The Senate Parliamentarian said no to some budget cuts in the OBBA.
The Byrd Rule Comes Into Play
Q: What is the Byrd Rule?
A: The Byrd Rule, formally known as Section 313 of the Congressional Budget Act of 1974, is a Senate rule that prevents extraneous matter from being included in budget reconciliation legislation. It’s designed to ensure that reconciliation bills, which can pass with a simple majority, focus on budgetary matters rather than being used to enact unrelated policy changes.
The above answer is from AI. It’s a very good synopsis. Congress.Gov provides in depth discussion in The Budget Reconciliation Process: The Senate’s “Byrd Rule”
The Byrd Bath
Please note the Senate Parliamentarian Advises Several Provisions in Republicans’ “One Big, Beautiful Bill” Are Not Permissible, Subject to Byrd Rule
Provisions Subject to a 60-Vote Byrd Rule Point of Order
Banking, Housing, and Urban Affairs
Funding Cap for the Consumer Financial Protection Bureau. This section cuts $6.4 billion by reducing the CFPB’s maximum funding to 0% of the Federal Reserve’s operating expenses, eliminating the agency. (Sec. 30001)
Pay and Benefits of Employees of the Federal Reserve System. This section cuts $1.4 billion by reducing the pay of Federal Reserve staff. (Sec. 30002)
Financial Research Fund. This section cuts $293 million by reducing the Office of Financial Research funding. (Sec. 30004)
Transfer of Public Company Accounting Oversight Board. This section cuts $771 million to eliminate the PCAOB and transfers its authority to the Securities and Exchange Commission. (Sec. 30005)
Environment and Public Works
Funding Repeals. These sections repeal statutory authorizations for Inflation Reduction Act programs and rescind funds. The repeals of authorizations, but not the rescissions, violate the Byrd Rule. (Secs. 01 and 03-25)
Repeal of Multipollutant Emissions Standards for Model Years2027 and Later Light-Duty and Medium-Duty Vehicles. This section repeals EPA’s rule that sets limits on the air pollution emissions of passenger vehicle models manufactured, sold, or operated in the United States. (Sec. 27)
Judicial Review portion of Project Sponsor Opt-In Fees for Environmental Reviews. This subsection allows environmental projects to skirt judicial review if they pay a fee. (Sec. 28)
Armed Services
Multi-Year Operational Plan. This section reduces appropriations to the Department of Defense if spend plans are not submitted on time. (Sec. 20014)
The American Prospect reports Elimination of CFPB and Other Financial Agencies Tossed Out of Budget Bill
The Senate parliamentarian has been hearing arguments over whether certain provisions can stay in the One Big Beautiful Bill Act, and the first set of decisions preserves several federal banking agencies.
The ruling means that these provisions would only be able to return to the bill in one of two ways: either with a 60-vote waiver of the Byrd Rule, or with the chair of the Senate ignoring the parliamentarian and allowing the measures to stay. Senate Majority Leader John Thune (R-SD) has ruled out the latter, but now we’ll get a test of whether he is committed to abiding by this.
The Senate Banking Committee attempted to essentially zero out the CFPB by reducing the cap for funds that the Federal Reserve can transfer to the agency to zero percent. That’s a full defunding, and it doesn’t directly impact the overall budget, since it’s a reduction in funds coming from off-budget, via the Federal Reserve. The parliamentarian ruled that this did not have a primary budgetary purpose but was a policy move by Republicans to get rid of a disfavored agency. This isn’t allowed in budget reconciliation.
The same ruling was made for the zeroing out of the budget of the Office of Financial Research, which is funded through an assessment on large banks. Under the bill, that assessment money would get swept into the general fund; the parliamentarian saw that as a policy maneuver to kill OFR, a critical agency for market operations as well as for seeing over the horizon on the stability of the financial system.
The Banking Committee also tried to eliminate the Public Company Accounting Oversight Board, which was inaugurated after Enron and other disasters to provide oversight of accounting firms, and fold it into the Securities and Exchange Commission. That also is policy.
Congress can of course move to destroy the agencies it created if it wants, but only through regular order, not the special process used for budget reconciliation, which gets around the filibuster. So these measures are out of the bill.
“As much as Senate Republicans would prefer to throw out the rule book and advance their families lose and billionaires win agenda, there are rules that must be followed and Democrats are making sure those rules are enforced,” Sen. Jeff Merkley (D-OR), ranking Democrat on the Senate Budget Committee, said in a statement.
A couple of other provisions were struck last night. The Banking Committee attempted to reduce pay of Federal Reserve staff to cut $1.4 billion. The Environment and Public Works Committee added a provision that appeared to repeal long-standing emissions standards for vehicles starting in 2027; that was also eliminated. And the Armed Services Committee had a trigger that would reduce appropriations to the Department of Defense if they were late in submitting their spending plans. All of these are gone as well.
