Line Item Veto Battle Begins

THE DAILY FED

Line Item Veto Battle Begins

From CongressDaily

President Clinton Monday for the first time exercised his new line item veto authority, axing three provisions that were passed by Congress as part of the reconciliation package while predicting his actions would withstand an expected court challenge because of the "careful, exhaustive" process the administration followed in selecting the vetoed provisions. The president outlined three criteria used by his administration in choosing the items that were vetoed. He said the rejected measures must not have been "included as part of the balanced budget agreement process with Congress," must benefit just a few individual entities "at the expense of the general interest," and be "inconsistent with good public policy."

Clinton cancelled a provision that would allow certain types of financial firms to avoid current tax on income from overseas operations, saving $317 million, according to the Treasury Department. He also vetoed a provision that would allow New York to use health provider taxes to boost its federal Medicaid contributions, a provision Clinton said would provide New York with an unfair advantage over other states, and, according to the CBO, would have cost taxpayers $200 million over five years. The third provision that was eliminated would defer, "possibly forever," certain taxes on the sale of a refiner's or processor of agricultural goods' assets to a farmer's cooperative, saving an estimated $98 million, according to the Treasury. Clinton called the provision "well-intended," but noted it could have benefitted not only traditional farm co-ops, but "giant organizations which do not need" the break. He said he "strongly supports family farmers" and pledged to work with farm state members, including Minority Leader Daschle, to restructure the provision so it is "better targeted and not susceptible to abuse."

Legislators from both parties--including line item veto supporters--blasted President Clinton's use of the line item veto and threatened legislative and judicial challenges to Clinton's actions. In the strongest statement, House Speaker Gingrich's office questioned whether the administration was fair in the recently concluded balanced budget talks. Gingrich Press Secretary Christina Martin said Republican negotiators believed the administration had been bargaining in good faith during recent balanced budget negotiations, but said Clinton's veto of the three budget provisions indicates "that may not have been the case." She added, "No objections to these provisions were raised throughout the talks, therefore these vetoes may have less to do with sound policy and more to do with petty politics." Senate Majority Leader Lott was more reserved, saying congressional leaders now have time to review the vetoes and decide whether to push legislation to reverse them. House Ways and Means Chairman Archer issued a similarly non-committal statement.

A court challenge to Clinton's line item vetoes is expected because, while the Supreme Court earlier this summer upheld the president's power to use the line item veto, it left its constitutionality unresolved by dismissing the legal challenge on procedural grounds. Specifically, the court dismissed that challenge because it said the House and Senate members who filed the lawsuit did not have standing to sue. The court made it clear it would decide the constitutionality of the law after someone directly affected by a line item veto filed suit against it. Analysts have said they expect such a lawsuit to be filed as soon as Clinton uses the new power. Under the law, Clinton must send Congress a message specifying his reasons for the veto and the budget impact. The veto remains in effect unless Congress enacts cancellation legislation by a majority vote. That bill would reinstate the spending. However, the president can veto that legislation and both houses of Congress then must override the veto with a two-thirds vote.