[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
        LINE-ITEM VETO: PERSPECTIVES ON APPLICATIONS AND EFFECTS

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, MAY 25, 2006

                               __________

                           Serial No. 109-18

                               __________

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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
JIM RYUN, Kansas                     JOHN M. SPRATT, Jr., South 
ANDER CRENSHAW, Florida                  Carolina,
ADAM H. PUTNAM, Florida                Ranking Minority Member
ROGER F. WICKER, Mississippi         DENNIS MOORE, Kansas
KENNY C. HULSHOF, Missouri           RICHARD E. NEAL, Massachusetts
JO BONNER, Alabama                   ROSA L. DeLAURO, Connecticut
SCOTT GARRETT, New Jersey            CHET EDWARDS, Texas
J. GRESHAM BARRETT, South Carolina   HAROLD E. FORD, Jr., Tennessee
THADDEUS G. McCOTTER, Michigan       LOIS CAPPS, California
MARIO DIAZ-BALART, Florida           BRIAN BAIRD, Washington
JEB HENSARLING, Texas                JIM COOPER, Tennessee
DANIEL E. LUNGREN, California        ARTUR DAVIS, Alabama
PETE SESSIONS, Texas                 WILLIAM J. JEFFERSON, Louisiana
PAUL RYAN, Wisconsin                 THOMAS H. ALLEN, Maine
MICHAEL K. SIMPSON, Idaho            ED CASE, Hawaii
JEB BRADLEY, New Hampshire           CYNTHIA McKINNEY, Georgia
PATRICK T. McHENRY, North Carolina   HENRY CUELLAR, Texas
CONNIE MACK, Florida                 ALLYSON Y. SCHWARTZ, Pennsylvania
K. MICHAEL CONAWAY, Texas            RON KIND, Wisconsin
CHRIS CHOCOLA, Indiana
JOHN CAMPBELL, California

                           Professional Staff

                     James T. Bates, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel























                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, May 25, 2006.....................     1
Statement of:
    Hon. Patrick J. Toomey, a former Representative in Congress 
      from the State of Pennsylvania.............................     8
    Thomas A. Schatz, President, Citizens Against Government 
      Waste......................................................    10
    Ed Lorenzen, Policy Director, Concord Coalition..............    14
    James R. Horney, Senior Fellow, Center on Budget and Policy 
      Priorities.................................................    22
Prepared statements, additional submissions by:
    Chairman Nussle..............................................     2
    Hon. Paul Ryan, a Representative in Congress From the State 
      of Wisconsin...............................................     4
    Mr. Schatz...................................................    12
    Mr. Lorenzen.................................................    17
    Mr. Horney's submission of an article written by Mr. Richard 
      Kogan......................................................    23
    Mr. Horney's prepared statement..............................    30





















        LINE-ITEM VETO: PERSPECTIVES ON APPLICATIONS AND EFFECTS

                              ----------                              


                         THURSDAY, MAY 1, 2006

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:03 a.m., in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Ryun, Hensarling, 
Ryan, Conaway, Campbell, Spratt, Moore, Neal, Ford, Capps, 
Baird, Cooper, and Cuellar.
    Chairman Nussle. Good morning, and welcome everyone.
    Today's hearing is the first of two hearings that this 
committee will hold on the issue regarding the line-item veto 
prior to marking up the legislative line-item veto, which is a 
bill which has been introduced by Paul Ryan of this committee. 
The gentleman from Wisconsin is here, and I appreciate his 
leadership on the issue.
    Today's discussion--I will yield to the gentleman from 
Wisconsin in a moment, because it is his legislation, but let 
me just make a couple of observations.
    Today's discussion will focus on perspectives, 
applications, the effect of the practice, both past use of the 
practice as well as the possible use of the practice in the 
future.
    I am pleased that we have several experts on the issue, 
including and first our former--I was about to say our former 
friend and colleague--our former colleague, current friend, Pat 
Toomey, who was a member of this committee for a number of 
years, and I am sure he--I hope he didn't break out into hives 
when he walked back into the room. I know that can occur for 
some Members who used to serve on this committee; I hope it 
didn't happen in this case.
    Pat Toomey is serving at the president of Club for Growth. 
We welcome the gentleman from Pennsylvania back to the 
committee.
    We have many others who have been here before: Tom Schatz, 
who is the president of Citizens against Government Waste. We 
appreciate his leadership and testimony on behalf of this 
committee and before this committee as well.
    Ed Lorenzen, the policy director from the Concord 
Coalition, we welcome you; as well as James Horney, who is from 
the Center of Budget and Policy Priorities. Welcome back to the 
committee. We look forward to hearing your testimony.
    Just as a kind of a brief history, let me suggest that back 
in 1994, as many of you may recall, the House Republicans 
included in our contract with America a version of the line-
item veto, which, after much discussion between the House and 
the Senate, and with the input of several State Governors, 
Congress enacted in the spring of 1996 the Line Item Veto Act 
authorizing the President to cancel discretionary 
appropriations, any new item of direct spending, entitlements 
or other mandatory programs, and certain limited tax benefits. 
If Congress disagreed with the President's action, it could 
pass a resolution of disapproval within 30 days, but the 
President could then veto that resolution and force an override 
vote in each House.
    That is pretty much how it worked. But as most of you may 
also recall, in 1998 the Supreme Court ruled that the Line Item 
Veto Act was unconstitutional, noting that in the two 
applications of the veto reviewed by the Court, the 
cancellation authority provided by the President by the veto, 
it violated the Constitution, and thus the law was stricken 
from the books at that time.
    The legislative Line Item Veto Act that we will hopefully 
soon consider must not only provide the effective mechanism for 
reducing unnecessary Federal spending, but it must also be able 
to overcome the constitutional implementation concerns that all 
of us share, and that we hope can be overcome so that it can be 
used appropriately.
    As I mentioned a moment ago, the committee hopes to hold 
some hearings on this, as well as have an opportunity to 
possibly mark this up. This goes in conjunction with other 
works that we are having with regard to curbing earmark abuse, 
all in a hope--and we are seeing it borne out in the numbers--
of actually reducing the deficit, which it is coming down. We 
want it to come down as fast as possible and as responsibly as 
possible, and we believe that these are some of the mechanisms 
that can be used in order to accomplish that.
    [The prepared statement of Chairman Nussle follows:]

  Prepared Statement of Hon. Jim Nussle, a Representative in Congress 
                         From the State of Iowa

    Whenever Congress has faced rapid spending growth combined with 
budget deficits, we've seen proposals to adopt a presidential ``line-
item veto'' emerge. In general, the intent of these proposals has been 
to reduce unnecessary spending included in Congressionally-passed 
legislation by allowing the president to strike out individual spending 
items effectively removing them from a bill.
                             brief history
    Back in 1994, as many of you recall, House Republicans included in 
our ``Contract with America'' a version of the line-item veto which 
after much discussion between the House and Senate, and with the input 
of several State governors Congress enacted in the Spring of 1996.
    The Line Item Veto Act authorized the president to cancel 
discretionary appropriations, any new item of direct spending 
(entitlements and other mandatory programs), and certain limited tax 
benefits.
    If Congress disagreed with the president's action, it could pass a 
resolution of disapproval within 30 days. But the president could then 
veto that resolution and force an override vote in each House.
                                problem
    But as most of you will also recall, in 1998, the Supreme Court 
ruled the Line Item Veto Act unconstitutional, noting that in the two 
applications of the veto reviewed by the Court, the cancellation 
authority provided to the president by the veto violated the 
Constitution and thus, the law was stricken from the books.
                   the legislative line item veto act
    The legislation we will soon consider The Legislative Line Item 
Veto Act of 2006 must not only provide an effective mechanism for 
reducing unnecessary Federal spending, it must also be able to overcome 
constitutional and implementation concerns.
    As I mentioned a moment ago, this Committee hopes to hold two 
hearings prior to marking up the legislation. Today we'll hear from our 
panel of experts on how the line-item veto might assist us in 
addressing earmarks and curbing future laws that might increase the 
deficit.
    Then, following the Memorial Day Recess, we plan to look at 
constitutional issues surrounding the legislation which I imagine will 
be a both a very spirited and informative discussion.
    And I look forward to hearing the thoughts of our witnesses and our 
Members on all these issues.

