Clinton Uses First Line-Item Veto on Budget Measures

Exercising for the first time the line-item veto authority that presidents have sought for more than a century, President Clinton on Monday struck three provisions from the sweeping tax and spending measures that he signed last week.

The historic action, which gave the president long-coveted control over Congress’ constitutionally enshrined power of the purse, provoked angry responses from some Republicans, but could save taxpayers $600 million over five years.

“The actions I take today will save the American people hundreds of millions of dollars . . . and send a signal that the Washington rules have changed for good,” Clinton said at an Oval Office ceremony. “From now on, presidents will be able to say ‘no’ to wasteful spending or tax loopholes, even as they say ‘yes’ to vital legislation. Special interests will not be able to play the old game of slipping a provision into a massive bill in the hope no one will notice.”

The Republican-led Congress passed the line-item veto authority--which for the first time allows a president to strike down a single legislative provision rather than an entire bill--early last year as a presidential weapon against wasteful spending, but it did not take effect until January. In June, the Supreme Court rejected a challenge to the veto on a technicality; another court challenge to the new executive authority is virtually certain.

Clinton deleted the following provisions from the two measures:

* A one-year tax haven for the easily portable profits that financial-services firms--like investment companies and brokerage houses--make in their foreign subsidiaries. Clinton argued that the provision was too broad and could allow the companies to inappropriately shelter dividend and interest income.

* A special-interest tax break allowing individuals to defer taxes on profits they make from selling food processing plants to farmers cooperatives, organizations owned by farmers. The president charged that although he wants to support efforts by small farmers to profit from the processing of their crops, the provision was drafted too broadly and could inordinately benefit large agribusinesses.

* An element in the spending measure that would have allowed one state, New York, to continue to tax health care providers to cover a portion of its costs for the Medicaid health insurance program for low-income, elderly and disabled Americans. The president struck this provision because it gave a break to one state while it immediately disadvantaged several others and had the potential to disadvantage all the other states.

Some Republican members of Congress assailed Clinton for vetoing provisions of the two measures that made up the so-called balanced-budget agreement, which was painstakingly negotiated between the White House and Congress over several months.

“Disappointment and surprise are the usual side effects of having been blindsided, and today’s line-item veto announcement is no exception,” said Christina Martin, spokeswoman for House Speaker Newt Gingrich (R-Ga.).

But as longtime supporters of the line-item veto, other congressional Republicans chose muted responses to the first exercise of the authority.

“Everyone knows that I fought for years to give the line-item veto authority to the president of the United States,” Senate Majority Leader Trent Lott (R-Miss.) said in a statement. “I’m a firm supporter of the process, and as part of that process, Congress now has a period of time to review the president’s cancellations and make the decision on whether to move to disapprove them.”

Despite the grumbling, White House officials said they do not expect Congress to actually vote to override the president’s first use of the line-item veto.

“Many Republicans have, along with the president, championed the line-item veto,” said Gene Sperling, who heads the president’s National Economic Council. “It would seem to make little sense for them to want to stake themselves out as opponents of the line-item veto.”

Some congressional supporters of the veto expressed concern that the president first aimed his veto pen at tax and entitlement spending measures in the carefully cobbled together tax and spending legislation rather than at the traditionally pork-laden appropriations bills scheduled to reach his desk this autumn.

“In his rush for expediency, I fear the president has risked the future of this important budget-cutting tool,” complained Sen. John McCain (R-Ariz.), a big supporter of the line-item veto.

Supporters of the targeted veto believe that there is a stronger case for its use on spending items. Until 1974, when Congress stripped presidents of the power to “impound” money, presidents regularly refused to spend money that had been appropriated by Congress. Because there is no similar precedent for the excising of specific tax provisions, some supporters and experts believe that such an exercise of the new veto authority may be more vulnerable to court challenges.

Clinton and his advisors defended his decision to act now, although there was been some internal disagreement about whether to wait for the appropriations bills.

“I expect the most glaring examples to come up in the appropriations process,” Clinton told reporters. However, Clinton said he hopes his use of the veto now will discourage lawmakers from putting costly special-interest provisions into the spending bills in the first place.

It is just this deterrent effect that legal scholars argue makes the line-item veto provision ripe for constitutional challenge.

“By touting its efficacy as a deterrent, the president is underscoring the way it distorts the constitutional process,” said Laurence H. Tribe, a constitutional law professor at Harvard University.

Tribe is one of many legal and political scholars who believe that the line-item veto authority is unconstitutional and will likely be overturned by the Supreme Court as early as next summer. Several members of Congress have already challenged the new executive tool. In April, a federal district court judge found in their favor, ruling that the measure offset the balance of powers established in the Constitution. But the Supreme Court in June rejected the case on appeal, saying that the plaintiffs--six members of Congress--lacked standing.

But at least one of the parties aggrieved by Clinton’s vetoes is sure to sue and would have standing, experts predicted.

“In a society as litigious as ours, the idea that none of the aggrieved parties wanted to sue would be almost unimaginable,” Tribe said.

Clinton, a former teacher of constitutional law, argues that the line-item authority can withstand the constitutional challenge.

“As long as the legislature has the right to override the executive. . . . I do not believe it is an unconstitutional delegation of the legislature’s authority to the president,” he said.

Congress can override each of the president’s line-item vetoes with a two-thirds majority vote.

Clinton also noted that in 43 states, governors have some form of line-item veto authority. “It has been upheld in state after state [and] the provisions of most state constitutions are similar to the provisions of the federal Constitution in the general allocation of executive authority and legislative authority,” Clinton said.

The first president to ask Congress for line-item veto authority was Ulysses S. Grant in 1873. Other presidents who were big supporters of the power included Rutherford B. Hayes, Grover Cleveland, Woodrow Wilson, Franklin D. Roosevelt, Harry S. Truman, Dwight D. Eisenhower, Gerald R. Ford and Ronald Reagan.

In recent decades, congressional Republicans, who were in the minority in the House for 40 years, were fervent advocates of the line-item veto authority.

“They were all anxious to have it to provide a Republican president with that kind of power against a Democratic Congress,” said Charles Jones, a political scientist from the University of Wisconsin. “It’s ironic that here a Democratic president gets to use it against a Republican Congress.”

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A Stroke of the Pen

Wielding power sought by presidents for generations, President Clinton on Monday exercised the line-item veto:

VETOED ITEMS

* Medicaid spending provision benefiting New York state. SAVINGS: $200 million

* A special-interest tax break allowing individuals to defer taxes on profits they make from selling food processing plants to farmers cooperatives. SAVINGS: $98 million

* Deferral for financial services companies on taxes incurred by overseas subsidiaries. SAVINGS: $317 million

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HOW IT WORKS

The law allows the president to veto new spending and some tax cuts, principally those aimed at fewer than 100 beneficiaries. Congress has 30 days to overturn the vetoes by a two-thirds majority vote in each house.

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WHAT’S NEXT

* A court challenge is considered likely.

* More line-item vetoes are possible as appropriation bills begin arriving on Clinton’s desk.

“The actions . . . send a signal that the Washington rules have changed for good.”

--President Clinton