Hearings of the
Subcommittee on Legislative and Budget Process
The Rescissions Process After the Line Item Veto: Tools for Controlling Spending
Associate Professor of Public Administration School of Business and Public Management,
The George Washington University
Chairman Goss, Representative Frost, and Members of the Subcommittee, I am pleased to appear before you today to discuss the options that are available to the Congress in the aftermath of the June 1998 Supreme Court decision that invalidated the Line Item Veto Act (LIVA). With your permission, I would like to submit for the record an article that I have recently published in the journal Public Budgeting and Finance on the first year's experience with the Line Item Veto Act and the prospects for the future. A portion of this article covers the use of the Line Item Veto Act, a topic that was the subject of my testimony before this subcommittee in April of 1998. Today I would like to go beyond that testimony to discuss, in particular, the legislative actions that the Congress might take and whether I view such actions are warranted. In doing so, my testimony will make three points:
- The problem that the Line Item Veto Act was designed to address was one of spending accountability. The need for greater accountability may be present whether large deficits exist, as they did when the Act was passed in 1997, or whether the budget is in surplus, as seems to be the case now.
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There are three alternatives available to the Congress if it wishes to enact some version of a line item veto—it can either amend the Constitution, provide for separate enrollment of appropriated items, or amend the existing rescission process to require Presidential rescission proposals to be acted on by the Congress.
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The first two of these options have potentially fatal flaws, which limit their usefulness as an appropriate response to the demise of the Line Item Veto Act. Of the three available options, therefore, it is my view that the one that has the most promise of doing some good is the third option, known as expedited rescission.
I will expand on each of these points in the remainder of my testimony.
WHAT PROBLEM WAS THE LINE ITEM VETO ACT DESIGNED TO ADDRESS?
When the Congress passed the Line Item Veto Act, there were two goals that were routinely cited. The first was to reduce the federal budget deficit. The second was to provide for greater accountability in the budget process. Supporters of the Act believed that many provisions were inserted into appropriation bills or (especially) cited in report language that benefited narrow constituencies (this is the definition of so-called "pork barrel" spending) and that would be unable to get broad support if they had to stand closer scrutiny. The Line Item Veto Act was designed to address this problem by allowing the President to identify these narrow-interest provisions and placing the burden on the Congress to get supermajorities in both houses to reaffirm them.
For now, the first of these goals seems to have been achieved. Both the Office of Management and Budget and the Congressional Budget Office now project surpluses, instead of deficits, as far as the eye can see. If the Congress believes that there is a direct connection between the existence of the budget deficit and the line item veto, there seems to be no reason to enact any substitute for the LIVA.
In my view, however, the Line Item Veto Act was never about deficit reduction. Certainly the existence of the Act cannot be credited with the movement of the budget from deficit to surplus. The purpose of the line item veto is to affect the composition of spending by making it more difficult to enact narrow-interest provisions. For this reason, despite the elimination of the deficit, supporters might find ample reason to continue to push for it. The belief that "pork" is wasteful, narrow interest spending that the President, as a representative of the general interest, should have an opportunity to strike out, has no relationship to the presence or absence of a deficit. If you believe that providing the President with this power will lead to "better" budget outcomes (the definition of "better", of course, is the eye of the beholder), then the argument is equally valid whether the budget is in deficit or surplus.
The Impoundment Control Act has not been a success in ensuring fiscal discipline or spending accountability in the Congress. The reason for this is straightforward. It was never intended to serve this purpose. Rather, it was intended to protect the prerogatives of the Congress by preventing presidents from unilaterally disregarding budget priorities by refusing to spend money that had been legally appropriated. If the Congress now believes that Congressional spending accountability is an important issue, as it did when it passed the Line Item Veto Act, it is essentially arguing for some shifting of power back toward the President. This may be appropriate, but it was not the original purpose of the Impoundment Control Act.
WHAT ARE THE LEGISLATIVE OPTIONS NOW?
Many Members of Congress are interested in pursuing a substitute for the Line Item Veto Act, despite the elimination of the deficit. This suggests that these Members are persuaded that the improvements in accountability that might occur if some version of the line item veto became law provides adequate justification for pursuing such a change. Already several bills have been introduced which seek a constitutional means of accomplishing a similar result as that intended by the authors of the Line Item Veto Act. These bills take three forms:
1. Amending the Constitution to permit the President to veto portions of bills upon presentment, as occurs in many states. An amendment to the Constitution requires a two-thirds vote of both houses of the Congress, with ratification by three-fourths of the state legislatures.
2. Separate enrollment, which requires appropriation bills to be broken up into many--possibly thousands—of "mini-bills" by the enrolling clerk prior to presentment to the President for his signature. Since each line item would be a separate bill, it would result in a de facto line item veto.
3. Expedited rescission, which would assure the President a vote on any proposed rescissions that he offered under the Impoundment Control Act. Under expedited rescission, a majority of each house would need to approve the President's proposed rescissions in order for them to take effect. If one house disapproved, the other would not have to act and the funds would be released for obligation. This would represent a substantial change to the current rescission procedures, since at present the President is not ensured a vote on his proposed rescissions. Frequently, however, proposed presidential rescissions are not voted on by the Congress. Instead, it has been the practice of the Congress to substitute a Congressional set of rescissions for the President's proposed cancellations.