    Chairman Nussle. Let me yield briefly to the gentleman from 
Wisconsin for any comments he would like to make, since this is 
his bill.
    Mr. Ryan. I thank the chairman for yielding, and I ask 
unanimous consent that my full opening statement be included in 
the record.
    Chairman Nussle. And without objection, all Members' 
opening statements will be put in the record as well.
    Mr. Ryan. I will be fairly brief. No. 1, I want to thank 
the witnesses for coming. Ed Lorenzen, it is nice to see you 
here as well, because we have worked on this together over the 
years when you worked with Charlie Stenholm.
    This bill is not a new idea. This is virtually identical to 
the Stenholm-Spratt bill that was introduced and, as Ed just 
told me, passed the House in 1993 in the 103d Congress, very 
similar to the Stenholm-Kasich-Penny bill, very much the same 
exact bill that I had with Charlie Stenholm in 2004. In every 
case these bills have been bipartisan.
    I think most people acknowledge that the rescission system 
we have today doesn't work. This bill fixes the rescission 
system so the rescissions actually work. And I am extremely 
sensitive to the constitutional issues. I actually agree with 
the Supreme Court ruling of 1996. I do believe that that 
version of the line-item veto, now having read the case, did 
unnecessarily transfer too much power from the legislative to 
the executive branch. This goes in a different direction.
    We actually have been talking to a lot of different 
constitutional scholars, including Chuck Cooper, who is the man 
who argued against the Supreme Court case in 1996, who is a 
strong supporter of this version of the line-item veto. This 
makes sure that Congress has the final say-so, Congress is the 
final arbiter of these things, but it makes sure that the 
rescission requests by the President don't go ignored like they 
all too often have ignored.
    And I will finish with this last point which is what we are 
trying to do is bring transparency and accountability to the 
way we spend taxpayer dollars. And we have the beginning of the 
system and the end of the system. What I mean when I say that 
is the earmark reform legislation we are trying to pass, we are 
trying to bring more transparency and accountability to the 
front end of the spending process here in Congress, but we 
don't have enough transparency and accountability at the back 
end of the final stages of the spending process. The choices we 
are given in Congress is one vote up or down on a conference 
report, which is usually typically a massive spending bill or 
tax bill. Then the President has the same kind of choice, sign 
or veto this entirely large bill. There is no in-betweens, no 
chances to revisit something that would have gotten snuck in in 
a conference report or something like that.
    So I think what this does is it brings a very good 
complement to the process by bringing more transparency and 
accountability at the back end of the spending process, and 
this complements our earmark reforms that are working its way 
through Congress to bring transparency and accountability at 
the front of the process so the entire congressional spending 
and taxing process has much more needed transparency and 
accountability so our constituents can see how their tax 
dollars are being spent, and that we, as Members of Congress, 
have an opportunity to visit these issues on an individual 
basis, and I think that is very important. We are airtight on 
the Constitution, and I would be happy to answer questions that 
people have, those things.
    But I want to thank the witnesses for coming, and I want to 
thank the chairman for having this hearing.
    Chairman Nussle. I thank the gentleman from Wisconsin.
    [The prepared statement of Mr. Ryan follows:]

Prepared Statement of Hon. Paul Ryan, a Representative in Congress From 
                         the State of Wisconsin

    Chairman Nussle, thank you for holding a hearing today on H.R. 
4890, the Legislative Line-Item Veto Act of 2006. This legislation 
would provide the President with the authority to single out wasteful 
spending items and narrow special-interest tax breaks included in 
legislation that he signs into law and send these specific items back 
to Congress for a timely vote. Unlike the line-item veto authority 
provided to President Clinton in 1996, H.R. 4890 passes constitutional 
muster because it requires an up-or-down vote in both chambers of 
Congress under an expedited process in order to effectuate the 
President's proposed rescissions.
    I appreciate the Budget Committee's interest in this issue and am 
looking forward to this and other upcoming hearings on H.R. 4890. This 
series of hearings will ensure that we produce effective and 
constitutional legislation that will help the President and Congress 
work together to reduce the federal budget deficit. Today, I am very 
interested in the views of our distinguished witnesses as to the impact 
that this bill would have on Congress' spending habits. It is my strong 
belief that H.R. 4890 will take an important step toward bringing 
greater transparency, accountability and a dose of common sense to the 
federal budget process.
                              the problem
    The amount of pork-barrel spending included in the federal budget 
continues to increase every year. According to Citizens Against 
Government Waste (CAGW), the federal government spent $29 billion on 
9,963 pork-barrel projects in Fiscal Year 2006 (FY 2006), an increase 
of 6.3% from 2005, and an increase of over 900% since 1991. Overall, 
the federal government has spent $241 billion on pork-barrel projects 
between 1991 and 2005, an amount greater than two-thirds of our entire 
deficit in FY 2005. This includes irresponsible spending on items such 
as the $50 million Rain Forest Museum in Iowa; $13.5 million to pay for 
a program that helped finance the World Toilet Summit; and $1 million 
for the Waterfree Urinal Conservation Initiative.
    Many of these pork-barrel spending projects are quietly inserted 
into the conference reports of appropriations bills where Congress is 
unable to eliminate them using the amendment process. In fact, the only 
time that Congress actually votes on these items is during an up-or-
down vote on the entire conference report, which includes spending for 
many essential government programs in addition to the pork-barrel 
earmarks. In this situation, it is very difficult for any Member to 
vote against an appropriations bill that, as an overall package, may be 
quite meritorious, despite the inclusion of wasteful spending items.
    Unfortunately, the current tools at the President's disposal do not 
enable him to easily combat these wasteful spending items either. Even 
if the President identifies numerous pork-barrel projects in an 
appropriations bill, he is unlikely to use his veto power because it 
must be applied to the bill as a whole and cannot be used to target 
individual items. This places the President in the same dilemma as 
Members of Congress. Does he veto an entire spending bill because of a 
few items of pork when this action may jeopardize funding for our 
troops, for our homeland security or for the education of our children?
    The President's ability to propose the rescission of wasteful 
spending items under the Impoundment Control Act of 1974 has been 
equally ineffective at eliminating wasteful spending items. The problem 
with the current authority is that it does not include any mechanism to 
guarantee congressional consideration of a rescission request and many 
Presidential rescissions are ignored by the Congress. In fact, during 
the 1980's, Congress routinely ignored President Reagan's rescission 
requests, failing to act on over $25 billion in requests that were made 
by the Administration. The historic ineffectiveness of this tool has 
deterred Presidents from using it with any regularity.
    summary of h.r. 4890, the legislative line-item veto act of 2006
    I introduced H.R. 4890, the Legislative Line-Item Veto Act of 2006, 
on March 7, 2006. This legislation, which currently has the support of 
104 bipartisan cosponsors in the House, is based on the 
Administration's proposal to provide line-item veto authority to the 
President and is the product of discussions that I and my congressional 
colleagues have had with the White House since the President announced 
his intent to seek line-item veto authority in the State of the Union 
Address on January 31, 2006.
    The Legislative Line-Item Veto Act is very similar to an expedited 
rescissions amendment that I offered during the consideration of H.R. 
4663 on June 24, 2004, with my former colleague Representative Charlie 
Stenholm, a Democrat from Texas. Like H.R. 4890, this amendment would 
also have allowed the President to propose the elimination of wasteful 
spending items subject to congressional approval under an expedited 
process. Although this amendment failed to pass the House, it attracted 
the support of 174 Members of Congress, including 45 Democrats. A 
similar provision is also included in Section 311 of the Family Budget 
Protection Act, legislation that I introduced along with Congressman 
Jeb Hensarling of Texas, Congressman Chris Chocola of Indiana, and 
former Congressman Christopher Cox of California during 2004 and again 
in 2005.
    If passed, H.R. 4890 would give the President the ability to put on 
hold wasteful discretionary spending, wasteful new mandatory spending, 
or new special-interest tax breaks (those that affect less than 100 
beneficiaries) after signing a bill into law. The President could then 
ask Congress to rescind these specific items. The requirement that both 
the House and Senate approve all proposed rescissions means that 
Congress will continue to control the power of the purse and will have 
the final word when it comes to spending matters. However, unlike the 
current rescission authority vested in the President under the 
Impoundment Control Act of 1974, the bill also includes a mechanism 
that would virtually guarantee congressional action in an expedited 
time frame.
    Using the Legislative Line-Item Veto, the President and Congress 
will be able to work together to combat wasteful spending and add 
transparency and accountability to the budget process. This tool will 
shed light on the earmarking process and allow Congress to vote up or 
down on the merits of specific projects added to legislation or to 
conference reports. Not only will this allow the President and Congress 
to eliminate wasteful pork-barrel projects, but it will also act as a 
strong deterrent to the addition of questionable projects in the first 
place. On the other hand, Members who make legitimate appropriations 
requests should have no problem defending them in front of their 
colleagues if they are targeted by the President. With H.R. 4890, we 
can help protect the American taxpayer from being forced to finance 
wasteful pork-barrel spending and ensure that taxpayer dollars are only 
directed toward projects of the highest merit.
    The process under H.R. 4890 would begin with the President 
identifying an item of wasteful spending or a special-interest tax 
break in legislation that is being signed into law. The President would 
then submit a special message to Congress, asking for Congress to 
rescind this wasteful item or items. House and Senate leadership would 
have the opportunity to introduce the President's rescission requests 
within two days following receipt of the President's message. After 
that time period, any Member of Congress would be able to introduce the 
President's rescission proposal, virtually guaranteeing congressional 
action. Once the bill is introduced, it would be referred to the 
appropriate committee, which would then have five days to report the 
bill without substantive revision. If the committee fails to act within 
that time period, the bill would be automatically discharged to the 
floor. The bill would have to be voted on by the full House and Senate 
within 10 legislative days of its introduction, with a simple majority 
required for passage.
    Since introducing H.R. 4890, I have received substantial feedback 
from interested Members of Congress on ways to improve the legislation 
to ensure that it best meets its intent of controlling federal spending 
while keeping the power of the purse squarely in the legislative 
branch. Among the changes that I think may improve the legislation are 
the following: limiting the time period available to the President to 
make a rescission request after signing a bill into law; limiting the 
number of rescission requests that can be made for each piece of 
legislation signed into law; allowing for the bundling of rescission 
requests; explicitly prohibiting duplicative requests; ensuring that 
the authority cannot be used to target policy provisions; and 
tightening the language that allows the Administration to defer 
spending while a rescission request is being considered by Congress. 
These changes will strengthen the bill and better ensure that the 
legislative branch retains all of the powers delegated to it by our 
founding fathers. I am committed to continuing to work with my 
colleagues in Congress throughout the legislative process to make sure 
that H.R. 4890 is narrowly drafted in order to best achieve its goals.
                               conclusion
    In 2006, the federal government will once again rack up an annual 
budget deficit of over $300 billion, and our debt is expected to 
surpass $9 trillion. Meanwhile, the retirement of the baby boom 
generation looms on the horizon, threatening to severely exacerbate 
this problem. Given these dire circumstances, it is essential that we 
act now to give the President all of the necessary tools to help us get 
our fiscal house in order. By providing the President with the scalpel 
he needs to pinpoint and propose the elimination of wasteful spending, 
H.R. 4890 takes an important first step toward achieving this goal.

