Cato Policy Analysis No. 186 December 9, 1992

Policy Analysis

How Governors Think Congress Should Reform the Budget:
Results of a Survey of U.S. Governors And Former Governors

by Stephen Moore

Stephen Moore is director of fiscal policy studies at the Cato Institute.


Executive Summary

A Cato Institute survey of 118 U.S. governors and former governors--including Jimmy Carter, Ronald Reagan, Michael Dukakis, and Bill Clinton--reveals a strong consensus that both a line-item veto for the president and a balanced-budget amendment to the Constitution would be effective methods of reducing the massive federal budget deficit. A majority of the governors also say that today Congress has too much power over the budget process and the president too little. High- lights of the survey follow.

--Ninety-two percent of the governors believe that "a line-item veto for the president would help restrain federal spending." Eighty-eight percent of the Democratic respondents believe the line-item veto would be useful.
--By a two-to-one margin the governors approve of a balanced-budget amendment to the Constitution. Fifty- five percent of them said that a balanced-budget amendment was "very desirable"; 22 percent said it was "somewhat desirable"; and 24 percent said it was "not desirable."
--Nearly nine of ten of the governors believe that the federal government should reimburse state governments for the cost of federal mandates.
--Fifty-five percent of the governors think that Congress has "too much authority over the federal budget," against only 2 percent who think that the president has too much authority.

America's governors and former governors have a unique perspective on budget reform issues. Most of them have had practical experience with the line-item veto and balanced- budget requirements in their states. The fact that most governors have found those budget tools useful in restraining deficits and unnecessary government spending suggests that they may be worth instituting on the federal level.

Purpose of the Survey

With the federal budget deficit continuing to skyrocket (it may hit $350 billion this year), budget reform is again on the legislative agenda of Congress. A balanced-budget amendment was narrowly defeated in the House this past summer and will be debated again next year. The line-item veto--which would allow the president to veto specific programs or projects within a spending bill without having to veto the entire bill--has been endorsed by President-elect Clinton. Both measures command very high public support. Polls consistently reveal that three of four Americans support a balanced-budget amendment to the Constitution. About two-thirds of Americans approve of a line-item veto for the president.

Those and other fiscal reforms under consideration in Congress are budget tools that are already in place in the states. Except for Vermont, every state has some form of balanced-budget requirement--although they vary widely in stringency. Forty-three governors have line-item veto authority. Many states also have constitutional or statutory spending- and tax-limitation provisions.(1)

Unfortunately, there has been very little attention devoted to the critical issue of how those measures have actually worked in the states. Although several academic studies have found that the line-item veto and the balanced- budget requirement have had a disciplining effect on state spending and borrowing, those findings have not prompted Congress to act.(2)

One way to determine whether budget reforms work is to consult America's governors. They are the one group that has hands-on experience with working with many of the deficit-reduction ideas that are now under consideration in Washington. They can bring a special perspective to the issue. Some governors, such as Tommy Thompson of Wisconsin, have relied heavily on the line-item veto to cut expenditures and balance the budget. Yet generally speaking, governors have not been consulted by federal policymakers.

To add the governors' voices to the debate, the Cato Institute surveyed all of the nation's current and former governors on budget reform.(3) We contacted 274 current and former governors,(4) 118 of whom completed all or part of the survey, for a response rate of 43 percent.(5) Sixty-seven of the respondents are Republicans, 50 are Democrats, and one is an Independent. Nineteen of the respondents are current governors. The governors were sent a one-page, five-question survey and asked to write a more detailed response to explain their answers. Roughly half of the governors did contribute detailed written responses.

The survey results and their policy implications are presented in the following sections. Appendix A contains some of the governors' written responses to the open-ended questions, and Appendix B is a list of the governors who participated in the survey.(6)

Survey Findings

The results of the five-question survey are given below. The figures at the end of this section give a summary of the survey findings with a breakdown of the results by party affiliation.

Question 1

"Was/Is the line-item veto a useful tool to you as governor in balancing the state budget?"

Sixty-nine percent of the governors said the line-item veto was a "very useful tool"; 23 percent said it was a "somewhat useful tool"; and 7 percent said it was "not useful." Republicans were only slightly more likely than Democrats to believe that the line-item veto was useful. Ninety-one percent of Democratic governors said the line-item veto was "very useful" or "somewhat useful."

