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Stimulus bill drama: Budget reconciliation can fast-track the package, but has one huge limit

Democrats are using a legislative tool called budget reconciliation to speed up passage of the new stimulus bill, but the lawmaking procedure may come at a cost.

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What's budget reconciliation? We'll explain how House and Senate Democrats are using the tool to pass President Biden's relief bill, over opposition.

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Congressional Democrats are leaning on an uncommon law-making tool to speedily pass the $1.9 trillion COVID-19 relief bill and its $1,400 stimulus check by the middle of March. The tool allows the lawmakers to bypass obstructions on the way to a final vote. But it comes with a rigid set of rules that determines what can and cannot be included in a bill. On Thursday night, a critical piece of the Democrats' economic-assistance proposal -- a hike to the minimum wage -- was ruled out of bounds.

The details of the legislative process, called budget reconciliation, are confusing, and the rules for what can and can't be covered by the process are so complicated even members of Congress aren't sure what would make the cut. We'll do our best to break down what it is and how it could work. Because of the 50/50 split between Democrats and Republicans in the Senate (with Vice President Kamala Harris holding the tie-breaking vote), Democrats are looking to budget reconciliation to avoid resistance to the COVID-19 relief package.

We'll explain how using the budget reconciliation process would make it possible to pass the stimulus bill -- and therefore approve the next stimulus check -- in both the House and Senate with just a simple majority of votes, and why Democrats see it as critical to the outcome of a Senate vote. We'll also look at what may not make the final bill. Here's how it works and what's happening now. This story has been updated with new information.

What is happening with the bill using budget reconciliation?

Congressional Democrats are fast-tracking the relief bill using budget reconciliation. But the budget tool sets strict limits on what can included, and not everything Democratic leaders want to accomplish in the stimulus bill may meet the requirements for the reconciliation process. On Thursday, the Senate's lead legislative rule-keeper -- its parliamentarian -- said including a boost to the minimum wage rate in the bill would not meet the requirements. Here's why.

With budget reconciliation, a funding bill needs a simple majority to pass, instead of the normal 60 votes required to approve spending or revenue legislation. The bill also can't be tied up with a filibuster, where a senator can use a variety of foot-dragging tactics to block or delay a bill.

Because it can be used to pass fiscal legislation that may not have bipartisan support, the budget reconciliation process comes with strict guidelines about how it can be used and how often Congress can use it. First, it can be used just for legislation that changes federal spending, revenues and debt limits, like President Joe Biden's COVID-19 stimulus package. Something called the Byrd rule -- named after former West Virginia Sen. Robert Byrd -- prevents items that don't fit into one of those three budget categories from being included. 

Second, the Senate can normally consider only one reconciliation per year for each of the budget categories: spending, revenue and debt. Because Congress didn't adopt a budget resolution in 2020 for the 2021 budget, this year's Congress may have two opportunities to use the tool, once now and once again in the fall when it adopts a budget to fund the government.

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What else could the budget-reconciliation rules exclude?

As the bill stands right now, a boost to the minimum wage rate falls outside the requirements, the Senate parliamentarian ruled. To keep the pay hike in the bill, lawmakers could rewrite the passage on minimum wage to try to meet the guidelines.

Monthly payments for child tax credits may also fall outside the limits, as well as using funds to reopen schools.

Why is budget reconciliation key to approval?

Since a bill must be approved in the House and Senate before it can become law, the ease of doing so depends either on which party retains the majority or whether the bill in question has enough bipartisan support to pass with a majority.

With the Senate split evenly, it would take 17 Republican senators to vote yes for the bill to pass. That isn't seen as likely, which would draw out negotiations and quite possibly dramatically alter the bill in the process. Using budget reconciliation could keep the bill largely as is, and approve it faster.

Using the budgeting tool, House Democrats hope to pass their version of the bill on Friday and then send the legislation on to the Senate for approval, giving the president enough time to sign the bill into law before March 14, when federal unemployment benefits are set to expire.

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President Biden is working to get more economic aid out as quickly as possible.

Sarah Tew/CNET

How budget reconciliation has been used before

Congress has successfully used the reconciliation process just 21 times since 1980, according to the Center on Budget and Policy Priorities.

The most recent use of the budget reconciliation process was under former President Donald Trump, when Congress used the tool to pass the administration's tax cuts in 2017. During the presidency of Barack Obama, Congress used the process to amend the Affordable Care Act in 2010.

For more on the next stimulus package, here's where things stand on stimulus proposal, what you need to know about stimulus checks and what's happening with federal unemployment assistance.