“They like to call it a revenue, not a tax increase, but one thing I did talk about is that it changes the rules and allows [Senate Majority Leader] Harry Reid to push through a tax increase with only 51 votes. I just discovered this an hour ago. It’s hidden deep in the bill.”

— Rep. Tim Huelskamp (R-Kan.), interview on MSNBC’s “Jansing & Company,” Dec. 12, 2013

“I regret to say that this bill clearly and unequivocally undermines the ability of the Senate to maintain agreed-upon statutory spending limits. It legitimizes tax and spend.”

— Sen. Jeff Sessions (R-Ala.), news release, Dec. 12, 2013

It’s always dangerous for a lawmaker from one chamber in Congress to comment on the rules in the other chamber. Rep. Huelskamp, for instance, might be surprised to learn that any tax increase can be passed with just a bare majority in the Senate. That’s because a tax increase would not raise the deficit, and thus no senator can protest (“raise a point of order”) that the proposal violates budget rules.

The statement from Huelskamp, an opponent of the bipartisan budget agreement that cleared the House on Thursday, was puzzling until his spokesman referred The Fact Checker to the statement by Sessions, the ranking Republican on the Senate Budget Committee. Sessions, hoping to piggyback on GOP objections to Democrats limiting the use of the filibuster on administration nominees, is referring to highly technical provisions in the bill that he claims would allow a tax increase if it was used as an offset for increased mandatory spending.

Frankly, this is an in-the-weeds budget debate. But such technical disputes can have consequences, so let’s explore what’s really happening.

The Facts

While Huelskamp claimed the problem is hidden in the bill, it actually turns up on page 17 of a 77-page bill. The subject at hand is called a “deficit neutral reserve fund.”

We have explored this issue before. These reserve funds, which have become standard in Senate budget blueprints, are basically marketing gimmicks — vote-generating vehicles to send messages to a party’s base.

Essentially, they reinforce pay-as-you-go rules, requiring that any increased spending must be “deficit-neutral,” meaning the spending hike would be matched by tax increases or spending cuts, or both. As long as that requirement is met, lawmakers cannot claim it violated agreed ceilings on spending and thus raise a “point of order” (requiring 60 votes) against it. The specific point of order in question is 302 (f), and wonks can refer to a report by the Congressional Research Service, for a list of all points of order.

The Senate Budget resolution included dozens of such reserve funds, sponsored by both Democrats and Republicans. Even Sessions got a vote on one (he filed five), which would have achieved savings by prohibiting illegal immigrants, or illegal immigrants granted legal status, from qualifying for federally subsidized health care. (It failed on a vote of 43 to 56.)

Sen. Rob Portman (R-Ohio) in March issued a news release when he won approval of a reserve fund to reduce duplication in job training programs. That provision remains in the new budget law. (Some two dozen reserve funds, many sponsored by Republican senators, were dropped in the negotiations between the House and the Senate; about 60 remain.)

So what’s the beef? Part of the issue is that the Bipartisan Budget Act is an actual law, as opposed to a budget resolution, which simply guides Senate procedure during the period the resolution is in force. So there’s a concern that the Senate would be entering uncharted territory, though a number of budget experts suggest it’s a tempest in a teapot. In any case, for the moment, the situation would be no different than if the two bodies had agreed on a budget resolution for the coming year.

Moreover, discretionary bills, if they contained spending covered by a reserve fund, would be subject to other points of order. (We won’t bore you with the details, except to note that the law actually appears to strengthen one, increasing the requirement to 60 votes.) There is more of question concerning mandatory spending, but again, there are probably other options, especially regarding Social Security — and not all such spending is affected by these reserve funds in the first place. The reserve funds generally are quite targeted because, as we noted, they are more about generating press releases than actually making policy.

In any case, any such bills would also be subject to a filibuster. To be fair, however, it is sometimes politically more advantageous to object to a bill on obscure budget issues than to outright prevent a vote.

Two experienced and respected GOP budget analysts, G. William Hoagland and Steve Bell, issued a statement through the Bipartisan Policy Center saying that “such reserve funds are common in budget legislation” and “this subsection does not deny any rights to the Senate minority that they have had under reserve funds in the past.” Their statement said that “this section maintains all of the historical prerogatives of the Senate minority when considering legislation resulting from the use of a reserve fund mechanism.”

A statement by the GOP-led House Budget Committee also dismissed the concern. “Senate Republicans retain the right to unlimited debate, meaning Democrats would still need 60 votes to pass a tax increase,” the statement said. “And of course, any revenue bill must originate in the House, and House Republicans have been unquestionably clear, that we would not under any circumstance pass a tax hike regardless of what the Senate does.” The statement listed three other possible points of order that could be raised, though for highly technical reasons, the efficacy of some options are in dispute.

Congressional officials involved in the debate would not comment for the record. (For a deeper look at the possible scenario envisioned by Sessions, read this article at the National Review Online.)

Update, Dec. 16: We do not want to suggest that the Republican side is acting in bad faith when they assert the the budget agreement amounts to an abuse of the reserve fund mechanism. The issue is highly technical and obscure to all but a handful of Capitol Hill denizens, and people can reasonably disagree about the impact of rule changes.

Stephen Miller, communications director for the GOP staff provided the following statement:

“The statement from the Bipartisan Policy Center is a non-sequitur.  It’s like being asked if the soil is red and replying that the ocean is blue.  The only question at issue is whether a specific budgetary point of order that is used to block spending hikes offset by tax hikes can no longer be raised in certain crucial circumstances.  The answer to this question is an unambiguous, unequivocal and undeniable yes.  No one who has examined this issue has disputed this discovery – they’ve only attempted to obfuscate it.
So what is really going on? In the Senate, members can enforce budgetary rules by raising a point of order.  This, in turn, triggers a vote on whether to sustain or waive the rule.  One such point of order—used on multiple occasions to block bills that busted spending limits since 2011—is the 302(f) point of order.  See here
Under this legislation, Senator Murray would be able to prevent Senators from exercising their right to raise this 302(f) point of order if a bill offsets a spending increase called for in a reserve fund with a tax increase.
Senators are therefore on the precipice of losing a core procedural tool to enforce spending limits—as well as a tool to prevent tax increases with bare majority votes in a post-cloture environment.”

The Pinocchio Test

Sessions, who opposes the budget agreement, is kicking up dust here. While the question of such funds being part of statutory legislation might possibly be a long-term concern, it appears the Senate minority still retains a number of paths to block tax increases they oppose.

Huelskamp, meanwhile, should stick to commenting on House rules.

Three Pinocchios

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