    Chairman Nussle. Mr. Spratt. I yield to my friend from 
South Carolina for any comments he would like to make.
    Mr. Spratt. Thank you, Mr. Chairman. Thank you for calling 
this hearing.
    Mr. Chairman, anything that can help bring the budget back 
to balance is worthy of discussion.
    In March of this year, the administration sent up a bill 
which has been introduced now in the House and the Senate 
granting the President expedited and, one would say, enhanced 
rescission authority. This bill would vest the President with 
the power to propose to Congress the rescission of new 
discretionary spending and new mandatory spending, and the 
rescission of targeted tax benefits as well. For its part, 
Congress would guarantee the administration a vote on a fast 
track.
    This bill is a cession of power from Congress to the 
President, and as such it behooves us to take care. Jim Wright 
used to say that you needed to have served under LBJ to fully 
appreciate what a President with an item veto can do. For 
example, a President with this power, pushing a big spending 
bill, could call Members of Congress when a vote was coming up, 
solicit their support, and if it was not forthcoming, back up 
his request with a veiled threat of rescission of something 
that Member dearly wanted.
    Charlie Stenholm and I were conscious of this potential for 
abuse and perverse results 15 years ago when we wrote and 
brought to the floor what we call expedited and enhanced 
rescission. We made the President act swiftly, soon after a 
bill's passage, if he wanted to wield his item veto. In one 
version we gave Members the right to present a petition of 50 
votes so that items could be broken out, considered 
individually. We gave the President one bite at the apple. If 
he didn't win the first time, there were no second chances. We 
limited the veto to discretionary spending so that we didn't 
open up Social Security, Medicare to some other Member on the 
House floor. We widened the scope by including targeted tax 
benefits, tax benefits that go to a limited number of 
beneficiaries. And just in case these limitations were not 
enough to abort abuse, we inserted a 2-year sunset in the bill.
    If you respect this whole institution of the public and 
status as a coequal branch, indeed the first among equals 
because it is Article I of the Constitution--that is how the 
Framers viewed us when it was originally written, and 200 years 
of history have borne them out. If you regard this whole 
institution as a coequal branch, these limits seem to me to be 
the least we should be doing to make certain that we do not 
cede too much power.
    This bill before us goes far beyond the balanced bill that 
Charlie Stenholm and I brought to the floor in 1990. First of 
all, it effectively resurrects empowerment. It allows the 
President to suspend spending for 180 days on any item he 
proposed for rescission, even if Congress promptly rejects the 
rescission. In effect, this provision allows the President to 
cancel legislative spending without congressional approval.
    This bill omits any time frame for the President to 
exercise his item veto. As written, it would allow the 
President to propose rescission months after the passage of a 
bill and repeatedly thereafter, even in the face of continual 
rejection by Congress.
    Despite this broad grant of authority, the bill contains no 
sunset. It is permanent law until you can muster two-thirds of 
the votes in each House to override the likely veto of any bill 
appealing or reining in the powers this bill would grant.
    Supporters will admit that this might be a broad cession of 
power, but argue that it is necessary with intractable deficits 
running over $300 billion for as far as the eye can see.
    In truth, most of the earmarks, which are the prime targets 
of this kind of veto, don't enlarge the total spending pie, 
they simply divide the pie into smaller pieces. In the end, 
total spending indeed may not be reduced at all if the 
President has these powers for reasons that I just mentioned.
    The Congressional Budget Office reports that under the more 
powerful line-item veto which the President enjoyed in 1997 and 
1998, only $600 million was actually cancelled out. As noted 
earlier, the two being proposed now would very easily give the 
President the leverage to win passage of legislation that 
increases rather than decreases the deficit.
    If we want budget process changed--and I think we need 
budget process changed--and improvements for us to get our grip 
on the deficit, a hand around this enormous problem, then why 
don't we start with the PAYGO rule, the one rule that really 
proved its worth during the 1990s, the one rule that Alan 
Greenspan, sitting where these four witnesses sit, three times 
testified should be reviewed and reenacted? If we want to 
increase the scrutiny, if we want to increase the review that 
earmarks are given or special provisions are given or targeted 
tax benefits are given, let us realistically have and 
rigorously enforce the requirements that bills lay over so we 
have an opportunity, after they come out of conference or out 
of committee, to truly scrub them down and find what is in them 
and address those issues on the floor or elsewhere.
    There are lots of budget changes we can make in this 
institution that would make us more responsible, it would go 
directly to the problem at hand, without ceding enormous 
authority to the President, which could be manipulative, which 
could be used to our detriment.
    I would hope that those who support this bill will 
recognize that some of its features are extremely problematic. 
For example, as I said, the bill would allow the President to 
withhold funding that he proposes for rescission for 180 days 
even if we promptly reject that proposal, and then to withhold 
funds for an additional 180-day period simply by submitting the 
same proposal all over again. This could allow the President to 
thwart previously approved funding unilaterally, and in clear 
conflict with congressional intent.
    To bring the budget back to balance, in all sincerity, we 
need to return to the kind of process that worked in the 1990s, 
the PAYGO rule, realistic discretionary spending caps, and 
budget negotiations, bipartisan negotiations, in which everyone 
comes to the table, and everything is on the table. Defense 
spending and nondefense spending, tax cuts, entitlements; 
everything is on the table, and everybody is at the table.
    If passage of this bill causes people to think that we are 
making headway on the deficit, I fear we will only defer 
realistic confrontation with the issues we have got to grapple 
with.
    Thank you, and I look forward to your testimony.
    Chairman Nussle. Thank you, Mr. Spratt.
    Let me turn now to our witnesses. All of your statements 
will be made part of the record, as presented, and we would 
enjoy having you summarize your testimony as you see fit in the 
time allotted.
    Welcome back to the committee, Pat. Mr. Toomey, it is good 
to see you, and we are pleased to receive your testimony.

