommend changes and a date by which
the committee(s) must submit its recommended legislation to its respective Budget
Committee. The House directives usually specify recommended levels of direct spending
and revenue by committee, while the Senate directives usually specify the amount of
change. Reconciliation directives may also specify the amount by which the statutory
limit on the public debt is to be changed and instruct the House Ways and Means
Committee and the Senate Finance Committee to recommend such a change.

    The  dollar amounts in reconciliation directives are based on assumptions about
existing policies and the budgetary impact of certain policy changes. In some instances,
the assumed changes in existing laws are printed in the committee or conference report
accompanying  a budget resolution. Committees, however, are not bound by these
assumptions or suggestions.

    If only one committee is required to recommend legislative changes, the committee
reports its recommended legislation directly to its chamber. If more than one committee
is directed to report legislative changes, which has often been the case, those


           Congressional Research Service w The Library of Congress
                Prepared for Members and Committees of Congress

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