Trump’s ‘Big, Beautiful Bill’ Gets Slimmed Down in Senate
The Wall Street Journal reports Trump’s ‘Big, Beautiful Bill’ Gets Slimmed Down in Senate
President Trump’s “big, beautiful bill” is getting smaller just as Republicans head into a crucial week, after the Senate’s rules arbiter decided several controversial provisions don’t qualify for the special procedure the GOP is using to bypass Democratic opposition.
Senate parliamentarian Elizabeth MacDonough, who has been hearing arguments from Republicans and Democrats behind closed doors, issued guidance in recent days on which measures don’t fit within the so-called budget-reconciliation process. Under budget reconciliation, provisions have to be primarily related to the budget to be eligible for a simple majority vote, rather than the 60 votes typically required in the Senate.
One of the top measures that the parliamentarian said didn’t fit, according to Democrats who publicized her decisions: a provision requiring states to pay a portion of food benefits, with their share increasing the more they mistakenly overpay or underpay beneficiaries. It isn’t clear if Republicans plan to rework the measure to try to accommodate the parliamentarian’s guidance.
The measure as originally passed in the House would have saved $128 billion over a decade, according to the Congressional Budget Office. While the Senate scaled back the House cuts, it didn’t entirely eliminate them.
The parliamentarian said a provision barring people living in the country illegally from receiving nutrition assistance didn’t conform to the requirements of the budget-reconciliation process.
She also struck out a measure that would have required plaintiffs to post potentially enormous bonds when asking courts to issue preliminary injunctions or imposing temporary restraining orders against the federal government.
She said a provision that would reduce the Consumer Financial Protection Bureau’s funding to zero didn’t qualify for reconciliation. She also said a proposal to merge the Public Company Accounting Oversight Board, the U.S. audit watchdog, into the Securities and Exchange Commission wasn’t eligible for the fast-track process. In response to the recommendations on the CFPB and PCAOB, Sen. Tim Scott (R., S.C.) said he remains committed to advancing legislation that cuts waste and duplication in the U.S. government.
One measure that appeared to survive her review: a provision withholding broadband funds to states that regulate artificial-intelligence technology. Earlier, House Republicans had included in their version of Trump’s “big, beautiful bill” a measure that would have essentially imposed a moratorium on state regulation of artificial intelligence for 10 years. But Senate Republicans changed that language in hopes of preserving the spirit of the policy while ensuring that it could survive the parliamentarian’s so-called Byrd bath—the review process named for the late Sen. Robert Byrd (D., W.Va.).
Still More Provisions Struck
The US Senate Budget Committee reports More Provisions in Republicans’ “One Big, Beautiful Bill” Are Subject to Byrd Rule
Judiciary Provisions Struck
Appropriation: Eligibility. This subparagraph limits certain grant funding for “sanctuary cities,” and where the Attorney General disagrees with states’ and localities’ immigration enforcement. (Section 154, Paragraph 5, Subparagraph C)
Bridging Immigration-Related Deficits Experienced Nationwide Reimbursement Fund. Language in this section gives state and local officials the authority to arrest any noncitizen suspected of being in the U.S. unlawfully. (Offending language in Section 155)
Restriction on Enforcement. This section limits the ability of federal courts to issue preliminary injunctions or temporary restraining orders against the federal government by requiring litigants to post a potentially enormous bond. (Section 203)
Limitation on Donations Made Pursuant to Settlement Agreements to Which the United States is a Party. This section limits when the federal government can enter into or enforce settlement agreements that provide for payments to third parties to fully compensate victims, remedy harm, and punish and deter future violations. (Section 301)
Nothing Surprising
Nothing above is surprising, especially the judiciary items.
Many of Trump’s executive orders will have to survive a filibuster or the courts. I expect some will and some won’t.
Byrd Rule not Officially Binding
There is nothing forcing the Senate to honor the Byrd rule. It’s just a convention that both parties honor. But as soon as one party breaks it, the other will the next time.
This is why Senate Majority Leader John Thune (R-SD) has ruled out ignoring the parliamentarian.
It will be interesting to see if Trump pressures Thune to do break the rule.
The Senate Makes Big Changes to Trump’s One Big Beautiful Bill
On June 16, I noted The Senate Makes Big Changes to Trump’s One Big Beautiful Bill
The biggest changes are SALT and Medicaid, but there are many significant details.
What I Expect
The SALT change is very favorable and I hope Trump hammers on the House to accept it. I sense a compromise, the smaller the better.
The Senate made a good set of changes on Medicaid that I think will stick. I thought there might have been a bigger Senate fight.
I expect the Senate caps on overtime and tips to stick.’
The Bottom Line
It’s hard to crow over big budget deficits, but the bill appears to be a significant improvement.
There is a decent chance most of the Senate changes stick.
Budget analysis should be out in a day or to so we can assess the real score card.
The Parliamentarian just undid ~$200 billion negating much of the Senate’s improvements.
So it’s back to the drawing board if the hawks insist on more cuts.
