Mr. Chairman, thank you for the opportunity to address the Subcommittee on the Constitution on an issue of vital importance to our nation’s fiscal future: the line item for the president. I share the opinion of three‐quarters of the American public that the line item veto is an essential fiscal tool for weeding out excessive and wasteful spending from the federal budget.
I have been writing about and advocating the line item veto for over ten years–first when I worked at the Heritage Foundation in the 1980s, and for the last several years as director of fiscal policy studies at Cato. In the 1980s many liberals accused fiscal conservatives of supporting line item veto authority only as a partisan power grab.
In hindsight, it is understandable why they would think that. Republican Ronald Reagan was in the White House while the Democrats had firm control of the Congress. But in 1992 after the election of Bill Clinton as President and at a time when the Democrats controlled the Congress and the White House, I and other long time supporters argued that now was the time to enact the line item veto. Republicans in Congress surprised the critics by supporting a line item veto for Democrat Bill Clinton.
The line item veto failed two years ago because the Democrat‐controlled Congress refused to give the president of their own party this budget tool to eliminate excessive spending. This is not a partisan issue, it is a balance of power issue.
How ironic, but appropriate, it would be if after all of these years a Republican‐controlled Congress enacted a line item veto to be first used by Democratic president .
Before getting to the major focus of my testimony, I wish to respond to one flawed but often repeated criticism of the line item veto. This is the charge that item veto would confer too much power over the purse strings to the executive branch. Indeed, the line item veto debate has never been a partisan battle as a battle between the executive and legislative branches of government.
The line item veto would not involve a huge and unprecedented power shift in the direction of the White House. The item veto should be more accurately thought of as a relatively weak and partial restoration of the rightful budgetary powers of the President that were stripped from the executive branch by the 1974 Budget Act. The Budget Act stripped the President of his right to impound funds–a power that was exercised routinely by every president from Thomas Jefferson through Richard Nixon. Jefferson first employed this power to refuse to spend appropriated funds in 1801 when he impounded $50,000 for Navy gunboats.
The founders believed that the President, as the head of the executive branch and therefore responsible for executing the laws and spending taxpayer funds judiciously, had a unilateral authority not to spend money appropriated by the Congress if that spending was unnecessary.
This was an extremely powerful White House authority that was exercised often for nearly the first 200 years of our nation. Presidents Kennedy, Johnson and Nixon used the impoundment power routinely–and in some years used it to cut federal appropriations by more than 5 percent. In one year Richard Nixon impounded more than 7 percent of domestic appropriations. In 1974 the Congress stripped the president of his lawful impoundment powers and instead gave him two very weak substitutes: the deferral and rescission authority. But as the members of this committee know well, rescissions require Congress to affirmatively approve a presidential request not to spend money. Most rescissions are simply ignored by Congress and never even voted on. And thus through congressional inaction, they are killed.
So the line item veto is vital because it partially restores the rightful authority of the executive branch that was improperly snatched away in a power grab by the post‐Watergate Congress in 1974. Indeed, my first choice would be for this Congress to enact a full restoration of the president’s impoundment power. Then the president would not need line item veto.
It is worth noting that although some critics say that the line item veto would not save taxpayers money, one way to measure the potential impact is to add up the foregone savings from rejected rescissions. If all of Ronald Reagan’s rescissions had been approved by Congress, the federal debt would have been $27 billion lower than it was from 1981–89.
This leads me into the main focus of my remarks and that is the issue of how well the line item veto works on the state level.
In 1992 the Cato Institute conducted a survey of 118 governors and former governors on the issue of what budget process measures that Washington should adopt to help balance the budget. Sixty‐seven of the respondents were Republicans, 50 were Democrats, and one was an independent. I wish to submit the entire study for the record if I may.
Many of the budget measures that Congress is now considering–including the balanced budget amendment, mandate relief, supermajority requirements to raise taxes, and line item veto–are already commonplace on the state level. For example, 43 states grant their governor some form of line item veto authority. All but one state have balanced budget requirements of one kind or another.
The reason we consulted the governors is that they are the one group that has hands‐on experience 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.
The major findings of our survey were as follows (see also the attached charts):
1) Sixty‐nine percent of the governors described the line item veto as “a very useful tool in helping balance the state budget.
2) Ninety‐two percent of the governors believe that “a line‐ item veto for the president would help restrain federal spending.”
3) There was very strong bipartisan support for the line item veto. Among only the Democratic governors, 88 percent believe the line‐item veto would be useful.
4) 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. There was a very large difference in opinion among Democrats and Republicans on this issue, with Democrat governors thinking the balance is right and the overwhelming majority of Republican governors believing Congress has too much power.
On two other budget reform issues we also found high levels of support:
* 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.
When we asked the governors why they supported or opposed the line item veto, here are some of the more interesting responses we received:
“I support the line item veto because it is an executive branch function to identify budget excesses and wasteful items. It is an antidote for pork.”
Hugh l. Carey, Democratic Governor of New York, 1975–83.
“Legislators love to be loved, so they love to spend money. Line item veto is essential to enable the executive to hold down spending.”
William Weld, Republican Governor of Massachusetts, 1991‐present.
“When I was governor of California, the governor had the line item veto, and so you could veto parts 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, Republican Governor of California, 1967–75.
“I support the line item veto. As the governor has 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, Democratic Governor of Kansas, 1991–995.
“Tremendous tool for saving money.”
Mike O’Callaghan, Democratic Governor of Nevada, 1959–63.
“To the detriment of the federal process, the president is not held accountable for a balanced budget.…Without the line item veto, the president has minimal flexibility to manage the federal budget after it is passed.”
L. Douglas Wilder, Democratic Governor of Virginia, 1990–1994.
The findings of Cato’s governor survey contradict the critics of line item veto who argue that such measures would not help resolve the nation’s fiscal crisis. Many inside‐the‐beltway pundits complain, “The budget needs leadership not process reform.” That is wrong. Process reform leads to better leadership and better decision‐making.
Finally, let me voice one word of caution about the line item veto. Although I am an enthusiastic supporter of this budget disciplining tool, we proponents should not oversell the case for this measure. Critics are right when they say that it will not by itself balance the budget. In my opinion, the president could pare the budget by $5 to $10 billion a year with line item veto. That is a far off distance from our $200 billion annual deficits. Nonetheless, on balance, the line item veto is a long overdue way to stop the fiscal bleeding.