       STATEMENT OF THE HON. PATRICK J. TOOMEY, A FORMER 
   REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Toomey. Well, it is great to be back.
    And, Chairman Nussle, Ranking Member Spratt, members of the 
committee, thank you very much for giving me the opportunity to 
testify today on the topic of H.R. 4890, the Legislative Line 
Item Veto Act of 2006. And I would like to ask permission to 
have included with my testimony an op-ed that I recently wrote 
for the Philadelphia Inquirer addressing this very legislation.
    Chairman Nussle. Without objection.
    Mr. Toomey. Thank you.
    At the Club for Growth, we believe that Federal Government 
spending has long been excessive both in the total level of 
expending and in the kinds of spending that have occurred. The 
Heritage Foundation observes that between 2001 and 2006, 
Federal spending has grown by 45 percent, and the spending 
increase is across the board. Spending on education is up 137 
percent, spending on Medicare is up 58 percent; defense 
spending, 76 percent.
    In addition to the total level of spending, the kind of 
pork barrel earmark spending has exploded. Since 1991, Federal 
earmarks have grown by 900 percent. And in 2006 alone, earmarks 
on appropriation bills totaled nearly 10,000 in number, adding 
up to $29 billion in costs for taxpayers.
    Now, we oppose that spending, and for many reasons, but the 
main reason, Mr. Chairman, is that we believe excessive 
government spending over time diminishes the rate of growth of 
our economy. The Government allocates money through a political 
process, which is necessarily heavily influenced by the 
perception of political gain of the officeholders. That is the 
nature of the process. Alternatively, nongovernment actors, be 
they individuals or businesses engaged in private enterprise, 
they tend to allocate capital based on the supply and demand 
signals they perceive in the marketplace. It is this latter 
free-market method of capital allocation that tends to allow 
for maximum economic growth and prosperity; therefore, growth 
in jobs and wages and opportunity. The former political 
allocation of capital simply doesn't match up. So because 
excessive government spending such as we have costs our society 
jobs, wages and opportunity, we support legislative measures 
likely to reduce the excesses.
    We believe that H.R. 4890 is likely to reduce some of the 
excesses. We acknowledge this is no panacea; in fact, it is no 
guarantee that we will have less Federal spending, but we think 
most likely if this were enacted, there would be fewer 
earmarks, there would be less total spending, and we think it 
would be good for taxpayers and good for our economy.
    Now, I understand that some opponents have suggested that 
this legislation may not have constitutional authority granted 
to Congress to control Federal spending, or that it 
inappropriately grants to the President lawmaking power. We 
think that is demonstrably false for several reasons. One, 
first of all, the Constitution, of course, grants to the 
President the authority to sign or veto spending bills like 
other bills, and as such, he has a shared responsibility for 
establishing both the total level of spending and the specific 
items of spending.
    But furthermore, the 1998 Supreme Court decision regarding 
the 1996 line-item veto legislation stated the Court's 
opposition to that legislation very clearly, and I will quote. 
They say that the act gave the President the unilateral power 
to change the text of duly enacted statutes, end quote.
    This bill under consideration today, or being discussed 
today, clearly gives the President no such unilateral power. 
Furthermore, as Justice Scalia observed in his dissent of that 
1996 decision, he made the point that insofar as the degree of 
political lawmaking power conferred upon the executive is 
concerned, there is not a dime's worth of difference between 
Congress authorizing the President to cancel a spending item 
and Congress' authorizing money to be spent on a particular 
item at the President's discretion. And the latter has been 
done since the founding of the Nation.
    Finally, and, I think, positively, this bill is simply not 
a true line-item veto; it is much more akin to an enhanced 
rescission bill. Under H.R. 4890, it is Congress and not the 
President that would have final say on these spending matters. 
So in our view this bill clearly would not violate the 
Constitution. What it would do is it would grant the President 
the power to force Congress to scrutinize a little more 
closely, and in some cases to specifically reaffirm Congress' 
own spending decisions.
    So the question raised by H.R. 4890 seems to be is Congress 
willing to subject itself to a little more openness and a 
little more scrutiny of its own spending, and we believe it 
should.
    We observed that the Republican-controlled Congress granted 
to a Democratic President a considerably greater line-item veto 
power not long ago. Furthermore, if individual items as 
specified by the President under this bill have merit, they 
ought to be able to withstand the scrutinyand simply pass the 
test of the vote when returned to Congress.
    I would like to observe that at least 11 Presidents from 
both parties have called for this authority. Of the 50 States, 
43 grant similar authority to their Governors, and if adopted 
at the Federal level, it just might help to reduce some of the 
spending excesses that have accelerated in recent years.
    So I thank you for giving me the opportunity to testify on 
behalf of the 35,000 members of the Club for Growth, and I 
would like to urge this committee and your colleagues 
throughout the House to pass H.R. 4890. Thank you.
    Mr. Ryan [presiding]. Thank you, Pat.
    Next we will hear from Tom Schatz, president of Citizens 
against Government Waste. Mr. Schatz.

  STATEMENT OF THOMAS A. SCHATZ, PRESIDENT, CITIZENS AGAINST 
                        GOVERNMENT WASTE

    Mr. Schatz. Thank you very much, Mr. Chairman, and also Mr. 
Spratt and the committee, for inviting us here this morning.
    This is an issue that has been around for quite some time, 
as I am sure all of you are aware, and brought up in the Senate 
many years ago, brought up in the House, of course. We did have 
passage of one piece of legislation that was found to be 
unconstitutional. So the question today really is how do we get 
legislation through that is constitutional, that can be 
bipartisan, because it will affect future Congresses, future 
Presidents of both parties? And I think it is important that 
there be a consensus on how to move this legislation forward 
because it is not only popular around the country, it needs to 
be something that sustains future objections from future 
Congresses.
    We have looked at the bill, and, of course, read the 
testimony of Charles Cooper, who testified before the Senate 
Budget Committee earlier in May, and he was assistant attorney 
general under President Reagan, and also argued against the 
previous version of the line-item veto. His view is this 
particular version is constitutional, and I think that other 
than his expertise, there are many others who agree that this 
is the appropriate way to move forward in this legislative 
line-item veto or enhanced rescission process.
    Looking at the actual numbers, the dollars that could be 
saved, it depends on how one looks at $29 billion in pork, as a 
small number or big number. We released our Congressional Pig 
Book earlier this year. This is where the $29 billion that Pat 
Toomey just spoke of comes from, almost 10,000 items. And while 
that is about 1 percent of the budget, it is still a list of 
items that people outside the Beltway recognize as wasteful 
spending.
    This is only part of what needs to be done in terms of 
budget reform, but certainly it would be nice if the President 
had the power to eliminate $500,000 for the Sparta Teapot 
Museum in North Carolina, a power which he currently doesn't 
have; or several years ago the $50 million for the indoor rain 
forest in Iowa, where the money is still sitting out there, and 
that project hasn't been built.
    There are a lot of ways to look at this and a lot of ways 
to move it forward, but it addresses what I think the American 
people say are the excesses here in Washington. Addressing 
entitlements, addressing larger areas of spending; even 
defense, of course, does need to move forward as well. But 
there is a lot of time that is spent on fighting for and 
protecting earmarks. While it is not a lot of money, it takes 
up an awful lot of time. A request to the Appropriations 
Committee, it affects their oversight, it affects the other 
activities that they may undertake, and therefore, in our view, 
it is critical to getting at least some of the spending under 
control in Washington.
    And I agree with what Mr. Ryan said about the fact that we 
are trying to get earmark reform up front. This is looking at 
the end of the process, allowing the President to be involved. 
It works in the 43 States. There doesn't seem to be any kind of 
constitutional crisis in those States with a permanent line-
item veto authority.
    So, in our view, the point is to get it right the first 
time. We think it should be permanent; it does work at that 
level. It did work a little bit when President Clinton had that 
authority. Whether it is $600 million or $30 million, or 
whatever it might be, it is still something that the American 
people want to be done. They are looking for reform, they know 
there has been too much spending. Pat gave you all the 
statistics, and they are all there. And at this point, with 
earmark reform moving forward, with other budget reforms being 
considered, with votes in the Senate to almost eliminate the 
$700 million Railroad to Nowhere, the line-item veto is a 
proposal--or the enhanced rescission in this case--a proposal 
whose time really has come.
    So in our view, we will be mobilizing, through our grass-
roots activities or our lobbying group, our members to support 
this legislation. We hope that it does get to the floor, and we 
hope that there are additional actions taken by Congress to get 
spending under control.
    I would be happy to answer any questions, and I ask that my 
full statement be entered into the record.
    I also--I don't want to take up the taxpayers' money and 
print this, but we do have a report called All About Pork, 
which gives an interesting history about pork. And I just want 
to mention one quote from President Monroe in 1822, who argued 
that Federal money ought to be limited to ``great national 
works only, since if it were unlimited, it would be liable to 
abuse and might be productive of evil.'' So maybe we can get 
rid of some of that evil, as President Monroe identified it, 
and pass this legislation. Thank you.
    Mr. Ryan. Thank you, Mr. Schatz.
    [The prepared statement of Mr. Schatz follows:]

  Prepared Statement of Thomas A. Schatz, President, Citizens Against 
                            Government Waste

