Stimulus Update: Even With Stimulus Off the Table, Here's How Reconciliation Can Put Money in Your Pocket

Whether Americans receive money directly or indirectly, every dollar helps.

Realistically, there's no chance Republican lawmakers will back another round of stimulus payments so close to the midterm elections. The fear is that passing another stimulus bill, even one targeted to help the poorest Americans, will make President Joe Biden and the Democrats look good.

It's a political reality and one that cannot be changed given the current makeup of the U.S. Senate. Still, Biden is very close to achieving one of his top goals: reconciliation. Here, we'll break down how reconciliation works and how it can put more money in your pocket.

Two important terms

Before we get into the details of potential savings, let's cover two key terms, both vital to what's happening currently in the nation's capital.

Filibuster

When it was first introduced in the Senate, the filibuster was primarily used by Southern senators to block civil rights legislation. Since that time, it's been used to block any legislation one party doesn't believe in or legislation they're afraid will make the other side of the aisle look good. While it was initially designed to give the minority an opportunity to explain their position, it has since become a tool for shutting down the opposition.

Here's how it works:

• A bill is introduced in the Senate and moves to committee.
• Once through committee, the bill heads to the Senate floor for a vote.
• Before a vote takes place, Senators debate the bill.
• Once the bill has been debated, the Senate leader asks for unanimous consent to end the debate and move on to a vote.
• Any Senator can object.
• Once an objection has been made, the only way to move forward is for the Senate leader to file a motion to end the debate.
• Now, here’s where things get tricky. It normally takes a simple majority to pass a bill in the Senate (since there are 100 senators, 51 votes is enough to pass). However, it takes 60 votes to close a debate and allow a bill to be voted on.
• If less than 60 senators agree to end the debate (referred to as "cloture"), the bill has been "filibustered" and dies on the vine.

There are currently 50 Democratic senators and 50 Republican senators. To overcome a filibuster, it takes 10 senators to vote with the other party -- a feat that is almost never achieved due to pressure from their own parties.

And that's where "reconciliation" comes in.

Reconciliation

As obnoxious as the use of the filibuster may be, there's only one loophole designed to neuter the practice. It's a special parliamentary procedure called "budget reconciliation." The word budget is particularly important here, because to get by the filibuster process, lawmakers must ensure that their bill is related to budgetary legislation. That may involve dealing with the federal date, changing tax laws, or anything else money related.

Just last week, Sen. Joe Manchin agreed to the outline of a new reconciliation bill -- one that would allow the Senate to bypass the filibuster and pass legislation with a simple majority vote of 51. Given that Vice President Kamala Harris is the tiebreaker in the event of a 50/50 vote, it looks like reconciliation could actually happen.

How this could put money in your pocket

If passed, many of the items on Biden's wishlist could become reality. Here are three most likely to impact everyday Americans:

1. Reduce the cost of prescription drugs. The president has long said, "No one should have to choose between paying for life saving medication or putting food on the table." If you're an American who finds yourself worrying about how you'll pay for prescription drugs, you may find yourself with extra money in your bank account each month.
2. Raise taxes on major corporations. According to economists cited in a Rolling Stone article, the middle class were hurt by Trump's 2017 tax cut. Although the average American did see their payroll taxes go down a bit, the largest cuts were awarded to the richest Americans, millionaires and billionaires who didn't need the money to pay medical expenses or buy shoes for their children. It is possible that this popular portion of the bill will result in lower taxes for citizens.
3. Tax incentives for green energy. While there are climate change deniers, nearly every reputable scientist in the world agrees that the Earth is warming at an alarming rate. This bill aims to do something about it while also paving the way for savings. According to the National Resources Defense Council (NRDC), a reduction in greenhouse gasses can save money by making us less likely to get sick. An NRDC study shows that climate-related health issues cost $10 billion per year, with people seeking more medical care for conditions like COPD and asthma. Clean energy means less pollution and less trips to the emergency room.

The fact that Joe Manchin -- from one of the largest coal-producing states in the U.S. -- backs reconciliation hit the beltway like a seismic shock. And Manchin could still back out. But if he does stay the course, we may all be on our way toward a chance to save a bit more money.