Question 2

"Do you think that a line-item veto for the president would help restrain federal spending?"

Ninety-two percent of the respondents replied yes. Fully 88 percent of the Democrats agreed that the line-item veto would help restrain federal spending. In contrast to the situation in Congress, there is bipartisan support among governors for the line-item veto.

Question 3

"Based upon your experience as governor with balanced- budget requirements, do you think that a balanced-budget amendment to the Constitution for the federal government is desirable?"

Fifty-five percent said a balanced-budget amendment would be "very desirable"; 21 percent said it would be "somewhat desirable"; and 23 percent said it would be "not at all desirable." Responses to this question differed markedly by party affiliation. Nearly 7 of 10 Republican governors responded that a balanced-budget amendment was "very desirable." But among Democrats there was no consensus: one-third said that it was "very desirable"; about one- third said it was "somewhat desirable"; and slightly more than one-third said it was "not at all desirable." The governors' responses roughly mirror party support for a balanced-budget amendment in Congress.

Question 4

"Should the federal government be required to reimburse states for the cost of federal mandates?"

Federal mandates imposed on states are eating up larger and larger shares of state budgets. Some states devote as much as half of their budgets to federally mandated spending. Several states have even passed provisions that would prohibit Congress from passing legislation that mandates any further unfunded spending. Eighty-eight percent of the governors said that the federal government should be required to reimburse the states for mandated spending. Democrats were slightly more in favor of requiring full reimbursement than were Republicans--91 percent to 84 percent.

Question 5

"In your opinion, does Congress or the president have too much authority over the federal budget today?"

Ever since Congress passed the Budget Reform and Impoundment Control Act of 1974, every president has complained that Congress has usurped the executive branch's traditional powers over the budget process. The governors agree. Fifty-five percent said "Congress has too much power"; 2 percent said "the president has too much power"; and 43 percent said "the balance of power is about right." On this question there was a large difference between the two parties. Sixty-nine percent of the Republicans said Congress has too much power, whereas only 35 percent of the Democrats did.

Question 1

Was/Is the Line-Item Veto a Useful Tool to You as Governor in Balancing the State Budget?

Very Useful Somewhat Useful Not Useful All Governors 69% 23% 7% Republicans 74% 21% 5% Democrats 63% 28% 10%

Note: Percentages may not add up to 100 due to rounding.

Question 2

Do You Think a Line-Item Veto for the President Would Help Restrain Federal Spending?

Yes No All Governors 92% 8% Republicans 95% 5% Democrats 88% 12%

Question 3

Based upon Your Experience as Governor with Balanced-Budget Requirements, Do You Think That a Balanced-Budget Amendment to the Constitution for the Federal Government is Desireable?

Very Desirable Somewhat Not at All Desirable Desirable All Governors 55% 21% 23% Republicans 70% 15% 15% Democrats 33% 31% 36%

Question 4

Should the Federal Government Be Required to Reimburse States for the Cost of Federal Mandates?

Yes No All Governors 88% 13% Republicans 84% 16% Democrats 91% 9%

Question 5

In Your Opinion, Does Congress or the President Have Too Much Authority over the Federal Budget Today?

Congress Has Balance President Has Too Much Power Of Power Is Has Too Much About Right Power All Governors 55% 43% 2% Republicans 69% 29% 2% Democrats 35% 63% 2%

Other Reforms

We also asked the governors to suggest other needed budget reforms that may have been tested on the state level. Roughly half of the responding governors gave us ideas. Some of the more common and some of the more imaginative responses follow.

--Separate the operating budget from the capital budget and require all operating expenses to be paid from revenues, rather than debt (7 governors).

-- Reduce federal mandates on states (7 governors).

-- Reduce or eliminate automatic cost-of-living adjustments for entitlements (5 governors).

--Give the president the item reduction veto (4 governors).(7)

--Require the president to submit a balanced bud get (4 governors).

--Impose an across-the-board budget freeze on spending (4 governors).

--Require all new programs to be funded by a specific tax (4 governors).

--Require fiscal impact statements for all new spending programs (3 governors).

--Restore rescission/impoundment power to the president (3 governors).

--Raise taxes on the wealthy (3 governors).

--Require a three-fifths vote to enact a tax increase (2 governors).

--Place restraints on size and pay of congressional staff (2 governors).

--Reduce defense spending more rapidly (2 governors).

--Implement term limits for members of Congress (2 governors).

