Speaker Pelosi, Leader Reid, and their Administration allies face seven challenges in implementing the two bill strategy:

1. Yes/no political question
2. Yes/no reconciliation question
3. Sequencing
4. Money
5. Procedural
6. Substance & vote counting, especially in the House
7. Timing

I have a companion post which describes the mechanics of the two bill strategy. Warning: the mechanics post is intended as a technical reference and gets into more detail than you may want.

Last August I posted a primer on reconciliation which may be helpful.

1. Yes/no political question

Irrespective of the bills’ substantive details, can Speaker Pelosi and Leader Reid convince each of 217 House Democrats and 50 Senate Democrats that it is in their crass political self-interest to vote aye (multiple times) and have a major health bill become law?

Most Democrats are from safe districts so this isn’t an issue. But there are some House Democrats who voted aye for House passage and are nervous about voting aye a second time.

Argument: You already voted aye. Your opponent this November can already run an ad against you for that vote. There is therefore no political cost to you voting aye a second time.

Response: If you vote aye a second time, the bills will become law. You are then committed to defending these laws and your votes for them through the remainder of this year (and thereafter). If you change your vote to no, the bill will not become law and you give yourself a response to that negative ad. Your message changes to “I changed my mind, and here’s why I opposed the bills.”

The crass and self-interested political question is not “Do I do additional damage by voting aye a second time?” It is “Given that my opponent will attack me for voting aye last October, am I better off (A) voting aye, having it become law, and defending it, or (B) voting no, having it not become law, and explaining why I changed my vote?”

Let’s use an extreme example to illustrate this tradeoff. Suppose you cared only about getting re-elected. Suppose you knew today that on Election Day a new comprehensive health care law would be intensely unpopular with 95% of your constituents. Clearly you would be politically better off to change your vote and explain why you did. You would still take heat for voting aye last October, but that’s true in either case. And some fraction of those 95% of your constituents would give you credit for voting no the second time and helping kill the bill. Even if all of the other 5% took retribution against you for flip-flopping, the severe imbalance in the numbers makes it politically advantageous to change your vote.

This is an extreme example, and I am not arguing it makes sense for all these nervous House Democrats to switch. I am instead making the less contentious claims that (i) there is a potential political benefit to switching from an aye to a no, and (ii) this political benefit gets bigger the less popular is a new health care law in fall of 2010.

A new law may make the anger and opposition go away. If so, the arguments for sticking with your aye vote are valid. But if you think opposition will continue to climb and intensify after a new bill is signed into law, then it may be in your narrow political interest to switch from aye to no.

Nervous House Democrats from purple districts know this, presenting a significant challenge for Speaker Pelosi.

2. Yes/no reconciliation question

Do Speaker Pelosi and Leader Reid lose any votes if they use reconciliation to pass Bill #2?

I think this is the smallest challenge of all those I list. I think the proposed process is an abuse of the intent and spirit of reconciliation. Even when made aggressively by Congressional Republicans, that argument so far does not appear to be dissuading Congressional Democrats from pursuing this path.

Still, if only two or three House Democrats who previously voted aye decide they cannot take the political heat associated with what is being labeled as a “nuclear option,” they could jeopardize the entire strategy. The vote-counting margins are so thin, especially in the House, that this procedural debate could still matter.

It also feels like this issue is still ripening. It appears the Blair House Debate and the President’s upcoming remarks this week are in part designed to provide those nervous Congressional Democrats with air cover for the process aspects of some tough votes.

It doesn’t really matter what the viewers of Fox News or MSNBC, or the editors of the New York Times or Wall Street Journal think on this point, except to the extent they influence the behavior of those swing votes in the House.

3. Sequencing

The core challenge here is to sequence three votes:

1. House passage of the Senate-passed bill (which I call Bill #1);
2. House passage of the new reconciliation bill (Bill #2);
3. Senate passage of Bill #2.

(I’m glossing over working out differences between the House-passed and Senate-passed versions of Bill #2. For this purpose that’s a detail.)

Each leader wants (needs?) the other body to go first:

• Some Democratic Senators will want to vote for a new reconciliation bill only if they are certain that it will lead to a new law. They therefore want the House to pass Bill #2 before the Senate does, so that if Speaker Pelosi can’t get the votes for Bill #2, the Senate Democrats don’t have to vote and don’t have to take any risk.
• Some Democratic House members feel the same way about the Senate, and won’t want to vote aye for Bill #2 in case the Senate might not pass it. I would imagine more nervous House Democrats from purple districts might fit into this group. Many of these Members already feel burned from when they cast a politically damaging vote for a cap-and-trade bill that died in the Senate.
• I expect some House Democrats will insist the Senate pass the reconciliation bill (#2) before the House passes Bill #1. They fear that, if the House passes Bill #1 unchanged and the President signs it into law, the Senate has little incentive to take any additional political risk and Bill #2 will die in the Senate. Interestingly, I can imagine both some House liberals and some more moderate House Democrats (especially the pro-life ones) falling into this group.

