If Budget Deficit Vanishes, Line-Item Veto May Too

Budget analysts are looking into a possible unintended consequence of the line-item veto law: President Clinton might find the power suddenly suspended if the budget gets balanced.

Although Congress and Clinton recently agreed on a budget deal to eliminate the annual deficit by 2002, some economists suggest it could happen perhaps as early as next year because of the thriving U.S. economy.

The line-item veto, which Clinton used for the third time Tuesday in canceling $144 million in projects from a defense spending bill, requires him to use the saved money to reduce the deficit rather than spending it on other projects.

With no deficit, he would have no line-item power, the theory goes.

“We tend to believe that’s the case, based on the purposes of the line-item veto that is outlined in the law,” said Larry Haas, spokesman for the White House Office of Management and Budget.

Budget Director Franklin D. Raines said Wednesday that he has not examined in detail whether an early budget surplus would cost Clinton his line-item veto power. But he told a reporter: “I wish I had that problem.”

The bipartisan Congressional Budget Office dropped its fiscal 1997 deficit estimate this month to $23 billion--about $100 billion less than it and the Clinton administration projected earlier this year. Fiscal 1997 ended Sept. 30.

Raines said that in about a week the administration would announce a deficit for the fiscal year just ended of less than $30 billion, the smallest since 1974. Last month, the OMB said it expected a $37-billion shortfall.

“There’s a chance that, if all the planets stay in alignment, as they have for the last two or three years, that we could have a small surplus next year,” said Robert D. Reischauer, former CBO director.

Raines did not agree with that.

Although recent shortfalls have consistently shrunk below expectations, he said, the administration still expects a deficit in 1998.

When the line-item veto was put in the Republicans’ “Contract With America” in 1994, and when the law was enacted last year, annual federal deficits of more than $100 billion seemed to stretch as far as the eye could see.

Then Clinton and the GOP-led Congress struck a deal last summer to balance the budget by 2002.

Furthermore, continued low unemployment, low inflation, modest interest rates and the high-flying stock market have helped to push down the deficit faster than expected.