It is safe to say we have entered a new phase of President Trump’s second presidency. The chaotic first four months was largely defined by an unprecedented flurry of executive action, Elon Musk’s efforts to shrink the federal bureaucracy, and rising geopolitical tensions resulting from the administration’s trade policies. 

The centerpiece of this next phase of Trump’s presidency is unquestionably the fate of H.R. 1 (One Big Beautiful Bill Act), the massive tax cut and spending package that includes many of the President’s campaign promises. 

The President has set an ambitious, and symbolic, goal for lawmakers to get this bill to his desk for signature by the Fourth of July. House Republicans, generally seen as a block united around the President and his agenda, did their part in passing the bill on to the Senate on May 22nd. 

Since that passage, however, it has become clear that getting a sufficient number of Senate Republicans on board will require significant changes, and likely more time. With 53 members of the Senate, Republicans can only afford to lose three votes to maintain their chances of passing the bill through reconciliation, a budget tool we’ll discuss below. 

As many as ten Republican Senators are seen as potential “nay” votes on H.R. 1 including Josh Hawley (MO), Susan Collins (ME), Lisa Murkowski (AK), Jerry Moran (KS), and Ron Johnson (WI). The concerns of those legislators may very well lead to significant changes in the bill, particularly to provisions that reduce access to Medicaid and/or those that increase the national debt. 

While the debate over these provisions, and the pressure on these legislators (from both sides) will lead to important changes, we want to focus on a quieter process that may result in equally significant alterations to the package passed by the House: the Byrd Rule.

The Byrd Rule

The Byrd Rule, named after Senator Robert Byrd, specifies the circumstances in which a provision is deemed to be “extraneous” and therefore not eligible to be included in a reconciliation package. The rule also prevents provisions that would change Social Security or increase the federal deficit beyond a ten-year window. 

Even with the Byrd Rule’s specifications, there is always debate over the eligibility of certain provisions to pass through reconciliation. That debate is generally decided by the opinion of the Senate Parliamentarian. Recent examples of the Byrd Rule’s impact include the removal of a provision defunding Planned Parenthood from the Better Care Reconciliation Act (which eventually failed) and the removal of a $15 minimum wage provision from the American Rescue Plan Act (which became law without the wage increase). 

Because complex Senate processes aren’t fun enough on our own, the Byrd rule also comes with puns to define the application of the rule:

• Byrd Bath: the review and “cleaning” process to remove any noncompliant provisions from reconciliation bills. 
• Byrd Droppings: those noncompliant provisions that are cut from the bill following a Byrd Bath. 
• Byrd Watchers: all of us closely following the changes this process will affect on the final bill Senators will consider. 

The Byrd Meets the Big Beautiful Bill

While every piece of the final text will be reviewed for potential Byrd Rule violations, certain provisions stick out as having the potential to run afoul of the rule:

• AI Regulation Moratorium: A somewhat surprising inclusion in the House-passed bill was a ten-year ban on the enforcement of state and local regulation of Artificial Intelligence. As we have written about at length, state actions to regulate AI have been plentiful recently. Beyond being controversial for the potential encroachment on state rights, this provision would seem to be “extraneous” to the budget-specific matters that reconciliation is reserved for. 
  
• Another Planned Parenthood Ban: The House bill includes language blocking Planned Parenthood from receiving federal funding. The provision faces an uphill battle towards inclusion given that Senate Parliamentarian Elizabeth MacDonough ruled against this language in 2017.
  
• Permanent Tax Cuts: The reauthorization of the tax cuts passed in the Tax Cuts and Jobs Act is technically only necessary because Republicans needed to put an expiration on those tax cuts when passed to stay within the Byrd Rules limitations on budgetary impact beyond ten years. To avoid a similar circumstance in 2035, Republicans now want to make those tax cuts permanent. To do so, Republican authors of the megabill are arguing that a permanent extension of the tax cuts does not raise the deficit if you assume that current policy will continue (i.e. ignore the expiration date in the Tax Cuts and Jobs Act). This is being referred to as using the “Current Policy Baseline.” Typically, the deficit impact would be calculated using “Current Law Baseline” which assumes the laws of today (including that expiration date) will continue. “Current Law Baseline” would indicate a significant impact to the deficit beyond ten years if these tax cuts were made permanent. It’ll be up to the Parliamentarian whether the GOP’s use of “Current Policy Baseline” satisfies the Byrd Rule’s provisions, otherwise they’ll likely need to include a new expiration date on this extension. 

Conclusion

You can expect to hear a lot of talk in the coming weeks about what parts of H.R. 1 might be altered as Senate leaders attempt to win over the most skeptical of their Republican colleagues. Any changes would then need to be agreed to in the House. 

The Senate Parliamentarian and her staff will also be working in the background with the bill’s authors to determine what, if anything, will need to be removed from the bill for it to qualify for the reconciliation process. Taken together, each of these political processes will shape the remainder of the debate around the One Big Beautiful Bill Act and the next phase of the Trump presidency. 

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