These dynamics definitely exist at the Member level. They may also exist at the Leader level. I wrote about the possible blame-shifting exit strategy dynamics among Team Obama, Speaker Pelosi and Leader Reid last week.

Lesson #1 in how a bill really becomes a law: The House and Senate are two separate legislative bodies that occasionally work out their differences.

Corollary: Never underestimate the potential for friction and distrust between the House and Senate, even (especially?) between Members of the same party. Former Republican House Majority Leader Dick Armey once said, “The Democrats are the opponents. The Senate is the enemy.” This sentiment exists in both parties and both bodies.

Illustrating this, here is a POLITICO article from Friday:

Still, Pelosi and Senate Majority Leader Harry Reid have been in a staring contest of sorts about who should move first on a revised health care bill. To that end, the speaker and her no. 2 prodded the Senate Friday to move forward with reconciliation.

That’s in part a sign of the distrust that has crept in between Democrats in the two chambers, with some House Democrats angry that the more moderate Senate caucus hasn’t been able to pass a liberal version of reform.

… “Yesterday took us further down the path,” Pelosi said of Thursdays summit. “Now, we’ll put something together. Harry – will see what he can get the votes for, and then we’ll go from there.”

Update: After further discussions it looks like the Speaker and Leader Reid may not have much flexibility to choose a sequence. The money problem I describe below in #4 appears unsolvable. If so, that means Bill #1 will have to pass the House (but not necessarily be signed into law) before the Senate can consider Bill #2. In addition, while there is technically a choice in which body goes first on Bill #2, I would bet heavily on the House going first. If the Senate goes first then two Senate committees need to mark up Bill #2 (Finance & HELP). That’s a nightmare.

So I predict that the likely sequence is:

• House passes Bill #1, the Senate-passed bill.
• The House initiates and passes Bill #2, the reconciliation bill.
• The Senate passes Bill #2, the reconciliation bill.
• The President signs Bill #1.
• The President signs Bill #2.

4. Money (& sequencing again)

The Congress is still operating under the quantitative limits established by last year’s budget resolution. This will continue to be true even though Congress is now working on this year’s budget resolution. The old limits apply until a conference report on the new budget resolution is passed by the House and Senate. That would rarely happen before the mid-April statutory deadline for the budget resolution, and it’s a safe bet that Speaker Pelosi and Leader Reid will delay it as needed to avoid further complicating their health care efforts.

Still, Bill #2 must comply with the limits in last year’s budget resolution. Since the House Rules Committee can waive budget rules with a simple majority, this is probably a bigger practical challenge in the Senate, where waiving those same rules requires 60 votes (and therefore the cooperation of a Senate Republican).

There is also a vote counting dynamic that goes beyond the formal procedural limits. The President and Democratic Leaders worked hard to get CBO to say their bills reduce the budget deficit over ten years, and also over the long run. I think those claims are misleading because of factors ignored in the CBO analysis, but my view is beside the point.

The tension here is that the leaders will want to spend taxpayer money in Bill #2 to include popular provisions that engender political support from wavering Democrats. (A cynic would call this “buying votes with taxpayer money.”) Since Bill #2 is a reconciliation bill, it must reduce the budget deficit over ten years and must not increase it in the long run (I’m oversimplifying).

There is an additional and potentially fatal challenge introduced by the two bill strategy. Senate Finance Committee Chairman Baucus said it well but I’ll bracketed language to further clarify it:

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blockquote>The general rule is, if there is reconciliation, you have to amend something that is passed

I am going to describe the mechanics of the anticipated “two bill strategy” to enact health care reform using reconciliation.

If you don’t care about all this procedural mumbo jumbo you can skip this post and head over to my strategic analysis: Challenges of the two bill strategy. I intend this to be a reference post for those who want the gory details.

This is a follow-up post to What is reconciliation? (posted 5 August 2009).

Last August I wrote two other posts analyzing the prospects for using reconciliation for health care reform:

• How reconciliation might be used for health reform (posted 5 August 2009)
• Doing health care through reconciliation is even harder than I thought (posted 6 August 2009).

This post in effect updates and replaces those two posts for the current legislative environment.

Thanks to two experts who helped check this. I will update it to reflect suggestions and corrections from others.

