MacDonough's guidance, a copy of which was obtained by The Hill, all but closes the door to Democrats using the spending bill to provide a pathway to citizenship for millions of immigrants.
MacDonough, in her guidance, warned that the Democratic plan doesn't meet the strict rules on what can be in the spending bill, calling the plan "by any standard a broad, new immigration policy."
"The policy changes of this proposal far outweigh the budgetary impact scored to it and it is not appropriate for inclusion in reconciliation," she wrote in the ruling obtained by The Hill, referring to the budget process Democrats are using to avoid the Senate filibuster.
But MacDonough, in her written guidance to senators, wrote that granting LPR status has “no federal fiscal equivalent.”
“Changing the law to clear the way to LPR status is tremendous and enduring policy change that dwarfs its budgetary impact,” she added.
Democratic leaders had pledged that if the Senate referee initially rejected their efforts, they could keep trying to sway her until the $3.5 trillion spending bill was on the Senate floor. Senate Majority Leader Charles SchumerChuck SchumerBiden's Supreme Court commission ends not with a bang but a whimper Hispanic organizations call for Latino climate justice in reconciliation Senate to vote next week on Freedom to Vote Act MORE (D-N.Y.) on Sunday night said Democrats would take an alternative proposal to MacDonough.
"We are deeply disappointed in this decision but the fight to provide lawful status for immigrants in budget reconciliation continues. Senate Democrats have prepared alternate proposals and will be holding additional meetings with the Senate parliamentarian in the coming days," Schumer said.
Senate Judiciary Committee Chairman Dick DurbinDick DurbinFill the Eastern District of Virginia Senators preview bill to stop tech giants from prioritizing their own products Democrats struggle to gain steam on Biden spending plan MORE (D-Ill.) and Sen. Alex PadillaAlex PadillaClimate activists target Manchin Pelosi on addressing climate through reconciliation package: 'This is our moment' Top Latino group endorses Padilla for full Senate term MORE (D-Calif.), who oversees the committee's immigration subpanel, added that the "fight for immigration reform will continue."
Aides didn't immediately respond to questions about the alternative plan.
The spending bill is Democrats' best shot at getting immigration reform to President BidenJoe BidenManchin lays down demands for child tax credit: report Abrams targets Black churchgoers during campaign stops for McAuliffe in Virginia Pentagon, State Department square off on Afghanistan accountability MORE's desk. Though the House previously passed two smaller bills, Senate Democrats have been unable to come up with a plan that could get the 10 GOP votes needed to break a filibuster in the Senate. Durbin has been leading bipartisan talks, but they have been slow going, and Democrats don't have the total unity they need to nix the filibuster.
Democrats were optimistic that MacDonough would greenlight including their immigration plan in the spending bill because it would increase budget deficits by $139 billion over a 10-year period, according to initial estimates they’ve received from the Congressional Budget Office.
But Republicans also argued to MacDonough that immigration reform was outside the lines of what could be passed under reconciliation, which allows Democrats to avoid a GOP filibuster in the Senate.
“Immigration is way outside the bounds of what ought to be included,” Sen. John ThuneJohn Randolph ThuneGOP rallies around Manchin, Sinema McConnell gets GOP wake-up call Democrat on controversial Schumer speech: Timing 'may not have been the best' MORE (S.D.), the No. 2 Senate Republican, told The Hill.
Sen. Lindsey GrahamLindsey Olin GrahamRepublicans' mantra should have been 'Stop the Spread' Senators preview bill to stop tech giants from prioritizing their own products Democrats fret as longshot candidates pull money, attention MORE (R-S.C.), the top Republican on the Budget Committee, praised MacDonough's decision and argued that legal status shouldn't be provided without broader immigration reforms.
“The Parliamentarian’s guidance reinforces long held traditions of the Senate that major policy changes should be done collaboratively and not through the reconciliation process. This decision reinforces the fact that the Senate is truly different than the House," he said in a statement on Sunday.
Outside groups supportive of using the spending bill to pass immigration reform argued that this was the first step in the process and not a nail in the coffin for getting some changes into the spending bill.
“We anticipated this would be a multistep, iterative process with multiple bites at the apple,” said FWD.us President Todd Schulte. “We continue to be confident that the ability for people to adjust status will be passed through the reconciliation process given the clear and substantial budgetary and economic impact.”
If Democrats can't sway MacDonough, they'll need to either leave the immigration language out of the spending bill or muster the 60 votes needed to keep it in. With Republicans opposed to using the spending package to pass immigration reform, that's unlikely.
Democrats are also likely to face fresh calls to nix the legislative filibuster, which would let them pass immigration reform and other priorities with a simple majority outside reconciliation, as well as either fire MacDonough or formally overrule her on the floor a move that would take total unity from Democrats and Vice President Harris presiding.
Greisa Martinez Rosas, the executive director of United We Dream Action, said that the "Senate parliamentarian is an unelected advisor to the Senate" and that Democrats and Biden "hold all the power to do the right thing."
"Democrats in Congress must deliver on their promises to the people," she said.
MacDonough previously ruled against Democrats' plan to include a $15 minimum wage in a coronavirus bill earlier this year as well as a 2017 ObamaCare repeal plan.
During a meeting with Democratic staffers last week, MacDonough asked for more information on the legal theory behind their proposal. Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat and Judiciary Committee chairman, indicated last week that Democrats were still optimistic.
"We feel very strong about that position, and we hope it is persuasive," he said of the Democrats' legal justification. "But ultimately it is her decision."