--Establish a rainy-day fund that would require setting aside a portion of revenues during good times to get through economic downturns without big deficits (1 governor).

--For every dollar of new program expenditures, reduce existing expenditures by two dollars (1 governor).

--Implement competitive bidding on federal contracts (1 governor).

--Tie congressional salaries to achieving a balanced budget (1 governor).

--Replace the income tax with a consumption tax (1 governor).

Conclusion

The major findings of the survey can be summarized as follows:

1. Nine of ten governors--regardless of party-- support a line-item veto for the president as a way to restrain spending.

2. Twice as many governors support as oppose a balanced-budget amendment; more Republicans than Democrats support it.

3. Almost nine of ten governors believe that Congress should be required to reimburse states for the cost of federal mandates.

4. A majority of governors think that Congress has too much authority over the budget process, although Republicans are much more inclined to think so than Democrats.

Those findings contradict the critics of budget reform in Congress who argue that such measures would not help resolve the nation's fiscal crisis. For example, Rep. Bill Gradison, the Ohio Republican on the House Budget Committee, says, "The budget process needs leadership not reform."(8) The experience of the states, according to their governors, suggests that the line-item veto and balanced-budget requirement do work and are needed in Washington.

Appendix A: Written Responses to Open-Ended Questions

Question 1: Based upon your experience as governor, why do you support/oppose the line-item veto?

"The line-item veto is a useful tool that a governor can use on occasion to eliminate blatantly 'pork barrel' expenditures that can strain a budget. At the same time he must answer to the voters if he (or she) uses the veto irresponsibly. It is a certain restraint on the legislative branch." Keith H. Miller, Alaska, Republican, 1969-70

"Besides providing specific authority to veto, the threat of a veto allows great flexibility in negotiating with a legislature (or Congress). The key to a good budget is negotiations between both sides--this device is a mechanism for negotiation." Norman H. Bangerter, Utah, Republican, 1985-present(42)

"I support the line-item veto because it is an executive function to identify budget plan excesses and wasteful items. It is an antidote for pork!" Hugh L. Carey, New York, Democrat, 1975-83

"Congress's practice of passing enormous spending bills means that funding for everything from a Lawrence Welk Museum to a study of bovine flatulence slips through Congress. The president may be unable to veto a major bill that includes such spending abuses because the majority of the bill is desperately needed. A line-item veto would let the president control the irresponsible spending that Congress can't. A line-item veto already works at the state level. It not only allows a governor to veto wasteful spending, it works as a deterrent to wasteful spending legislators know will be vetoed." Pete Wilson, California, Republican, 1991-present

"Legislators love to be loved, so they love to spend money. Line-item veto is essential to enable executive to hold down spending." William F. Weld, Massachusetts, Republican, 1991-present

"When I was governor in California, the governor had the line-item veto, and so you could veto parts of a bill or even part of the spending in a bill. The president can't do that. I think, frankly--of course, I'm prejudiced--government would be far better off if the president had the right of line-item veto." Ronald Reagan, California, Republican, 1967-75

"I support the line-item veto because the Congress does appropriate for new programs and even expansion of present programs in a way that they don't stand on their own merit. Ever since the Congress began forcing the president to spend money he thought to be unwise during the Nixon administration, we have needed the line-item veto. The preferable arrangement would be, however, that the president not be required to spend any amount of any appropriation if he deemed such expenditure unwise."

Albert H. Quie, Minnesota, Republican, 1979-83"Legislators can be pressured into decisions that cost money. They see only a small portion of the picture. The governor or the president can 'take them off the spot' and thwart unwise

(42)An asterisk indicates that a governor either did not run for reelection or was defeated in November 1992. legislation. He also has a better weapon for negotiation than the threat of vetoing an entire bill." John R. Williams, Arizona, Republican, 1967-75

"It is of limited usefulness. The state legislature hides all the bad spending in programs that are impossible to veto." Mark White, Texas, Democrat, 1983-87

"I believe it provides a check and balance which is helpful even if only because it requires legislators to con- sider the potential for veto and may thereby make them more accountable." Michael J. Sullivan, Wyoming, Democrat, 1987-present

"I support the line-item veto. As I have direct accountability to the entire state while the legislators report to a relatively small constituency, so the president must account to the entire nation as members of Congress respond to the needs of 535 varying constituencies." Joan Finney, Kansas, Democrat, 1991-present

