The federal budget reconciliation process arose from language inserted in the Congressional Budget and Impoundment Control Act of 1974, which, in part, allows Senators to pass concurrent budget bills without debate or a presidential signature.
Following passage of the 1974 Act, several senators attempted to attach amendments which had nothing to do with fiscal policy to reconciliation bills. To ensure important legislative initiatives are given proper checks and balances, subsequent reconciliation bills have adopted the "Byrd Rule," which applies to amendments that:
- do not produce a change in outlays or revenues
- 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, as a whole, 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, as a whole, remains budget neutral
- contain recommendations regarding the OASDI (social security) trust funds