WHICH OF THESE OPTIONS SHOWS THE MOST PROMISE?
In the final analysis, there is no clear fallback position for supporters of the Line Item Veto Act. The Supreme Court, in its majority opinion, stated flatly that a different role for the President in the lawmaking process could only "come through the Article V amendment procedures". Deciding the issue through amending the Constitution, however, has two substantial drawbacks. The first is that Constitutional amendments are notoriously difficult to adopt. Even if a Constitutional amendment were adopted, it would likely not take effect for a number of years. The second is more substantive. A constitutionally provided line item veto would only allow the President to veto items that were specifically provided for in appropriation bills. Most federal "line items", however, are found not in statute, but in report language accompanying statutes.
Separate enrollment also has two substantial problems. The first is administrative. This approach is a potential nightmare for the enrolling clerk, who would have to break up each of the appropriation bills into hundreds of single-item bills for presentment to the President. This would be particularly problematic since these bills have a tendency to pass in bunches at the end of the legislative session. Even if this problem could be overcome, however, separate enrollment shares a design flaw with the constitutional amendment approach--it would not permit the President to reach into committee reports to find line items.
To summarize, the major drawback of the both a Constitutional amendment and of separate enrollment is that they would not allow for spending to be identified at the level of detail specified in committee reports. This substantially limits their effectiveness to get at pork barrel spending. An April 1998 CBO report illustrates this fact by noting that, in 76 of the 79 cases where the President proposed items in Fiscal Year 1998 appropriation bills for cancellation, those "items" were found only in report language. Neither a constitutional amendment nor separate enrollment would have permitted the President to reach beyond the statute to identify those items.
This brings me to expedited rescission, which passed the House on several occasions in the past. At that time, it was viewed by many supporters of the Line Item Veto Act as a weaker alternative. While the Line Item Veto Act required the Congress to come up with supermajorities in both houses to overcome Presidential rescissions, expedited rescission simply guarantees the President a vote on his proposals. If both houses approved the President's proposals by simple majority, and if the President approved these legislative rescissions (as he presumably would), they would become law.
Expedited rescission, in my view, has a major substantive advantage over either a constitutional amendment or separate enrollment. Because it would represent a change to the current rescission process, it would focus on appropriated spending at the appropriate level of detail, given the stated goal of improving accountability. Under expedited rescission, the President could, as he does now, identify portions of appropriated amounts for rescission, and could identify precisely what the intended policy implications of those rescissions would be. Unlike the current process, however, the Congress could not ignore the President's proposals—rather, they would have to vote on the President's entire package. If the President's rescissions were voted down, the Congress would still have the option of substituting its own set of rescissions for those proposed by the President. It could also choose to do nothing, but only after disposing of the President's proposals.
Expedited rescission is also an improvement over the existing process because it increases (marginally, to be sure) the accountability of the Congress by subjecting spending to greater scrutiny. This is particularly important, given the tendency of the Congress and the President to appropriate through massive omnibus spending bills, which happened last year and seems destined to happen again this year. In such a context, the greater visibility that narrow-interest provisions need to confront, the greater the accountability of the process. It should be remembered, however, that Presidents have been known to pursue their own narrow interests in the budget process. Expedited rescission is unlikely to curb this tendency.
Any effort to address the issue of narrow interest provisions provided through expanded rescission authority has one potential shortcoming. It focuses only on the appropriations process. Narrow interests are also frequently served though tax policy. In fact, the Line Item Veto Act faced this issue directly through including "limited tax benefits" in the definition of items that might be candidates for cancellation (the LIVA argued that these limited benefits were those that affected "100 or fewer taxpayers", which proved to draw a somewhat fuzzy line, to be sure). Expedited rescission would presumably not focus on tax policy, unless the Impoundment Control Act were amended to fundamentally change the definition of "rescission", which currently represents a cancellation of budget authority. The Congress would need to be mindful of whether some effort to improve accountability for taxes (and new direct spending, which was also covered under the LIVA) should accompany the effort to subject appropriated spending to greater scrutiny.
CONCLUSION
As the Congress considers whether to take action in response to the demise of the Line Item Veto Act, it needs to keep front and center its aims in enacting the Act in 1997. It is my belief that subjecting budgetary actions to greater scrutiny is a desirable aim, particularly given the recent tendency to enact giant omnibus spending bills. It seems advisable to provide the President with an opportunity, after the fact, to review these bills for the presence of spending that he does not agree with. It also seems reasonable to guarantee the President a vote on his proposed rescissions, with a simple majority prevailing. Expedited rescission would shine more light on the process, while still protecting the prerogatives of the Congress, which would be free to substitute its own rescissions, but only after disposing of the President's. In my view, expedited rescission would be an improvement over the current process, but would not raise the constitutional and separation of powers issues that were highlighted by the Line Item Veto Act.