"I support it, because most people in Congress don't know the difference between bringing home the bacon and bringing home the pork. They spend a lot of money wastefully and we should put a stop to it." David F. Cargo, New Mexico, Republican, 1967-71

"Support as an executive tool to discipline spending without shutting entire government down. Its presence also helps to discourage some undesirable items and pressures our legislature to put items in." Edward J. King, Massachusetts, Democrat, 1979-83

"The line-item veto is helpful in stopping efforts to add riders and other extraneous amendments to the budget bill. It doesn't have much to do with restraining the overall level of spending." Michael S. Dukakis, Massachusetts, Democrat, 1975-79 and 1983-91

"It can be a surgical tool to highlight foolishness and thus help the executive make his case." Pete du Pont, Delaware, Republican, 1977-85

"Absolutely yes! It allows the partisan 'spoils' approach to be carried out but then eliminated so as not to inflate tax burden of the people. Every governor in this state has needed the line-item veto, but a 'minority' governor needs it more!" Lee Sherman Dreyfus, Wisconsin, Republican, 1979-83

"Oppose. It is a tool which can be easily abused and penalize states with few electoral votes." Mike O'Callaghan, Nevada, Democrat, 1971-79

"Tremendous tool for saving money." S. Ernest Vandiver, Georgia, Democrat, 1959-63

"I oppose the line-item veto because it gives the governor an extraordinary amount of power. It is a simplistic response that ignores the constitutional balance of power between the executive and the legislative branches. As governor I would have liked the power. As a citizen I am opposed." Kenneth M. Curtis, Maine, Democrat, 1967-75

"The line-item veto is tremendously important to eliminate 'pork barrelling,' It is almost imperative that the chief executive have this power if we are to have financial stability." Preston Smith, Texas, Democrat, 1969-73

"During the Thompson administration, the governor's partial veto power has been used 1,307 times in six budget bills. The partial veto has been used to eliminate spending increases totaling $142 million, to avoid tax increases, and to remove poor policy from budget bills. It is an important tool for keeping spending increases within prudent and affordable limits, keeping taxes at competitive levels, and keeping special interest, pork-barrel items from becoming law." Tommy G. Thompson, Wisconsin, Republican, 1987-present

"To the detriment of the federal process, the president is not held accountable for a balanced budget. Congress takes control over budget development with its budget resolution, after which, the president may only approve or veto 13 appropriation bills. Without the line-item veto the president has minimal flexibility to manage the federal budget after it is passed." L. Douglas Wilder, Virginia, Democrat, 1990-present

Question 2: Why do you support/oppose the balanced-budget amendment?

"I would support it only if provisions were included, as a minimum, for coping with emergencies such as war or massive unemployment." C. Malcolm Wilson, New York, Republican, 1973-75

"The balanced-budget amendment would provide the fiscal discipline necessary to force Washington policymakers to actually achieve what nearly all Americans acknowledge to be a necessary goal. . . . The very purpose of the amendment is to discipline the executive and legislative branches actually to make these choices and not to propose or perpetuate vast spending programs without providing revenues to fund them. The amendment would, in effect, make Congress and the president more accountable for the spending decisions that they make while in office." Dick Thornburgh, Pennsylvania, Republican, 1979-87

"We have tried procedural solutions before only to prove that easy answers are no answer. I believe we must begin by looking in the direction of runaway mandatory program growth and further defense cuts. . . . There are still many questions in my mind regarding how and to what extent a balancedbudget amendment would be enforced." Mark Hatfield, Oregon, Republican, 1959-67

"I support the balanced-budget amendment as a needed regimen. The Congress has proven that only statutory discipline will avail in the face of the current excess spending." Hugh L. Carey, New York, Democrat, 1975-83

"It would put the federal government into an inflexible bind. There are instances in which the government should be able to run a deficit, in part to smooth out the business cycle." Orville Freeman, Minnesota, Democrat, 1955-61

"The reason Congress lacks fiscal discipline is that it can print money ad libitum. The deficit is driving up the cost of capital and killing us in international economic competition. In terms of government reform, the states are where the action is now--because we have to balance our budgets!" William F. Weld, Massachusetts, Republican, 1991-present

"A balanced-budget amendment must also carry with it a limitation on taxes. It must contain a limit so that in the future you couldn't just always have a balanced budget by simply sending the bill to the taxpayers for whatever the deficit might be." Ronald Reagan, California, Republican, 1967-75