Update: I think the “Bill #2 amending a bill that is not yet current law” problem is unsolvable. This changes the likely sequence. I have updated my projected sequence to reflect this.

Step by step

For this explanation I will assume success at each stage of the process, ultimately leading to President Obama achieving victory and enacting comprehensive health reform into law. The following is what I believe would be the most “normal” scenario for a highly unusual procedural path. It’s unusual not just because of the use of reconciliation, but because Congressional Democrats would be attempting to enact one substantive set of reforms spread across two bills, one of which realistically cannot change. This is procedurally novel for policy changes of this magnitude. It is also incredibly difficult to execute. You will seen so that there are many potential failure points.

There are many even more complex variants of this basic scenario. I will ignore them — this is complex enough. If you understand all of what’s below then you can understand variants of it.

I will assume that the House will go first on Bill #2 (the reconciliation bill), and that Bill #2 will pass both Houses in identical form before Bill #1 passes the House. This is a reasonable scenario but by no means the only one. I am choosing this because it is the closest approximation to “standard practice,” given an extremely unusual two bill process. Indeed, a budget problem discussed below may require the leaders to enact Bill #1 into law before Bill #2 comes to the Senate floor. For more on this challenge, please see challenge #4 in Challenges of the two bill strategy. Luckily for me, the bulk of the explanation below remains intact even if you assume a different sequence.

The hard steps are in red. The really hard steps are in bold red.

• House and Senate Democrats negotiate a substantive agreement on health care reform that they think can get 217 votes in the House and 50 in the Senate.
  • Speaker Pelosi and Leader Reid are the ultimate arbiters and sign off on the final deal.
  • The White House may be able to help, but they don’t formally have the pen. Since we know the President will sign any bill(s) that make it to his desk, the substantive agreement of the President’s advisors is helpful but not necessary. The Administration’s role is a supporting one.
  • Speaker Pelosi needs 217 rather than 218 votes because the House is down three members, so 217 is a majority. Please see House Minority Whip Eric Cantor’s memo to get a feel for the Speaker’s vote-counting challenge.
  • For majority votes Leader Reid needs 50 Senators rather than 51 because VP Biden can break ties. On other questions (like waiving certain points of order) he still needs 60 and the VP plays no role.
  • As a formal procedural matter this substantive agreement is not essential, but they would be crazy to proceed without doing so.
• As a part of this substantive agreement and vote-counting exercise, Speaker Pelosi and Leader Reid reach a procedural agreement on which bill goes first and which body goes first.
• Since I think they cannot figure out a way around the Senate scoring problem, then I think this sequence is the most likely: (updated to reflect better information on the Senate scoring problem)
  • House passes Bill #1, the original Senate-passed bill.
  • House passes Bill #2, the new reconciliation bill.
  • Now that the House has passed Bill #1, the Senate passes Bill #2.
  • House and Senate conference or ping-pong Bill #2 until they have passed identical text.
  • Bill #1 is sent to the President.
  • The President signs Bill #1.
  • Bill #2 is sent to the President.
  • The President signs Bill #2.
  • (I will assume the other sequence for the rest of this explanation, not this one.)

