The following is written as of June 27, 2025, so by time you read this it will be completely outdated.

As we predicted, the Senate parliamentarian had other plans for the Republicans’ grandiose “One Big Beautiful Bill,” delivering a series of blows stripping it of hundreds of billions of dollars in savings and possibly derailing President Trump’s ambitious July 4th deadline. I guess Elon was right it will either be “Big” or “Beautiful” but not both. As the GOP scrambles to salvage their pièce de resistance, the archaic rules of budget reconciliation have surfaced as the ultimate party pooper.

The Byrd Rule: Budget Reconciliation’s Party Pooper

The budget reconciliation process, which allows Congress to pass fiscal legislation with a simple majority and bypass the usual 60-vote filibuster threshold, comes with a catch. The Byrd Rule, named after the late Senator Robert Byrd (D-W.Va.), serves as the budgetary bouncer, ensuring that any extraneous provisions that don’t directly impact federal spending or revenues get the boot. Please see our previous post of the overview of the Reconciliation Process and Byrd Rule.

The Byrd Rule sets six tests to determine whether a provision can crash the reconciliation party. Most crucially, any provision must have a direct budgetary impact, with changes to spending or revenues that are not merely incidental to the policy change. The rule also prevents provisions that increase the federal deficit beyond the 10-year budget window and bars changes to Social Security benefits or payroll taxes.

Senate Parliamentarian Elizabeth MacDonough, the nonpartisan referee since 2012, acts as the ultimate gatekeeper, determining whether provisions pass muster. Her decisions, while not technically binding, carry enormous weight and are rarely overturned. The process of reviewing and dismissing violating provisions, affectionately known as a “Byrd bath,” results in rejected items being labeled “Byrd droppings.”

Major Excluded Provisions and Their Costs

Health and Human Services Provisions

The parliamentarian’s most significant ruling was a hilariously brutal takedown of Medicaid provider taxes, nixing a provision that would have capped states’ ability to use healthcare provider taxes for additional federal Medicaid funding. This provision alone was set to save a whopping $250 billion over the next decade. The ruling effectively torpedoed one of the GOP’s largest spending reduction mechanisms, leaving a gaping hole in the bill’s financial structure.

Additionally, MacDonough unceremoniously rejected several other Medicaid-related provisions:

• Medicaid eligibility restrictions for non-citizens
• Prohibition on using Medicaid funds for gender-affirming care
• Changes to Children’s Health Insurance Program (CHIP) coverage for unauthorized immigrants

Nutrition Assistance Programs

Initially, the parliamentarian ruled against the Senate’s plan to shift SNAP (Supplemental Nutrition Assistance Program) costs to states based on their payment error rates. This provision would have saved an estimated $41 billion over ten years in the revised Senate version, down from $128 billion in the original House proposal. However, Republicans managed to tweak this provision to comply with Senate rules, retaining the savings.

Financial Regulatory Provisions

MacDonough gleefully struck down several provisions targeting financial regulatory agencies:

• Consumer Financial Protection Bureau (CFPB): A provision to eliminate the CFPB’s funding by capping it at zero percent of Federal Reserve operational costs, which would have saved an estimated $6.4 billion
• Office of Financial Research: Elimination of funding for this Treasury Department office
• Public Company Accounting Oversight Board: Complete elimination of this securities oversight body
• Federal Reserve staff cuts: Reducing Federal Reserve employee salaries by $1.4 billion

Federal Workforce and Civil Service Provisions

MacDonough ruled against numerous provisions targeting federal employees:

• Requirements for new federal employees to pay nearly 15% of their paychecks toward retirement benefits or serve as at-will employees
• $350 filing fee for Merit Systems Protection Board appeals
• Charging federal employee unions for the use of agency property and official time
• Authority for agencies to unilaterally rescind funds through “cost-cutting” bonuses

Education Provisions

The parliamentarian struck several higher education provisions:

• Removal of federal student aid eligibility for certain non-citizen immigrants
• Restrictions on student loan repayment plans that cannot be applied to current borrowers
• Workforce Pell Grants: Expansion of Pell Grants to unaccredited and for-profit institutions
• Prohibition on loan payments during medical/dental residencies from qualifying for Public Service Loan Forgiveness

Environmental and Regulatory Provisions

Multiple environmental and regulatory provisions didn’t make the cut:

• Reversal of EPA emissions standards for passenger vehicles
• Requirements for the General Services Administration to sell all Postal Service electric vehicles
• Expedited environmental reviews under the National Environmental Policy Act
• $250 million for Coast Guard station repairs, including South Padre Island facility

Immigration and Border Security

The parliamentarian rejected provisions granting states authority over border security and immigration enforcement, traditionally federal responsibilities. Additionally, a provision to restrict preliminary injunctions against federal government actions was struck down, which would have required litigants to post potentially enormous bonds.