"I would support a balanced-budget amendment, but I don't like the one that's now being considered because it doesn't provide for investment. I want to make a real distinction between investing in the future and just spending on a daily basis." Bill Clinton, Arkansas, Democrat, 1979-81 and 1983-present

"I support it but know because of the inept presidential leadership of the last twelve years (i.e., never has the executive even bothered to propose a balanced budget) it will take many years to correct the mess." Harvey Wollman, South Dakota, Democrat, 1978-79

"I have opposed the amendment in years past thinking it to be a political 'cop-out.' The deficit problem has gotten so bad, that I have now decided to support it." Richard W. Riley, South Carolina, Democrat, 1979-87

"The balanced-budget amendment with a trigger to bypass it would cut a huge amount of spending that is politically driven based on power of individual legislators. This is the ultimate check on a public that has figured out they can vote themselves money from the public treasury without the offset of a revenue increase." William J. Janklow, South Dakota, Republican, 1979-87

"Congress and the president should be able to control themselves without a straightjacket but apparently they cannot." Calvin L. Rampton, Utah, Democrat, 1965-77

"I believe it is imperative we at some time reach that position if we are to avoid continuing economic chaos or unreasonable expectations from the public." Michael J. Sullivan, Wyoming, Democrat, 1987-present

"My support of the balanced-budget amendment is lukewarm, as I do not like to see the Constitution amended for something which could be as readily handled by appropriate federal legislation. I do believe that a balanced budget should be required. Many states have it without making it a constitutional matter. A constitutional amendment should be the last resort." Hugh Gregg, New Hampshire, Republican, 1953-55

"Using the states as an example of the effectiveness of a balanced-budget provision ignores the fundamental differences between state and federal fiscal policy. To deny the president and the Congress the ability to inject some stimulus into a lagging economy is, in my view, absurd." Michael S. Dukakis, Massachusetts, Democrat, 1975-79 and 1983-91

"The balanced-budget amendment imposes discipline and financial responsibility where it belongs. No governmental body should hide behind platitudes and deficits when spending the public's money." Dixy Lee Ray, Washington, Democrat, 1977-

81

"The only way to control the size of government is to limit it overall--choices among spending programs cannot be enforced without a ceiling." Pete du Pont, Delaware, Republican, 1977-85

"I've long opposed the balanced-budget amendment for several reasons: One, it should not be in the Constitution. Two, the federal government in the national interest needs to spend in excess of revenue from time to time. I now support a balanced-budget amendment because the president and Congress are unable to grapple with deficits and such an amendment could be a means of focus and fiscal discipline." William L. Guy, North Dakota, Democrat, 1961-73

"The balanced-budget amendment is risky to federal needs which can be critical." Richard J. Hughes, New Jersey, Democrat, 1962-70

"I support the balanced-budget amendment. Large pressure groups are just too strong today for any politician to withstand. Help is needed." John D. Vanderhoof, Colorado, Republican, 1973-75

"Balanced-budget amendment may help to solve the problem, but men and women of character would do much more. Gutless people are at the core of the problem, not the system." George M. Leader, Pennsylvania, Democrat, 1955-59

"Washington can always find a way around it such as 'off-budget' action on S&Ls. Where there is no will, there is no way." Richard F. Celeste, Ohio, Democrat, 1983-91

"The U.S. government is no different than a person. Spend only what you have except in case of emergency--such as war." Preston Smith, Texas, Democrat, 1969-73

"The balanced-budget amendment is the only way to force some discipline on federal budgeting." Evan Bayh, Indiana, Democrat, 1989-present

"A balanced budget requirement is a restraint on gimmicks. Surely, it will not succeed unless we are dedicated to principles. Yet, we can be even more certain it will not be accomplished if we are unwilling to set forth the principles." L. Douglas Wilder, Virginia, Democrat, 1990-present

"I am in support of the balanced-budget amendment because of my frustration at the failure of Congress to ad dress the deficit in any substantive manner. Even though the adoption of this amendment would be a drastic measure, something must be done now to place restraints on the free-spending Congress. As the national debt climbs, so too do the interest payments made to service that debt. We are basically mortgaging the future for our children and we must stop it now before it gets worse. I must state that voting for the balanced-budget amendment is the easy vote. The difficult votes will come later when it is time to actually reduce government in order to comply with the amendment. Significant reductions will not come from across-the-board cuts, but rather by thorough examination of each program. The federal government will be forced to rethink how and what services are delivered, something that we at the state level have already successfully initiated. Further, I recognize we will not achieve a balanced budget overnight as the size of the federal deficit is a product of years of overspending. But we must start somewhere and the balanced-budget amendment sets the target for which we need to shoot." Michael N. Castle, Delaware, Republican, 1985-present*

