How CBO Supports the Congress in the Reconciliation Process

The House and Senate recently agreed to a budget resolution that kicks off the reconciliation process, which allows the Congress to expedite consideration of bills that would change laws affecting spending, revenues, or the debt limit. That budget resolution, H. Con. Res. 14, includes reconciliation instructions directing committees to propose legislation aimed at having a specified effect on the federal budget.

Throughout the reconciliation process, the Congressional Budget Office, in collaboration with the staff of the Joint Committee on Taxation (JCT), assists the Congress by providing nonpartisan analysis and cost estimates for legislative proposals as they are developed and finalized. As the committees move forward with reconciliation, the information that CBO provides about legislative proposals may be considered in determining whether the bills comply with the rules governing the process. The Congress is responsible for enforcing those rules.

CBO will update its Reconciliation page as it publishes estimates and other related analyses.

Cost Estimates During Reconciliation

CBO will publish cost estimates for bills as they are ordered reported by the relevant Congressional committees. To ensure that its analysis is timely, the agency anticipates that those estimates will be conventional—that is, they will not incorporate any effects that the legislation might have on the size of the economy. As required by law, JCT will provide estimates for legislation that would affect the Internal Revenue Code. After the bills are combined, CBO and JCT will work together to provide an estimate of that broader reconciliation package that accounts for the interactions among the separate bills' provisions.

CBO and JCT also expect to work together on dynamic estimates—that is, estimates that reflect the budgetary effects of changes in the size of the economy and in other macroeconomic variables that would stem from enacting the legislation. Such dynamic estimates are required, to the extent practicable, by the House rules for the 119th Congress.

By law, CBO develops cost estimates that show budgetary effects in relation to its baseline budget projections, which reflect the assumption that current laws governing taxes and spending generally remain unchanged. The Congress chooses which information to use and the baseline against which to enforce points of order during the legislative process.

Some lawmakers have called for using a baseline that reflects current tax policy—one in which certain provisions of the 2017 tax act (Public Law 115-97) that are set to expire under current law, many at the end of 2025, are extended. If the Chairmen of the Budget Committees specify the details of such a baseline and direct CBO to provide information about the budgetary effects of legislation relative to that baseline, the agency will do so.

The Roles of CBO and JCT

CBO and JCT collaborate to support the Congress and will continue to do so throughout the reconciliation process. When it comes to legislation involving changes to the Internal Revenue Code, CBO is required by law to incorporate estimates produced by JCT into its cost estimates. Thus, JCT is responsible for any estimates of the effects of tax provisions included in reconciliation legislation.

For example, JCT provided estimates of the budgetary effects of the tax provisions of the 2022 reconciliation act (P.L. 117-169), including the cost of energy-related tax credits, which CBO reported in its cost estimates. If this year's reconciliation legislation makes further changes to those provisions—and thus to the Internal Revenue Code—JCT will once again provide the estimates.

With each new baseline, CBO includes updated projections of tax revenues to reflect new legislation, newly available data, and updated projections of the economy, including any information that has become available since JCT made its initial estimate for the new legislation.

The baseline projections that CBO published in February 2024, for example, included substantial upward revisions to the cost of clean vehicle and energy-related tax credits. Those revisions reflected a rule proposed by the Environmental Protection Agency that would change standards for vehicle emissions, guidance from the Treasury about certain provisions of the 2022 reconciliation act, and market developments.

Compliance With Senate Rules

The nonpartisan analysis that CBO and JCT provide can inform lawmakers as they look to ensure that reconciliation legislation complies with Senate rules that govern the process. An example of such a rule is the "Byrd rule," which limits the provisions that can be included in a reconciliation package. CBO does not enforce those rules—that responsibility is left to the Senate.

Phillip L. Swagel is CBO's Director.