    Mr. Chairman, members of the subcommittee, thank you for the 
opportunity to testify today. My name is Thomas A. Schatz. I am 
president of Citizens Against Government Waste (CAGW), a nonprofit 
organization made up of 1.2 million members and supporters, dedicated 
to eliminating waste, fraud and abuse in government. Citizens Against 
Government Waste has not received at any time any federal grant and we 
do not wish to receive any in the future.
    CAGW was created 22 years ago after Peter Grace presented to 
President Ronald Reagan 2,478 findings and recommendations of the Grace 
Commission (formally known as the President's Private Sector Survey on 
Cost Control). These recommendations provided a blueprint for a more 
efficient, effective and smaller government. The line-item veto was one 
of those proposals.
    Since 1984, the implementation of Grace Commission and other waste-
cutting recommendations supported by CAGW has helped save taxpayers 
more than $825 billion. CAGW has been working tirelessly to carry out 
the Grace Commission's mission to eliminate government waste.
    H.R. 4890, the Legislative Line Item Veto Act of 2006, was 
introduced by Rep. Paul Ryan (R-Wisc.), and would grant the power of a 
line-item veto to the president. This legislation would help restore 
fiscal discipline in Washington.
    The bill provides the authority for the President to identify a 
specific spending provision or tax break in legislation that is to be 
signed into law, and to presents a communication to Congress asking for 
the removal of the item. House and Senate leadership have two days to 
introduce the rescission request. After three days, any member of 
Congress is free to introduce the President's proposal.
    Next, the rescission bill is submitted to the appropriate 
committee, which has five days to report the bill without substantive 
modification. The request is automatically discharged to the floor if 
the committee fails to act within five days. The full House and Senate 
must vote on the bill within ten days of its introduction, with a 
simple majority required to pass. Lastly, if the House and Senate 
approve of the rescission, it goes to the President and becomes law; if 
either fails, the proposal is not ratified.
    There is a public perception that earmarks, or pork-barrel 
spending, have been around ``since we were a country,'' as Senate 
Minority Leader Harry Reid (D-Nev.) said. Nothing could be further from 
the truth. While Congress is granted the power under Article I, Section 
9, Clause 7, which says ``No money shall be drawn from the Treasury but 
by consequence of Appropriations made by Law,'' the Founding Fathers 
expressed strong views on the limits of that authority.
    Responding to a proposition by James Madison to improve a system of 
roads used in national mail delivery, Thomas Jefferson wrote the 
following on March 6, 1796:
    Have you considered all the consequences of your proposition 
respecting post roads? I view it as a source of boundless patronage to 
the executive, jobbing to members of Congress & their friends, and a 
bottomless abyss of public money. You will begin by only appropriating 
the surplus of the post office revenues; but the other revenues will 
soon be called into their aid, and it will be a scene of eternal 
scramble among the members, who can get the most money wasted in their 
State; and they will always get most who are meanest.
    President James Monroe argued in 1822 that federal money ought to 
be limited to ``great national works only, since if it were unlimited 
it would be liable to abuse and might be productive of evil.''
    President Grover Cleveland was labeled ``king of the veto'' in the 
late 1800s for refusing to sign numerous congressional spending bills. 
He explained this practice by stating, ``I can find no warrant for such 
an appropriation in the Constitution.''
    While the term pork-barrel spending was first used in the late 
1800s comparing the rush toward tax dollars to the way slaves would 
crowd around barrels of salted pork at meal time, the practice was not 
widespread until the late 1980s. In particular, pork-barrel spending 
has exploded since the mid-1990s. Since 1991, CAGW's annual Pig Book 
has identified 76,420 examples of egregious pork-barrel spending, which 
has cost taxpayers $241 billion. Examples from the 2006 Congressional 
Pig Book include:
     $13.5 million for the International Fund for Ireland, 
which helped finance the World Toilet Summit;
     $8.3 million for the Department of Defense for breath 
alcohol testing equipment;
     $6.4 million for wood utilization research;
     $5 million for the Capitol Visitor Center;
     $4.2 million for shrimp aquaculture research;
     $2.3 million for the International Fertilizer Development 
Center in Alabama;
     $2.2 million for the MountainMade Foundation;
     $1 million for the Waterfree Urinal Conservation 
Initiative;
     $550,000 for the Museum of Glass in Tacoma, Washington;
     $500,000 for the Sparta Teapot Museum in Sparta, North 
Carolina.;
     $450,000 for plantings on the eastern front of the 
Capitol;
     $250,000 for the National Cattle Congress in Waterloo, 
Iowa;
     $234,000 for the National Wild Turkey Federation in 
Edgefield, South Carolina;
     $150,000 for the Bulgarian-Macedonian National Education 
and Cultural Center in Pittsburgh, Pennsylvania;
     $150,000 for the Actors Theater in Louisville, Kentucky; 
and
     $100,000 for the Richard Steele Boxing Club in Henderson, 
Nevada.
    For a brief period, the American people had hope that reform would 
reduce the assault on their wallets. In 1995, Congress passed the line-
item veto by a voice vote in the House and a 69-31 vote in the Senate. 
This law was enacted after several previous failed efforts to pass such 
legislation.
    Unfortunately, this new veto privilege was used sparingly by 
President Bill Clinton to cancel a mere $355 million in fiscal year 
1998 pork-barrel spending, less than .002 percent of that year's 
budget. Although the amount of waste that was removed was miniscule, 
members of Congress who had previously lauded the passage of the line-
item veto began to question its legitimacy. This was clear evidence 
that even though the overall amount of money saved was relatively 
small, eliminating more waste would have had a substantial effect on 
the spending culture.
    However, the Supreme Court took the line-item veto power away from 
the president in mid-1998, ruling the law unconstitutional.
    The need still exists for a constitutional presidential line-item 
veto because Congress has confronted the president repeatedly with 
hastily-crafted, 11th-hour omnibus
    bills that cover all or substantial portions of federal spending 
for the year. This practice inhibits the exercise of the veto, which 
under such circumstances would have the effect of closing down the 
federal government. A line-item veto would enhance the president's role 
in the budget process. It would not tilt the power over the nation's 
purse strings in favor of the president, but restore the balance that 
has been eroded by Congress' budget rules that favor spending and pork. 
As it does in 43 states, it would make both the legislative and 
executive branches more accountable for our tax dollars. While some 
have questioned whether a line-item veto at the federal level would 
threaten the separation of powers, experience with such authority at 
the state level indicates that would not be the outcome.
    A line-item veto is necessary because under current law, the 
president's rescission proposals can easily be ignored. This luxury 
afforded Congress by the Budget and Impoundment Control Act of 1974 
shifted the balance of power over spending, and that balance needs to 
be restored. It is an affront to common sense that while the president 
now can propose to rescind any portion of an appropriations bill, 
Congress is not required to vote on his rescission package. If Congress 
chooses to ignore the president's request, it expires after 45 days. 
The spending proposals stand as law.
    Under H.R. 4890, the President would be authorized to defer or 
suspend signing an appropriations bill for up to 180 days, enough time 
to allow Congress to consider the President's rescission suggestions 
and to vote them up or down. By giving the president a bigger presence 
in spending decisions, fiscally sound legislation and not special 
interests would be the order of the day.
    Concern that the line-item veto would give the president unlimited 
power is unfounded. The fear that the president could use the veto 
authority to expand his power exponentially and upset the checks and 
balances between the branches is addressed by restricting the 
president's veto power to disapproving specific line-items in 
appropriations bills. In this way, the line-item veto would not give 
authority to the president to alter the budget priorities set by 
Congress in its spending decisions, since the veto can only be used to 
withhold funds for an item.
    As for the constitutionality of H.R. 4890, it is the opinion of 
former Assistant Attorney General Charles J. Cooper, that the proposal 
by the president passes that test. Mr. Cooper testified before the 
Senate Budget Committee on May 2, 2006, that the Legislative Line Item 
Veto Act of 2006 has been designed in a way that avoids what was 
previously deemed unconstitutional by the Supreme Court--specifically 
that a president cannot reject outright portions of a bill. If he 
disagrees with it, he must ``reject it in toto.'' Consequently, it was 
stated in the court's opinion that President Clinton's cancellation 
``prevent[ed] one section of the Balanced Budget Act of 1997 * * * 
`from having legal force or effect,' '' while allowing the remaining 
portions of the Act ``to have the same force and effect as they had 
when signed into law.''
    Mr. Cooper's testimony is especially significant because in 1997, 
he was on the opposite side of the line-item veto issue, when he 
represented the City of New York and healthcare associations and 
providers who were affected by President Clinton's use of the line-item 
veto on the Balanced Budget Act of 1997. That veto resulted in a 
reduction of almost $1 billion in Medicaid subsidies for the State of 
New York. In Clinton v. City of New York, 524 U.S. 417, 448 (1998) the 
Supreme Court struck down the Line Item Veto Act, stating ``the Act's 
cancellation provisions violate Article I, & 7, of the Constitution.''
    As Mr. Cooper stated in his Senate testimony:
    The Legislative Line Item Veto Act of 2006, in contrast, is framed 
in careful obedience to Article I, Section 7 and to the Supreme Court's 
teaching in Clinton. The President is not authorized by the bill to 
'cancel' any spending or tax provision, or otherwise to prevent such a 
provision 'from having legal force or effect.' To the contrary, the 
purpose of S. 2381, as President Bush put it in proposing the 
legislation, is simply to 'provide a fast-track procedure to require 
the Congress to vote up-or-down on rescissions proposed by the 
President.' Thus, any spending or tax provision duly enacted into law 
remains in full force and effect under the bill unless and until it is 
repealed in accordance with the Article I, Section 7 process--bicameral 
passage and presentment to the President.
    For decades, the opportunities for purging wasteful government 
programs and reducing the size of government have been scarce. A line-
item veto can provide opportunities for Congress and the president to 
work closely for a smaller, more efficient and less costly government.
    The Government Accountability Office, Congress' own investigative 
agency, estimated in 1992 that a presidential line-item veto could have 
cut $70.7 billion in pork-barrel spending from fiscal years 1984 
through 1989. That's $70.7 billion in unnecessary spending taken out of 
the hands of the private sector.
    The line-item veto would help restore control over the budget 
process. This, in turn, would promote fiscal soundness, efficient 
government, and policies favorable to continued economic growth. A 
line-item veto, over time, would reduce the inclusion of unauthorized, 
non-competitive projects in appropriations bills and require increased 
cooperation between Congress and the executive branch in determining 
which programs truly need to be funded with the taxpayers' money.
    CAGW realizes that while pork-barrel spending is a serious problem, 
it affects a relatively small portion of the budget, and more needs to 
be done to limit the growth of entitlements and other government 
expenditures in order to bring the budget back into balance. However, 
that does not mean that a line-item veto, which receives a great deal 
of attention because it is tied to some of the most egregious examples 
of wasteful spending, should be delayed until other budget problems are 
addressed or solved.
    Mr. Chairman, the line-item veto would allow the president to weigh 
parochial expenditures which benefit the few against the common good 
and the priorities of the many. The American people know the way 
business is done in Washington, and they are seeking changes. A recent 
Wall Street Journal/NBC News poll reported that ``among all Americans, 
a 39 percent plurality say the single most important thing for Congress 
to accomplish this year is curtailing budgetary 'earmarks' benefiting 
only certain constituents.''
    Successive presidents have asked Congress to provide them with the 
line-item veto. Congress must show that it is serious about controlling 
spending by passing legislation giving the president the line-item 
veto. The time is now to pass a constitutional version of that 
legislation.
    This concludes my testimony. I will be glad to answer any 
questions.