"While I have steadfastly opposed virtually all constitutional amendments, including one that would provide for a balanced budget, it sometimes seems that such an amendment may ultimately be the only way spending can be controlled." Dale L. Bumpers, Arkansas, Democrat, 1971-75

Question 3: What other federal budget reforms would you recommend?

"While not strictly speaking a budget reform, I do support term limitations on members of Congress." Keith H. Miller, Alaska, Republican, 1969-70

"Separate the capital and expense budgets and reflect U.S. asset values as part of the capital budget accounting." Hugh L. Carey, New York, Democrat, 1975-83

"Require the president to submit a balanced budget. Remove the Social Security account from the budget. Consider adoption of biennial budgets." Anthony S. Earl, Wisconsin, Democrat, 1983-87

"For every dollar increase in new expenditures there should be a two-dollar reduction in existing program expenditures." Lester Maddox, Georgia, Democrat, 1967-71

"Congress must kick its addiction to imposing federal mandates on the states. When funds for new federal programs are scarce, the Congress invariably turns to federal man dates to impose its agenda. Unfortunately, these mandates too often reflect the priorities of inside-the-beltway politics rather than the needs of the states. The truth is, they hog-tie our ability to respond to our states' very real needs. Having served in state, local, and federal government, I can tell you that passing the buck is a time-honored tradition. I've tried to put an end to it in California by not passing mandates on to the cities and counties without the means to pay for them. The federal government should adopt the same standard. Unfunded congressional mandates will cost California at least $1.4 billion this year, probably more than any other state." Pete Wilson, California, Republican, 1991-present

"Require a three-fifths vote for tax increases." William F. Weld, Massachusetts, Republican, 1991-present

"A look at whether the federal budget system could or should be patterned after state systems. For example, Maryland has an operating budget which cannot be increased by the legislature or funded by debt--and must be balanced; and there is a separate capital budget funded by debt (bonds) or 'pay as you go,' which can be increased or items added by the legislature, and the governor has a line-item veto. Would this work at the federal level?" Harry Hughes, Maryland, Democrat, 1979-87

"Each bill should have a fiscal impact statement attached which ought to be announced at the bill's introduction. The impact statement would need to be revised as the contents of the bill changed. Otis R. Bowen, Indiana, Republican, 1973-81

"Require president to submit a balanced budget request by law. By law require Congress to appropriate--delete authorization legislation." Hulett C. Smith, West Virginia, Democrat, 1965-69

"I believe the president should be required to present a balanced budget to Congress and if the president believes that greater expenditures be made, the excess be specified and the process of funding be specified. The same should be required of the Congress in appropriations legislation to the president and any in excess of a balanced budget and its funding be in a single bill and a vote greater than a majority required. . . . The president should not be required to expend funds even though appropriated." Albert H. Quie, Minnesota, Republican, 1979-83

"Reforms on the revenue side, i.e., adjusting COLAs and Medicare outlays and some other transfer programs." William H. Avery, Kansas, Republican, 1965-67

"Cut payroll of congressional staffs." Frank D. White, Arkansas, Republican, 1981-83

"Freeze all salaries, pensions, and other governmental benefits until the budget is balanced (deficit under control--eliminated). Reduce interest rates on indebtedness until deficit eliminated and payment begun on indebtedness." Orval E. Faubus, Arkansas, Democrat, 1955-67

"I believe that legislative proposals which require funding should be accompanied by a fiscal note stating the amount of money to be appropriated in order to implement and maintain the act." Joan Finney, Kansas, Democrat, 1991-present

"The power to restrict spending--not in a specific area (or region) but to apply generally, across the board on a program basis. This eliminates opportunity for president to punish states that send opposition party legislators." George R. Ariyoshi, Hawaii, Democrat, 1974-86

"What we need is a president with the guts to provide leadership on the budget. We haven't had such a president for twelve years, and unless we get one we're going to continue to wallow around in this mess." Michael S. Dukakis, Massachusetts, Democrat, 1975-79 and 1983-91

