Maybe We Should Call the Byrd Rule the ‘Byrd Suggestion’

The Senate has figured out how to bend the deficit-limiting rule without technically breaking it.

Historians may look back at 2017 as the year that the Senate’s deficit-limiting Byrd rule became, in effect if not name, the Byrd suggestion. All credit or blame will go to the Republican leadership, which blew out the budget deficit to round up enough Republican votes to pass the Tax Cuts and Jobs Act.

I interviewed William Hoagland, who was Republican staff director of the Senate Budget Committee from 1985 to 2002, about the undermining of the Byrd rule. “I’m an old Republican budgeteer here, and it makes me cry,” Hoagland, senior vice president of the Bipartisan Policy Center, said on Dec. 11. “The end product is that deficit hawks are on the endangered species list right now.”

The Byrd rule hasn’t actually gone away. As this Bloomberg QuickTake explains, it’s named after the late Robert Byrd, who represented West Virginia in the Senate from 1959 to 2010, making him the longest-serving senator in history. (He was also a mean fiddle player.) The rule is supposed to rein in budget deficits by limiting the kinds of budget bills that can pass the Senate with a simple majority—i.e., without risk of a filibuster.

The most important feature of the Byrd rule is that a bill isn’t entitled to the fast-track voting procedure in the Senate if it would add to deficits beyond a 10-year window. To comply with the Byrd rule, the Senate stipulated that  its individual tax cuts would expire before 10 years are up. But senators simultaneously reassured reporters that they expect a future Congress to extend those cuts, so they’re really not meant to be temporary at all.

Here’s a snippet from an interview the Washington Post did with Senator Mike Rounds, a Republican from South Dakota:

The Washington Post: You’re confident those tax cuts will stay for individuals beyond 10 years?

Rounds: That’s the intent. We can’t put it in the bill that way because the rules don’t allow us to, but once we do this under reconciliation and it proves itself correct, it would be extremely difficult not to continue.

WP: So if it’s going to be extended, shouldn’t you include it in the 10-year deficit impact?

Rounds: No, you can’t include it — that’s the reason for the 10 year, you can’t do it.  Since it’s not in the bill, it’s not included. If you put it in the bill, it wouldn’t fit the 10-year window.

WP: I think a Democrat would then say that the bill is more expensive than it’s being marketed as —

Rounds: Not really, because we’re still talking in the same time frame. What we continue on after that, and the modifications we make after, may very well be significant, based on whether this is as significant as we want it to be. But the intent is once you get rolling on it, it will become permanent.

Rounds stops being intelligible in the last bit, where he says “… the modifications we make after, may very well be significant, based on whether this is as significant as we want it to be.” But his main point is clear: The Byrd rule is no obstacle to running big deficits over any period of time you can name.

To be sure, it won’t be simple for a future Senate to extend the individual tax cuts in the Tax Cuts and Jobs Act. Since the law calls for them to end, extending them will be regarded as a brand-new, deficit-increasing tax cut. That would run afoul of the Statutory Pay-As-You-Go Act of 2010. 

But Congress can get around Statutory PAYGO by planning ahead and including in the reconciliation bill some language that waives the act’s provisions, says Hoagland, who helped shepherd President George W. Bush’s 2003 tax cuts through Congress as a top aide to Senate Majority Leader Bill Frist. 

Rules such as the Byrd rule are Congress’s way of handcuffing itself so it can’t keep running up big budget deficits. But Congress always seems to leave a skeleton key within easy reach. Says Hoagland: “Nothing is truly binding. … It’s not binding if they change the law.”



    Peter Coy
    Bloomberg Businessweek Columnist
    Peter Coy is the economics editor for Bloomberg Businessweek and covers a wide range of economic issues. He also holds the position of senior writer. Coy joined the magazine in December 1989 as telecommunications editor, then became technology editor in October 1992 and held that position until joining the economics staff. He came to BusinessWeek from the Associated Press in New York, where he had served as a business news writer since 1985.
    Before it's here, it's on the Bloomberg Terminal.