• I will assume they figure out a way around the scoring problem described below and sequence the bills this way:
  • House passes Bill #2, the new reconciliation bill.
  • Senate passes Bill #2.
  • House and Senate conference or ping-pong Bill #2 until they have passed identical text.
  • House passes Bill #1, the original Senate-passed bill.
  • Both bills are sent to the President.
  • The President signs Bill #1.
  • The President signs Bill #2.
• The Leaders tell committee staff to draft the agreement as two bills:
  1. Bill #1: The Senate-passed bill is already drafted and not a word can be changed, so there is no work to be done there.
  2. Bill #2: Draft a new bill, the text of which is the agreement minusBill #1 so that if both bills become law, the substantive deal is in effect.
     • They probably draft Bill #2 as if Bill #1 has already been signed into law. Example: Bill #2 would say “Repeal the provision of law that is the Cornhusker Kickback.” Thus the President would sign Bill #1 into law creating the Cornhusker kickback, and then immediately sign Bill #2 into law repealing that provision of law. In my primary scenario, the Cornhusker kickback would be the law of the land for only a few seconds. In my fallback scenario Bill #1 is law for many days while Bill #2 moves through the process. This is one reason why the fallback scenario is so difficult.
     • They need to draft Bill #2 so it can move through the legislative process as a reconciliation bill.
     • Some in Washington are referring to bill #2 as the “reconciliation sidecar.”
• They get CBO scoring. They then tweak the bill to make it (a) comply with reconciliation rules and (b) satisfy whatever political constraints are mandated by the votes you need to get. Assuming no change from before, this means CBO must say the bill reduces the deficit over 10 years, and that it reduces the deficit in the long run. In some cases they then have to check to make sure the CBO-induced changes have not changed their vote count. This iterative process could easily take at least a week during which all sorts of other things can go wrong.
  • One area of procedural uncertainty and therefore risk is that you would draft (reconciliation) Bill #2 to amend Bill #1. How does CBO score Bill #2, given that Bill #1 is not yet law? This could cause budget points of order (and therefore 60-vote problems) in the Senate.
    • Example: The Cornhusker Kickback is a provision in Bill #1 that increases Federal spending on Medicaid for Nebraska. If this provision were signed into law, and then Bill #2 contained a provision to repeal it, Bill #2 would reduce federal spending. CBO would score this as savings which could then be spent within Bill #2 on sweeter benefits for someone without resulting in a net deficit increase.
    • But if Bill #1 is not yet law, then repealing a non-existent provision of law doesn’t save any money, and they will not get scored with any savings. This means they cannot offset your other spending, and their Bill #2 will increase the deficit.
  • This is a major problem if the strategy is to hold Bill #2 until Bill #1 has passed the Senate. If there is a way to work around this problem, I don’t know it. If there is not a way around it, they may be forced to enact Bill #1 into law before the Senate passes Bill #2. But this causes severe tension between House and Senate Democrats because House Democrats will fear the Senate will abandon Bill #2 after Bill #1 becomes law.
  • Update: I am strengthening my view that there is no way around this. This makes my alternate sequence more likely than my main sequence. I have updated this post to reflect this scoring challenge, and therefore to assume that the House must pass Bill #1 before the Senate can consider Bill #2. The Speaker might try to play a game by holding a House-passed Bill #1 and not sending it to the President until Bill #2 has passed both the House and Senate, but I don’t think that’s her problem. Her problem is getting House Democrats who don’t trust the Senate Democrats to vote for Bill #1 before Bill #2 looks certain.
    
• The House passes Bill #1, the Senate-passed bill, with at least 217 Democratic votes.
  • The Speaker might try to instruct the House Clerk to hold Bill #1 and not send it to the President until Bill #2 has passed both bodies. I don’t know for how long she can do this.
    