I propose killing SALT entirely along with no tax on tips and no tax on overtime, and ramming that through the House.
Trump can blame the Parliamentarian for the changes.
For more of my ideas, please click on the preceding link.
A balanced budget amendment was the only thing that could have saved us,
Now it is too late. Not enough lifeboats, so I’m building a life raft.
pro tip. there are 2 tax codes. one for owners with lots of free stuff. the other tax code is for employees. let them eat cake.
The thing about SALT is that is a policy that allows for double taxation which conservatives generally disavow but they like this one because it tends to hit high tax states (which are also the states that contribute the most to the federal income tax).
It really skews the ‘laboratory of democracy’ nature of states as it makes a fiscal preference for implementing policies at the federal level but the federal level is highly veto-ridden.
Really makes things stagnant in terms of states trying to take the lead in both social services and in municipal services.
SALT limits are surprisingly effective at taxing the rich. Even when I was working I came nowhere near the limit, I haven’t itemized deductions in over 20 years.
The limit should be inflation adjusted, but it should stay.
This Jabba the Hutt bill has many secrets hidden under the rolls of fat.
Some pretty far reaching power grabs contained in it
How about everyone stop this provision?
https://www.zerohedge.com/political/big-beautiful-land-grab-technocrats-stand-profit-250-million-acre-bonanza-hidden-hr1
Apparently the children still have potential to assume more debt. Of course they don’t actually do that themselves. The “grown-ups” take on the debt for them.
What a stupid system that prevents budget cuts. I’m sure anything that increases spending would be found to fit the Byrd rule. A rule name after a despicable Senator.
of course mr.adjective and his minions tried to pass a bloated self serving bill. why hasn’t he been impeached yet?
> “It will be interesting to see if Trump pressures Thune to do break the rule.”
It is very difficult for me to imagine Trump NOT pressuring Thune to break the rule.
“I took a lot of finance courses at Wharton, and first they taught you all the rules and regulations. then they taught you that those rules and regulations are really meant to be broken.”
— Donald Trump (1987) as quoted at:
https://www.forbes.com/sites/danalexander/2017/09/19/trump-decades-old-quotes-sound-lot-like-current-day-tweets-1982-2000/#30809b1c2fc6
I hope they don’t break the rule and I expect they won’t. It’s one of the few things both sides agree on and I would like that cooperation to continue. At some time the divide will start to heal and grow from these kernels of collaboration.
Wow Mish!
This article has stirring elements of destabilizing the United States and its banking system. I am stunned to learn of this attempt to end the Federal Reserve.
If The Federal Reserve were defunded would the United States of America lose its status as having the reserve currency of the world (the Federal Reserve note).
Since the Federal Reserve would technically no longer exist if these provisions had passed, what currency would be legal tender?
What would our deposits be worth if denominated in U.S. Dollars?
Would we default on our debt if this were to happen?
Can you give us a workable theory of what would happen if the Fed was defunded?
Thanks in advance!
They did not try to end the federal reserve by defunding it; they tried that with the CFPB
Did you read Fish’s post?
Why the down-votes? It is an interesting question. We have Fed Reserve Notes and very little treasury issued money.
Then what? A US Treasury issued crypto-coin that will be compromised by quantum computers? Put money printing back to the treasury to print to the government’s content?
I thought it was a good question as well.
There were silver certificates for a while and all paper bills before 1917 when the Federal Reserve was created. U. S. coinage is not a Federal Reserve Note.
Gold and silver coins would be maintain some value or appreciate.
Personally I think it would create chaos on a scale unparalleled in our history. Trump thrives on destruction of our revered institutions and is personally issuing currencies that compete with the dollar.
The SEC is already gutted and you can see by the markets reaction to Iran situation (or lack thereof) that the plunge protection team has things well in hand.
>
The bill keeps getting bigger and now has a new name: Big Byrd Bill.
Wasn’t that guy in the Klan? Nothing personal.
If the BBB is so great, pass it through regular order.
I guess the name of the bill needs to be changed, perhaps “The Little Toadstool That Could” in honor of Trump.
Senate Can Keep Ban on State AI Rules in Trump Tax Bill
Controversial Ban on AI Rules Will Stay in Trump Tax Bill – Bloomberg (archive.ph)
Don’t they know there’s a war on? The existence of our little buddy in the middle east is at stake.
It seems as if all the arcane rules of the government are designed to prevent spending from ever being reduced.
Or – hopefully – this just put the kibosh on passing the Big Boondoogle Bill through reconciliation, making it subject to the filibuster. Would Thune kill the filibuster for this POS bill?
i remember the last century, when a millionaire meant you were stinking wealthy. taxes are just social engineering to get the middlebrows all worked up. the real problem is in lower manhattan. the FEDRESNY. those boys have robbed the empire. remember when a hunge, meant you were a baller. now it’s barely lunch for a family of 4.
Thank goodness someone’s watching the store.
Check the cash register just to be sure.