"More competitive bidding. More full disclosure of details of government spending programs. Prohibit borrowing from the Social Security fund as a cover-up for budget deficits." Frank B. Morrison, Sr., Nebraska, Democrat, 1961-67

"Absolute ban on middle-of-the-night last-minute slipping of special interest items onto unrelated bills. The Congress is expert in this." Dixy Lee Ray, Washington, Democrat, 1977-81

"One, rescission power in president. Two, telescope authorization and appropriation process so Congress gets only one bite each year. Three, simplification of the process, so that departments must compete for funds." Pete du Pont, Delaware, Republican, 1977-85

"Time for a new idea! Let's tie congressional salaries or a 'bonus' to a balanced budget. The closer to balance, the more bonus. Every salesperson in the U.S. would under stand!" Lee Sherman Dreyfus, Wisconsin, Republican, 1979-83

"I would recommend a balanced reduction in spending presented as a package so all affected could see how their sacrifice compared to others. One, reduce or delay COLAs in Social Security, federal, military, and railroad retirement except at the low end of income. Two, reduce the military and shut down exotic weapon production. Three, reduce some foreign aid, i.e., Israel, El Salvador. Four, reduce subsidies, i.e., farming, navigation, hydro sales. Five, delay the space programs. Six, freeze most federal government agency growth. I would also ask for more taxes from the wealthy, more user fees, and a sharp increase in Medicare support along with a national medical insurance with caps on procedures and legal fees for malpractice." William L. Guy, North Dakota, Democrat, 1961-73

"Federal government needs to discontinue automatic costof-living adjustments. Should also force federal government to pay for its mandates, matching programs, and shift more to revenue sharing. Presidents and Congress must become more responsible." Robert E. McNair, South Carolina, Democrat, 1965-71

"Do away with federal income tax and install a fair tax system where everyone is taxed on the amount of money they spend each year, such as a value-added tax on everything except drugs and food. Let people at the local level tax themselves for the things they are willing to pay for. The federal government is too large and too wasteful." Donald W. Samuelson, Idaho, Republican, 1967-71

"Limited terms for Congress." Robert W. Scott, North Carolina, Democrat, 1969-73

"The power to reduce appropriations by a specific percentage. This would not be as much help as it could be as Congress could inflate the appropriations but it would make passage more difficult. We had it in New Mexico until the budget control was changed to delete it. Made the control much more difficult." Edwin L. Mechem, New Mexico, Republican, 1951-55, 1957-59, and 1961-62

"Obvious waste exists everywhere in federal government. Trillion-dollar budgets hide billions of waste and pork. Until someone has the courage to face reality we will go deeper and deeper in debt. The country is already bankrupt by any business standpoint." Burton M. Cross, Maine, Republican, 1953-55

"One, take Social Security/Medicare benefits out of the regular budget. Put these programs on an actuarily sound basis. Two, gradually eliminate most of the programs which are essentially aid to state and local governments, decreasing the tax take by like amounts. Much inefficiency would be eliminated." David C. Treen, Louisiana, Republican, 1980-84

"Any legislation that increases expenditures would have to be tied to the source of funds." George M. Leader, Pennsylvania, Democrat, 1955-59

"Biennial budget with separation of operating and capital accounts (one in year one; the other in year two). Also, eliminate the authorizing/appropriating dichotomy--one budget." Richard F. Celeste, Ohio, Democrat, 1983-91

"Discontinue creation of large (millions of $) grants requiring states and or municipality subdivisions to match certain portions to participate. Many of our state and local governments have the idea that the federal government has free money--but so do a lot of congressmen and senators." Preston Smith, Texas, Democrat, 1969-73

"Treat Social Security like any other federal entitlement instead of pretending it's a 'trust fund.' Then fund it partly through an income tax instead of using a payroll tax, which discourages employment." Steve Cowper, Alaska, Democrat, 1986-90

"In Wisconsin, the governor has partial veto authority, which is more useful than a line-item veto because the governor can choose to veto parts of items and can choose to approve spending increases in part, rather than being forced to choose between approving all or none of an item. Another reform that has proved useful in Wisconsin is 'reduced based budgeting.' We ask agencies to submit budget requests that indicate what reductions they would make if they had to spend at 97.5 percent of prior-year levels and what increases would have highest priority if they could go up to 102.5 percent of the prior-year spending levels. This is designed to make agencies prioritize requests and to get them to review base spending, without requiring the extensive work inherent in zero-base budgeting, which theoretically requires that every base spending item be rejustified." Tommy G. Thompson, Wisconsin, Republican, 1987-present

