Ezra Klein has written a more detailed description (see here, for instance), but the short answer is handy to have access to.
The very short version is that the budget reconciliation process — which limits debate and thus defuses the filibuster — was created in the Balanced Budget Act of 1974. It was later modified by the Byrd rule, which confined it to provisions that directly affect federal spending. That constraint is what makes reconciliation complicated: Insurance regulations, for instance, have only an indirect effect on federal spending, which means they’re not eligible for reconciliation. Subsidies, however, have a direct effect, so they are eligible. Policies falling into the gray area are decided by the Senate parliamentarian, who listens to arguments from both sides and then makes a ruling.
Reconciliation has, in general, been a Republican endeavor. Political scientist Joshua Tucker looked at the 19 times reconciliation was used between 1981 and 2005, and found that 14 of them were Republican initiatives. If you extend that analysis out to 2008, then 16 of 21 reconciliation bills were Republican.
[Click to continue reading Ezra Klein – A reconciliation primer ]
And the Republicans, and their allies in the media and elsewhere want you to ignore the history, or better yet, pretend it doesn’t even exist.
Republicans are arguing that reconciliation has never been used for major legislation, and so any attempts to use the process to modify the health-care reform bill would be a sharp break with precedent. That’s wrong on two counts.
First, reconciliation has been used for major legislation almost constantly, particularly on health-care reform. An NPR analysis concluded that “over the past three decades, the number of major health financing measures that were not passed via budget reconciliation can be counted on one hand.”
In fact, if you named a recent legislative accomplishment at random, you’d probably find it went through reconciliation. Both Bush tax cuts, at a total cost of $1.8 trillion, used the reconciliation process. So did welfare reform, and the Balanced Budget Acta of 1995 and 1997. The Children’s Health Insurance Program was created in reconciliation, and so too was COBRA. The law stating that hospitals who take Medicare and Medicaid money have to see all patients who walk into their emergency room was also passed in reconciliation, as was the 1983 tax increase that reversed many of the Kemp-Roth tax cuts.