    Mr. Ryan. Next we are going to hear from Ed Lorenzen, the 
policy director of the Concord Coalition. Mr. Lorenzen.

    STATEMENT OF EDWARD LORENZEN, POLICY DIRECTOR, CONCORD 
                           COALITION

    Mr. Lorenzen. Good morning, Mr. Chairman, Mr. Spratt and 
members of the committee; it is good to be before you.
    I am Ed Lorenzen, the national policy director of the 
Concord Coalition. Before going to work at the Concord 
Coalition, I spent nearly 15 years working on Capitol Hill, 
primarily as an aide to former Congressman Charlie Stenholm. In 
that capacity I had the privilege of working with several 
members of the committee as well as the Democratic and 
Republican staff of the committee.
    The Concord Coalition has worked for 14 years to help build 
a political climate that encourages elected officials to make 
the tough choices required to balance the Federal budget, keep 
it balanced on a sustainable basis, and prepare for the fiscal 
and economic challenges that will occur as the Nation's 
population become sharply older in the coming decades.
    Most recently, the Concord Coalition has organized the 
Fiscal Wake-Up Tour, a series of public forums around the 
country designed to focus attention on our Nation's fiscal 
challenges. We are taking this message across the country 
because better public awareness of the problem is the first 
step in finding solutions that are both acceptable and 
meaningful.
    The Concord Coalition believes that the proposed modified 
line-item veto could have a positive impact on the budget 
process. Strengthening the rescission process, as this proposal 
would do, brings greater accountability to the budget process.
    Now, let me say the enactment of the modified line-item 
veto authority will take a step toward reducing public cynicism 
about the public political process and send a signal to the 
public that politicians are serious about addressing the 
deficit, and we are willing to set aside narrow parochial 
interests to make hard choices for the common good.
    Restoring public confidence in the budget process is an 
important first step in dealing with the deficit. One of the 
things that we found throughout the Fiscal Wake-Up Tour is that 
even after explaining to the public the tough challenges we are 
facing with entitlements and tax policy, that they are willing 
to make those tough choices, but they first want to be 
reassured that those sacrifices will go toward the greater goal 
of deficit reduction and will not be diverted toward special-
interest spending or taxes.
    Under realistic estimates, deficits will remain near or 
above $300 billion the rest of the decade. Fiscal policy is not 
sustainable over the long term.
    Now, proposals to grant the President modified line-item 
veto authority are not likely to have a significant impact on 
budgetary outcomes. The spending and tax items that will be 
affected by this provision represent a relatively small portion 
of the budget. Simply cracking down on everyone's favorite 
target of waste, fraud and abuse is simply not enough to get 
the job done.
    Modified line-item veto authority would do nothing to 
address the underlying structural deficit problems resulting 
from existing tax and entitlement laws, and the legislative 
actions which have the greatest impact on a deficit are 
expansions of entitlement programs or tax cuts that go well 
beyond the scope of this legislation. That is one of the 
reasons that the Concord Coalition strongly supports 
reinstatement of PAYGO budget enforcement rules for all tax and 
spending legislation that would increase the deficit, as well 
as mechanisms which would force Congress to address existing 
structural fiscal problems.
    The modified line-item veto proposal put forward by 
President Bush embodies the approach of legislation passed by 
the House of Representatives in the early 1990s, as Congressman 
Ryan mentioned. This approach, an expedited rescission, has 
received support from Members of both sides of the aisle over 
the years.
    Having been involved in several previous legislative 
efforts to enact expedited rescission authority, I thought it 
might be useful to briefly discuss some of the differences 
between this proposal and previous proposals, as well as other 
issues that the committee may wish to consider. I will focus on 
six key areas: the ability to withhold funds, when and how 
often the President may propose rescissions, allowing separate 
votes on individual items, sunsetting the authority, applying 
the authority to targeted tax revisions, and ensuring that 
savings goes to deficit reduction.
    On withholding funds, that is perhaps the most significant 
difference between H.R. 4890 and previous expedited rescission 
proposals. As Congressman Spratt and others have noticed, that 
language will allow the President to withhold funds even if 
Congress has already voted to reject a proposed rescission, 
which could be viewed as an unconstitutional grant of 
Presidential authority to cancel provisions of law.
    Previous expedited rescission proposals included language 
making it clear that the President could not withhold funds or 
delay implementation of a tax provision after Congress has 
rejected the proposal. I would strongly encourage the committee 
to replace this provision allowing the President to withhold 
funds for 180 days with language requiring that the funds be 
made available for obligation on the day after rescission 
package is adopted.
    There was some question in the past whether the President 
would be allowed to withhold funds if Congress ignored or 
waived the requirements of this legislation and failed to act 
on a proposed rescission package. Based on conversations I have 
had with legal scholars in the past, I believe the President 
would have the authority to defer spending until Congress acts 
in rescission; however, the committee may wish to clarify this 
point in legislative language.
    On the issue of the timing and composition of the 
rescission message, most of the previous expedited rescission 
proposals allow the President to submit one rescission package 
per bill for expedited consideration. This limitation was 
included to prevent the President from tying up the legislative 
schedule with dozens of rescission proposals. By contrast, H.R. 
4890 gives the President the authority to submit rescissions 
throughout the year with no limit on the number of rescissions 
he can submit.
    On the issue of separate votes on individual items, as 
Congressman Spratt mentioned, several previous versions contain 
a mechanism for obtaining a vote to strike an individual action 
or item in a package. If the President proposed to rescind an 
item with strong congressional support in the package with 
dozens of other lower-priority items, Congress would have the 
option of striking the politically popular provision from the 
package and approving the rest of the package.
    On the sunset authority, as Congressman Spratt mentioned, 
concerns have been raised that the President could abuse this 
authority granted in the legislation. Some previous versions 
address this concern by including provisions sunsetting 
authority after 2 years. If a President were to abuse the 
authority, Congress almost certainly would not approve an 
extension.
    H.R. 4890 would allow the President topropose rescissions 
of targeted tax benefits as well. The Concord Coalition 
believes budget enforcement rules should apply equally to taxes 
and spending. Special-interest provisions in tax bills have as 
much, if not more, of an impact on the Federal budget of 
earmarks and appropriation bills. And I would note that the 
concept of allowing the President to single out targeted tax 
rates and tax bills as well as spending earmarks was originally 
introduced into the debate by then-House Republican Leader Bob 
Michel.
    The Concord Coalition strongly supports the requirement 
that all savings through modified line-item veto would go to 
deficit reduction. This requirement ensures that the authority 
would be used to improve the overall fiscal condition instead 
of simply reducing the priorities of Congress in order to fund 
the President's priorities. I would encourage the committee to 
strengthen this language to clarify that any savings from 
rescinding tax or entitlement provisions would not be credited 
to the PAYGO scorecard for purposes of congressional rules or 
statutory budget enforcement rules.
    In conclusion, the proposed modified line-item veto and 
similar proposals would not remotely begin to address the 
magnitude of our fiscal problems. However, granting the 
President modified line-item veto authority could be a useful 
tool to improving the accountability of the budget process and 
achieving greater public confidence in the budget process that 
will be necessary to make the tough choices on much larger 
fiscal issues.
    Mr. Ryan. Thank you, Ed; and it is nice to see you again.
    [The prepared statement of Mr. Lorenzen follows:]