"I feel that Delaware has enacted several fiscal constraints which may have application at the federal level. These are: Limit appropriations to less than 100 percent of projected revenues. Establish and fully fund a budget reserve account. Place limits on the issuance of new debt and payment of debt service tied to projected revenues. Require a three-fifths majority vote in each chamber of Congress to enact any revenue increase. Estimate revenue collections using consensus forecasting. Separate operating and capital budgets." Michael N. Castle, Delaware, Republican, 1985-present*

"Restoring the power of rescission that was stripped from the executive branch during the Watergate era 'reforms' would be a good first step toward budget reform. In the absence of a line-item veto, rescission power will at least enable the executive branch to have a role in the budget process. We should also explore reducing the number of committees involved in the congressional budget process in order to promote a better sense of responsibility. Finally, I would urge the Congress to discontinue the practice of mandating expensive programs to the states; the single biggest problem facing state budgets today is the explosion of costs associated with federally mandated programs such as Medicaid." Carroll A. Campbell, Jr., South Carolina, Republican, 1987-present

"I would recommend action to require the federal government to reimburse the states for the cost of federal mandates. At the state level, I have been a strong proponent of similar efforts to control 'unfunded mandates,' and I am a strong supporter of a constitutional amendment to bar the state from imposing 'unfunded mandates' on Maine municipalities. This constitutional amendment will be on the ballot for ratification by the voters in November." John R. McKernan, Jr., Maine, Republican, 1987-present

"A major concern to states is that the federal budget problems should not be solved at state expense. Since federal actions, even the most well-intentioned, can negatively impact state budgets, this must be our primary focus. Pennsylvania's experience with Medicaid, for example, shows a clear shifting of the burden of federal mandates to states. Pennsylvania's state Medicaid expenditures for 1992-93 are expected to increase by $209 million or 13.5 percent in the General Fund. Clearly, expanding coverage without full funding places states in the position of expending more state funds while having to cut other needed programs or raising taxes." Robert P. Casey, Pennsylvania, Democrat, 1987-present

Appendix B: Governors Who Participated in Survey

Current Governors, Alphabetically by State (23)

Former Governors, Alphabetically by State (95)

(42)An asterisk indicates that a governor either did not run for reelection or was defeated in November 1992.

Notes

(1) For a summary of the various state budget laws, see Advisory Commission on Intergovernmental Relations, Significant Features of Fiscal Federalism, 1991.

(2) The studies include Stephen Moore, "What the States Can Teach Congress about Balancing the Budget," Heritage Foundation Backgrounder, 1990; Mark Crain and James Miller, "Budget Process and Spending Growth," William and Mary Law Review, 1987; and Charles K. Rowley, William Shughart, and Robert D. Tollison, "Interest Groups and Deficits," in Deficits, ed. James Buchanan et al. (Oxford: Basil Blackwell, 1987) pp. 263-80. For a contrary view, see Burton A. Abrams and William R. Dougan, "The Effect of Constitutional Constraints on Governmental Spending," Public Choice 49 (1986): 101-16.

(3) The Cato Institute wishes to thank the National Institute of Former Governors and the National Governors Association for their generous assistance in contacting former governors.

(4) Governors from Vermont were excluded from the survey because Vermont does not have a balanced-budget requirement, nor does it empower its governor with line-item veto authority.

(5) In almost all cases the governors filled out and signed the surveys themselves. In a few cases we did telephone interviews with the governors. In a few other cases the governors had an aide complete the survey with their approval. Finally, in some cases the governors completed the survey and sent copies of their speeches that expound upon their positions on budget reform issues. We include excerpts from some of those speeches in Appendix A.

(6) A complete listing of written responses is available upon request.

(7) The item-reduction veto is a power that would allow the president to reduce the appropriated expenditure for a pro gram without vetoing the entire program. For instance, if Congress passed a $500 million appropriation for an educa tion program, the president could use his item-reduction veto to trim that amount to $400 million. Roughly a dozen governors currently have this authority.

(8) Bill Gradison, "No More Budget Games," Washington Post, January 9, 1990, p. A19.

1992 The Cato Institute
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