The historic GOP tax reform plan was passed by the House late Tuesday night and was subsequently sent to the Senate. However, it was later revealed that the House would have to vote once again.
Why? The legislation, titled the Tax Cuts and Jobs Act, was not compliant with a US Senate rule known as the Byrd Rule. After altering the bill to comply with the Senate rule, the bill will now go back to the House for a second vote.
What exactly is the Byrd rule, and why has it come up in this legislation? After all, not every bill goes through this process, and many Americans have been left scratching their heads in the wake of the news, having never even heard of the seemingly-obscure Senate rule.
The Byrd Rule is recognized as part of the Reconciliation Process. Named after Democratic Senator Robert Byrd, the rule amends the Congressional Budget Act of 1974 to allow Senators during Reconciliation to block legislation if there is a strong likelihood of the legislation significantly increasing the federal deficit beyond a ten-year term, or is otherwise deemed an “extraneous matter” as described in the Budget Act. The definition of what constitutes an “extraneous matter”, however, is subject to interpretation.
Created to prevent policymakers from abusing the reconciliation process, the Byrd rule can only be invoked against reconciliation bills and reconciliation conference reports.
There are six criteria that must apply in order for a provision to be considered “extraneous”, these being provisions that:
- do not produce a change in outlays or revenue
- produce changes in outlays or revenue which are merely incidental to the non-budgetary components of the provision
- are outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure
- increase outlays or decrease revenue if the provision’s’ title fails to achieve the Senate reporting committee’s reconciliation instructions
- increase net outlays or decrease revenue during a fiscal year after the years covered by the reconciliation bill unless the provision’s title remains budget-neutral
- contain recommendations regarding the OASDI trust funds
Essentially, a provision is considered “extraneous” if it changes Social Security, increases the deficit beyond a ten-year period, or produces no change in revenues.
Due to this unexpected “Byrd Bath”– the nickname given to the Senate process— certain provisions of the Tax Cuts and Jobs Act will be changed, including the exemption for small colleges from a new excise tax, and changes to the 529 savings plan that would have permitted money in college-savings accounts to be used for homeschooling materials.
The House, which initially passed the bill along party lines in Tuesday’s vote, is scheduled to vote again on the amended bill today.
GOP officials have stated that they aim to get the bill on President Trump’s desk to finally be signed into law by Christmas, and are confident that even with this unexpected setback, they will prevail.
“This is one of the most important pieces of legislation Congress has passed in decades,” House Speaker Paul Ryan said following Tuesday’s vote. “This is a good day for workers, and a great day for growth.”