  Prepared Statement of Edward Lorenzen, Policy Director, the Concord 
                               Coalition

                               background
    Chairman Nussle, Congressman Spratt, and members of the Committee, 
thank you for inviting me to discuss the President's modified line-item 
veto proposal. I am the National Policy Director for The Concord 
Coalition, a nonpartisan organization with approximately 200,000 
members who hail from every state who have consistently urged 
Washington policymakers to strengthen the nation's long-term economic 
prospects through sound and sustainable fiscal policy. The Concord 
Coalition receives no grants, contracts, or other funding from the 
government. Before going to work at Concord, I spent nearly fifteen 
years working on Capitol Hill, primarily as an aide to former 
Congressman Charlie Stenholm. In that capacity I had the privilige of 
working with several members of the Committee as well as both the 
Democratic and Republican staff of the committee.
    Concord's co-chairs are former senators, Warren B. Rudman (R-NH) 
and Bob Kerrey (D-NE). The Concord Coalition has worked for fourteen 
years since the organization's founding by Paul Tsongas, Warren Rudman, 
and Peter G. Peterson in 1992 to help build a political climate that 
encourages elected officials to make the tough choices required to:
     Balance the federal budget
     Keep it balanced on a sustainable basis, and
     Prepare for the fiscal and economic challenges that will 
occur as the nation's population becomes sharply older in coming 
decades.
    Given these objectives, The Concord Coalition is encouraged by 
encouraged by the growth in the awareness of our fiscal challenges on 
the part of the public and policymakers. The Concord Coalition has 
organized The Fiscal Wake Up Tour, a series of public forums around the 
country designed to focus attention on our nation's daunting long-term 
fiscal challenges. The purpose of this new issue-oriented grassroots 
project is to draw attention to the simple fact that, according to 
analysts of diverse political views, current fiscal policy is 
unsustainable and hard choices must be made to set things right. To 
that end, we have joined forces with speakers from the Brookings 
Institution, the Heritage Foundation, the Committee for Economic 
Development the Committee for a Responsible Federal Budget and other 
organizations who may differ on proposed solutions but who all agree on 
the magnitude of the problem and the need for serious action. Our 
purpose is not to cast blame but to give the public a better idea of 
how serious the long-term fiscal problem is; why there is no free 
lunch, and what the realistic trade-offs are.
    We are taking this message across the country because better public 
awareness of the problem is the first step in finding solutions that 
are both acceptable and meaningful. Without greater understanding of 
the problem among the public, community leaders, business leaders and 
home state media, elected leaders are unlikely to break out of their 
comfortable partisan talking points. In our Wake Up Tour events we 
explain the greater context for today's fiscal policy debates, 
including: changing demographics; inadequate national savings; 
intractable health care costs; the crowding out of discretionary 
spending on everything from defense to education; and ultimately 
growing deficits and debt that is simply unsustainable.
    Under realistic estimates, deficits will remain near or above $300 
billion for the rest of the decade. Analysts of diverse ideological 
perspectives and nonpartisan officials at the Congressional Budget 
Office (CBO) and the Government Accountability Office (GAO) have all 
warned that current fiscal policy is unsustainable over the long-term.
    Dealing with these fiscal challenges will require a comprehensive 
look at all parts of the budget. As the Concord Coalition board said in 
a recent New York Times Ad:
    ``If everyone insists on only cutting someone else's priorities, 
talk about deficit reduction will remain just that. The best way to end 
this standoff is to agree on the common goal of deficit reduction, put 
everything on the table-including entitlement cuts and tax increases-
and negotiate the necessary trade-offs * * * Unfortunately, actions 
have been wanting. Leaders must put the national interests ahead of 
partisan or parochial interests and develop a specific and realistic 
plan to put the country on a sustainable long-term fiscal path.''
      the role of the line item veto in addressing fiscal problems
    One of the cornerstones of the administration's effort to restore 
fiscal discipline is the proposal for a line-item veto ``that would 
withstand constitutional challenge.'' The proposal would give the 
President the authority to defer new spending whenever he ``determines 
the spending is not an essential Government priority.''
    The Concord Coalition believes that the proposed modified line-item 
veto could have a positive impact on the budget process. Strengthening 
the rescission process as this proposal does would bring greater 
accountability to the budget process so that individual appropriations 
and tax items may be considered on their individual merits. The current 
rescission process does not make the President or Congress accountable. 
Congress can ignore the President's rescissions, and the President can 
blame Congress for ignoring his rescissions.
    This reform will not make a significant dent in our deficit. But it 
will have a very real cleansing effect on the legislative process and 
will take a step toward reducing the public cynicism about the 
political process. Granting the President modified line-item veto 
authority would send a signal to the public that politicians in 
Washington are willing to set aside narrow parochial interests and make 
hard choices for the common good.
    Restoring public confidence in the budget process is an important 
step in gaining the support that will be necessary to make the 
difficult choices required to address our fiscal challenges. On the 
Fiscal Wake Up Tour we have found that even after we present 
information regarding the magnitude of our fiscal challenges and point 
out that pork barrell spending pales in comparison to the rapid growth 
in entitlement spending, audience members still feel strongly about the 
need to cut out wasteful spending. It is not that they believe that the 
budget can be balanced by eliminating waste, fraud and abuse. The 
audiences at Wake Up Tour events understand that addressing our fiscal 
problems will require tough choices restraining entitlement spending or 
increase revenues and are willing to accept the necessary sacrifices. 
But before they accept sacrifices in terms of lower entitlement 
benefits, reduced services or higher taxes they want to be assured that 
those savings will go toward the greater good of balancing the budget 
and not diverted to special interest spending or tax items.
    Although Concord supports granting the President additional 
authority to root out low-priority spending, we do not believe this 
proposal by itself will have a significant impact on budgetary 
outcomes. The spending and tax items that would be affected by these 
provisions represents a relatively small piece of the budget. Moreover, 
President Bush has never used his authority under current law to submit 
rescissions of earmarks or other spending he considers low priority, so 
it is unclear whether granting him this additional authority would have 
much of an impact at all.
    According to the House Appropriations Committee, appropriations 
earmarks totaled $17 billion last year. Other studies have produced 
somewhat higher numbers, perhaps as high as $30 billion. The cost of 
earmarks in authorizing measures such as the highway bill and special 
interest tax provisions in tax legislation undoubtably add to this 
cost. But even under the most optimistic of estimates the potential 
savings from reducing or even eliminating so-called ``pork barrell 
spending'' would not remotely begin to address the magnitude of our 
fiscal problems.
    In 2005, the government spent $2.47 trillion and ran a deficit of 
$318 billion. If Congress had been required to balance the budget 
without raising taxes, it would have had to enact a 14 percent cut in 
all federal programs ? not an easy task. But if Social Security, 
Medicare and Medicaid were exempted, the cut would have to be 25 
percent. Nobody would suggest such a thing, but these numbers 
demonstrate that exempting popular programs from fiscal scrutiny is not 
a viable strategy for balancing the budget and that simply cracking 
down on everyone's favorite target of ``waste, fraud and abuse,'' is 
not enough to get the job done.
    Modified line-item veto authority would do nothing to address the 
underlying structural deficit problems resulting from existing tax and 
entitlement laws. Moreover, the legislative actions which have the 
greatest impact on the deficit are expansions of entitlement programs 
or tax cuts that go well beyond the special interest provisions that 
this legislation would address. The Concord Coalition strongly supports 
reinstatement of budget enforcement rules for all tax and spending 
legislation that would increase the deficit as well as mechanisms which 
would force Congress to address existing structural fiscal problems.
           brief history of modified line item veto proposals
    Under Title X of the Budget Control and Impoundment Act , the 
President may propose to rescind all or part of any item at any time 
during the fiscal year. If Congress does not take action on the 
proposed rescission within 45 days of continuous session, the funds 
must be released for obligation. Congress routinely ignores 
Presidential rescissions. The discharge procedure for forcing a floor 
vote on Presidential rescissions is cumbersome and has never been used. 
Most Presidential rescission messages have died without a floor vote.
    The modified line-item veto proposal proposed by President Bush 
embodies the approach of legislation passed by the House of 
Representatives in 1993 and 1994 requiring Congress to vote up or down 
by majority vote on rescissions submitted by the President. This 
approach, known as ``expedited rescission authority'' or ``modified 
line-item veto,'' has received support from members on both sides of 
the aisle over the years. In the early 1990's, then Congressman Tom 
Carper worked with former Congressmen Dick Armey, Tim Johnson and 
others to find a bipartisan agreement on consensus legislation 
establishing expedited rescission authority. The House of 
Representatives overwhelmingly approved this consensus language in 
October of 1992.
    The legislation was introduced in the 103rd Congress by former 
Congressman Charlie Stenholm, for whom I had the honor of working from 
1990 through 2004. The House of Representatives passed a version of 