Total Financial Impact

According to budget experts, the parliamentarian’s rulings threaten well over $500 billion in planned spending cuts over the next decade. Matthew Fiedler of the Brookings Institution estimated that the disqualified health provisions alone represent $200 billion to $300 billion in lost savings. Democrats were undoubtedly doing a victory dance, with Senator Ron Wyden noting that “more than $250 billion in health care cuts” were removed from the Republican bill.

Impact on Bill Viability and Timing

Immediate Challenges to July 4 Deadline

The parliamentarian’s rulings have created severe complications for Republican leaders’ ambitious timeline. Senate Majority Leader John Thune had hoped to bring the bill to a vote by the end of June to meet Trump’s July 4 signing deadline. However, the need to find alternative savings mechanisms or accept a larger deficit impact has complicated negotiations. This will potentially loss the Senate’s fiscal hawks who were already not excited about the deficit spending that the original bill created.

The White House has maintained its expectation that the bill will reach Trump’s desk by Independence Day, with Press Secretary Karoline Leavitt stating, “We expect that bill to be on the president’s desk for signature by July Fourth.” However, this timeline appears increasingly unrealistic given the scope of required revisions.

Options for Republican Leadership

Republicans face several difficult choices in responding to the parliamentarian’s rulings:

• Strip the provisions entirely: This would eliminate hundreds of billions in savings, making the bill more fiscally irresponsible and jeopardizing key Republican votes needed to pass the Bill.
• Revise provisions to comply: Attempt to rewrite rejected provisions in ways that satisfy the Byrd Rule, though this may significantly weaken their impact
• Challenge the rulings: Hold floor votes requiring 60 senators to override the parliamentarian’s decisions, which would be impossible given unified Democratic opposition
• Overrule the parliamentarian: Establish new precedents through simple majority votes, though Thune has indicated reluctance to pursue this option

Growing Republican Opposition

The parliamentarian’s rulings have exposed deeper tensions within the Republican caucus. Several GOP senators, including Josh Hawley (R-Mo.) and Susan Collins (R-Maine), had already expressed concerns about Medicaid cuts’ impact on rural hospitals. The elimination of these savings may paradoxically help these senators support the bill while creating new problems for fiscal conservatives.

Senator Ron Johnson (R-Wis.) has called the bill “completely unsustainable,” while Senator Rand Paul (R-Ky.) believes there is sufficient Republican opposition to force changes. With Republicans holding only a 53-47 Senate majority, they can afford to lose only three votes.

Some Republican lawmakers have criticized MacDonough directly. Senator Tommy Tuberville (R-Ala.) called for “the WOKE Senate Parliamentarian” to be fired, while Representative Greg Steube (R-Fla.) made similar demands. However, Senate leadership has shown no appetite for such dramatic measures.

Procedural Complications

Beyond the immediate impact of struck provisions, the parliamentarian still faces several critical rulings that could further complicate the bill. Most importantly, MacDonough must decide whether Republicans can use a “current policy baseline” rather than “current law baseline” for calculating the bill’s deficit impact. If rejected, this could create a gap exceeding $3 trillion in the bill’s financing.

We have been very vocal that this “current law baseline” makes no sense and we anticipate the parliamentarian to reject this approach. Please see our prior posts on this major provision. If the parliamentarian shoots down this approach it will certainly derail the viability of this bill passing in our opinion.

The Congressional Budget Office has already estimated that the House-passed version would increase deficits by $2.4 trillion on a conventional basis, or $3.4 trillion including economic feedback effects. The parliamentarian’s rulings have eliminated key offset mechanisms, potentially making these numbers even worse.

Inter-Chamber Tensions

The parliamentarian’s rulings have exacerbated existing tensions between House and Senate Republicans. House members are frustrated that their carefully crafted bill has been substantially altered, with some advocating for a formal conference committee to resolve differences. However, Trump and GOP leaders prefer to avoid such a process due to time constraints.

House Majority Whip Tom Emmer has indicated the House will simply accept whatever the Senate passes, stating, “When it comes over, we’ll pass it.” However, several House Republicans have expressed unwillingness to support the Senate’s changes without significant modifications.

Conclusion

The Senate parliamentarian’s rulings represent a fundamental challenge to Republican efforts to quickly enact Trump’s domestic agenda. By stripping hundreds of billions in spending cuts while maintaining expensive tax provisions, these decisions have made the bill significantly less fiscally responsible and more politically difficult to pass.

The rulings highlight the constraints that procedural rules can place on partisan legislation, even when one party controls both chambers of Congress and the presidency. As Republicans scramble to find alternative approaches or accept a larger deficit impact, the July 4 deadline appears increasingly untenable.

The ultimate fate of the “One Big Beautiful Bill” now depends on whether Republican leaders can navigate these procedural obstacles while maintaining party unity. With fiscal conservatives demanding more spending cuts and moderates concerned about program reductions, the parliamentarian’s rulings have made an already difficult balancing act even more precarious.

We will continue to keep you abreast of these changes and how this Bill progresses through the process. Please let us know if you have any questions or would like to discuss its impact on your specific situation.