• The House then initiates and passes Bill #2, the reconciliation bill. Assuming they solve this Senate-side scoring problem, we begin with the House passing bill #2, the reconciliation bill, with at least 217 votes.
  • The House Budget Committee formally creates an empty shell of a Bill #2 and reports it out of committee on a party line vote. There’s no real substantive markup and no amendments. The Budget Committee is just doing the formal procedural work for the bill given to the Chairman by the Speaker.
  • The Speaker gives the legislative language for the new Bill #2 to the Chair of the House Rules Committee (Rep. Louise Slaughter).
  • None of the three committees of jurisdiction need to meet or mark up the bill: Ways & Means, Energy & Commerce, or Education & Labor.
  • The House Rules Committee reports a rule that will “self-execute” to insert the new legislative language of the agreement into the text of Bill #2 as reported from the House Budget Committee.
  • The House passes this rule for bill #2.
  • The House passes bill #2.
  • Bill #2 goes to the Senate.
• The Senate proceeds to, debates, amends, and passes bill #2 using the reconciliation process.
  • When Bill #2 arrives in the Senate, Leader Reid holds it at the desk so it is not referred to a Senate committee.
  • Reid proceeds to bill #2. This is a privileged motion, so if Republicans challenge it Reid can immediately have and win a majority vote to begin debate on the reconciliation bill.
  • (If necessary) Reid makes a procedural motion to “refer the bill to the Finance Committee and report forthwith” to satisfy reconciliation rules.
  • Neither the HELP Committee nor the Finance Committee needs to meet or mark up the bill.
  • The Senate spends twenty hours debating bill #2 and maybe voting on amendments to it. Assume 10 hours of debate per day, so this takes two full days.
    • Amendments must be germane. This is a technical term that basically means “related to something in the bill.” In a non-reconciliation bill, you can amend a bill on the Senate floor with a completely unrelated amendment.
    • Amendments cannot be filibustered.
    • During the amendment process, some elements of the bill may be stricken by the Byrd rule. I describe the Byrd rule below.
    • The Senate has a long sequence of votes in the vote-a-rama. Some are majority votes (need 51 or 50+VP to win), other point of order waiver votes require 60 to win. This is the one area where Republicans may have procedural leverage. (See #5 in Challenges of the two bill strategy for details.)
  • The Senate votes on final passage. A majority vote (51 Senators or 50+VP) wins.
  • No extended debate (aka “filibuster”) is possible at any stage in this process, but Republicans can technically offer an infinite sequence of amendments in the vote-a-rama. (See #5 here.)
• If the Senate does not amend the House-passed version of Bill #2, then it is enrolled by the House Clerk and then is ready to go to the President. But it doesn’t yet.
• If the Senate does amend the House-passed version of Bill #2, then the differences between the House-passed and Senate-passed versions of Bill #2 need to be worked out. Either the two bodies go to conference, or they ping pong Bill #2.
  • Conference path:
    • The Senate-passed version of Bill #2 goes to the House.
    • The House then disagrees with the Senate amendment, requests a conference with the Senate, and appoints conferees. These messages travel to the Senate.
    • The Senate insists on its amendment, agrees to the conference with the House, and appoints conferees. (That’s three formal procedural steps that each take only a few seconds.) Unlike with a non-reconciliation bill, if Republicans try to block any of these steps Leader Reid can accomplish each instantly with only a simple majority. Senate Republicans could force him through three votes, but they lack the procedural ability to block going to conference.
    • Now the House and Senate are in conference.
    • Democratic conferees from the House and Senate work out a compromise between the House-passed and Senate-passed versions of Bill #2.They ignore/shut out Republican conferees.
      • As necessary, Pelosi and Reid jointly arbitrate (or negotiate between them) any issues the conferees can’t resolve. Or Pelosi and Reid bypass the conferees and work out all the substantive differences themselves. This would be unusual but fits with the current environment.
    • All the while both Democratic leaders and their whips are checking with their members to ensure that the final conference report can get 217 House votes and 50 Senate votes.
    • Senate Budget Committee staff, supervised by Reid and Pelosi’s staff, do a Byrd bathon the agreed conference text.
      • They review the bill text and identify Byrd rule violations.
      • They check any questionable provisions with the Senate parliamentarians. This is a staff process over several days.
      • They tell the Leaders about the violations.
      • The Leaders then remove those provisions from the conference report, even if they think in theory that those provisions might be supported by 60 or more Senators. They do this because they cannot risk Senate Republicans voting strategically not to waive the Byrd rule, and because if a single provision of a conference report is stricken by the Byrd rule, the entire conference report dies and you have to start from scratch. The leaders have to be extremely risk averse in this situation.
    • Democratic leaders and whips recheck to make sure they have 217 + 50.
    • A majority of the House conferees (the Democrats) and a majority of the Senate conferees (the Democrats) sign the conference report on Bill #2.
    • One body (I’ll guess the Senate goes first, since the House vote is probably harder to win) passes the conference report, again under reconciliation protections.
      • Reid’s motion to proceed to the conference report is privileged, so it cannot be filibustered. If Senate Rs force a vote on it, Reid needs only a majority to win.
      • Ten hours of debate are allowed on the conference report, followed by a majority vote on final passage. No amendment is in order, and no extended debate/filibuster is possible.
      • Points of order can be raised, but if the Democratic staff did their job with the scoring and Byrd bath, no points of order are available against the conference report.
      • 41 Senate Rs therefore have no procedural tools to prevent a majority from passing the conference report on Bill #2.
    • The conference report on Bill #2 goes to the House.
    • With 217 or more votes, the House passes the conference report on Bill #2. The bill is enrolled by the House Clerk and then is ready to go to the President. But it doesn’t yet. The Speaker instructs the House Clerk to hold it.
  • Ping pong path:
    • The Senate-amended version of Bill #2 returns to the House.
    • The House takes it up and either passes it or amends it and send it back to the Senate.
    • The Senate either debates and passes it as is, or amends it and sends it back to the House.
    • Repeat as necessary until both bodies have passed the same text. If it returns to the Senate, the same reconciliation rules and protections apply (20h of debate, no filibustering, amendments and vote-a-rama).
    • At the end of the ping pong, Bill #2 is enrolled by the House Clerk and then is ready to go to the President. But it doesn’t yet.
• Now that Bill #2 is ready to go to the President, the House passes Bill #1.
• The Speaker tells the House clerk to enroll Bill #1 (the original Senate-passed bill) and send it to the President, immediately followed by Bill #2 (the reconciliation bill).
• At a triumphal signing ceremony, the President signs Bill #1, immediately followed by Bill #2.
• The substantive agreement for comprehensive reform is now law.

See, that wasn’t so hard. Or was it?

If you’d like you can read about the challenges of the two bill strategy.

(Photo credits: Wikipedia: Pelosi & Reid)