this legislation in April of 2003 with several modifications and 
improvements made in cooperation with Congressman Spratt based on 
consultations with leaders of the Appropriations Committee, the Clinton 
administration and other Members. The House again passed an expedited 
rescission proposal authored by Congressman Stenholm and former 
Congressmen Tim Penny and John Kasich in July of 1994.
    Enactment of the Line Item Veto in 1996 made expedited rescission a 
moot issue in Congress. Congress rejected proposals to provide 
expedited rescission authority as a fallback option if full line-item 
veto authority was struck down. There was little interest in the issue 
immediately following the Supreme Court decision striking down the Line 
Item Veto law, perhaps because the budget was in surplus. However, the 
proposal resurfaced last year when Congressman Paul Ryan offered an 
amendment granting the President expedited rescission authority. This 
approach has now been embraced by President Bush.
    Having been involved with most of these previous legislative 
efforts to enact expedited rescission authority similar to the 
President's proposal, I thought it might be useful to discuss some of 
the differences between these previous proposals and the legislation 
currently before the committee as well as other issues the Committee 
may want to consider in marking-up the legislation.
    Previous expedited rescission bills were carefully crafted to 
comply with the Constitutional requirements established by the courts 
in I.N.S. v. Chada, 462, U.S. 919 (1983), the case that declared 
legislative veto provisions unconstitutional. Legislative vetoes allow 
one or both Houses of Congress (or a Congressional committee) to stop 
executive actions by passing a resolution that is not presented to the 
President. The Chada case held that legislative vetoes are 
unconstitutional because they allow Congress to exercise legislative 
power without complying with Constitutional requirements for bicameral 
passage of legislation and presentment of legislation to the President 
for signature or veto. Unlike the line-item veto law struck down by the 
Supreme Court, the expedited rescission approach meets the Chada tests 
of bicameralism and presentment by requiring that both chambers of 
Congress pass a motion enacting the rescission and send it to the 
President for signature or veto, before the funds are rescinded. 
Expedited rescission does not provide for legislative review of a 
preceding executive action, but expedited consideration of an executive 
proposal. Thus, it represents a so-called `report and wait' provision 
that the Court approved in Sibbach v. Wilson and Co., 312 U.S. 1 (1941) 
and reaffirmed in Chada.
         the ability to withold funds for proposed rescissions
    The most significant difference between H.R. 4890 and previous 
expedited rescission proposals is the provision in H.R. 4890 allowing 
the President to withold funds for items in a rescission package for 
180 days. The language appears to allow the President to withold funds 
even if Congress has already voted to reject the proposed rescission. 
This could be viewed as an effective grant of presidential authority to 
cancel provisions of law that was proscribed by the Supreme Court in 
Clinton v. City of New York, 524 U.S. 417 (1998), the decision striking 
down the Line Item Veto Act.
    Previous expedited rescission proposals included language making it 
clear that the President could not withold funds or delay 
implementation of a tax provision after Congress has rejected the 
proposal. I would strongly encourage the Committee to replace the 
provision in H.R. 4890 allowing the President to withold funds for 180 
days with the following language that was included in all previous 
expedited rescission proposals:
              requirement to make available for obligation
    1. Any amount of budget authority proposed to be rescinded in a 
special message transmitted to Congress under subsection (b) shall be 
made available for obligation on the day after the date on which either 
House rejects the bill transmitted with that special message.
    2. Any targeted tax benefit proposed to be repealed under this 
section as set forth in a special message transmitted by the President 
shall not be deemed repealed unless the bill transmitted with that 
special message is enacted into law.
    There was some question in the past about whether the President 
would be allowed to withold funds if Congress ignored or waived the 
requirements of the legislation and failed to act on a proposed 
rescission package. Based on conversations I had at the time with legal 
experts I believe that the language above gives the President implicit 
authority to defer spending until Congress acts on the rescission and 
that OMB would be allowed to utilize the practice it has followed under 
Title X of the Impoundment Control Act of withholding funds from 
apportionment until Congress acts on the rescission message. However, 
if the Committee decides to adopt the language mentioned above, you may 
want to clarify that point in the legislative language or committee 
report.
limitations on when and how often the president may propose rescissions
    Most of the previous expedited rescission proposals granted the 
President the authority to submit one rescission package per bill for 
expeditied consideration within ten days after enactment. All of the 
proposed rescissions for each bill would be bundled into one package 
for Congressional consideration. This limitation was included to 
prevent the President from tying up the legislative schedule with 
dozens of rescission proposals that would receive priority 
consideration. The President would be free to submit additional 
rescissions throughout the year as under current law, but they would 
not be eligible for expedited consideration. By contrast, H.R. 4890 
gives the President the ability to submit rescissions throughout the 
year with no limits on the number of rescission proposals he can 
submit. This gives the President greater flexibility to rescind items 
that are discovered or found to be of low priority well after a bill 
has been signed into law, but also presents opportunity for abuse.
             separate votes on individual rescission items
    The requirement that all rescissions in each bill be bundled 
together led to concerns that individual items would not get an up or 
down vote on its merits but could be eliminated because it was packaged 
with other less meritorious items. This led to the inclusion of a 
process to divide up a package of rescissions. The Stenholm-Spratt 
legislation passed by the House in 1993 allowed 10 Senators or 45 
Members of the House of Representatives to demand a separate vote to 
strike an item from the package. That way if the President proposed to 
rescind an item with strong Congressional support in a package with a 
dozen other lower priority items, Congress would have the option of 
striking the popular provision from the package and approving the rest 
of the package instead of being forced to choose between rejecting the 
entire package or approving the rescission of an item with strong 
support.
    H.R. 4890 does not include language providing the ability to get a 
separate vote on individual items in the package. This is obviously 
much less of an issue without the requirement that all rescissions for 
each bill be bundled together. However, even under H.R. 4890 the 
President potentially could try to thwart the will of Congress by 
packaging a rescission that does not have Congressional support with 
other rescissions that are difficult to reject.
                                 sunset
    Concerns have been raised that the President could abuse the 
authority granted under this legislation. Specifically, it has been 
suggested that a President could use this authority not to reduce the 
deficit but to punish his opponents and increase his leverage with 
Members of Congress. In fact, some have argued that granting the 
President this authority could just as easily increase spending if the 
President threatens to veto items unless programs he favors are 
increased. I believe that these dangers are mitigated by the fact that 
the President must get a majority of the House and Senate to support 
his rescissions for them to take effect. Moreover, a President who 
blatantly abused the authority for political purposes would risk 
political reprecussions with the public as well as Congress.
    Nonetheless, these are very serious and legitimate concerns and it 
is impossible to determine whether or not these fears are founded until 
the President has the authority. Some previous expedited rescission 
proposals have addressed the concern by including a provision 
sunsetting the authority after two years. Advocates of this approach 
referred to it as a ``two year test drive'' to see how it operates. If 
a President abused the authority, Congress almost certainly would not 
approve an extension. This is similar to the approach that Congress 
took when it granted the executive branch additional authority in the 
Patriot Act.
        applying rescission authority to targeted tax provisions
    H.R. 4890 would allow the President to propose rescission of 
targeted tax benefits for expedited consideration in Congress. As a 
general principle, The Concord Coalition believes that budget 
enforcement rules should apply equally to taxes and spending. Since 
spending and tax decisions both have consequences for the budget, there 
is no good reason to exempt either from budget discipline. It it 
therefore very appropriate to extend expedited rescission authority to 
special interest tax breaks. Special interest provisions in tax bills 
have as much if not more of an impact on the federal budget than 
earmarks in appropriations bills. The vast number of special interest 
fiscal giveaways in the corporate tax bill passed in 2004 and the tax 
incentives in the energy bill approved last year are just the latest 
examples of tax bills becoming the vehicle for Congressional pork-
barreling at its worst.
    Applying this authority to tax legislation has encountered 
resistance among some Republicans in the past. However, it is worth 
noting that the concept of allowing the President to single out 
targeted tax breaks in the same way as spending earmarks was originally 
introduced into the debate by then House Republican leader Bob Michel. 
Exempting tax cuts from modified line-item veto authority would also 
encourage an expansion of so-called 'tax entitlements' where benefits 
are funneled through the tax code rather than by direct spending, a far 
less efficient approach.
              ensuring the savings go to deficit reduction
    The President proposed that the modified line-item veto be linked 
to deficit reduction and that any savings achieved would not be 
available to offset increases in other programs. The Concord Coalition 
strongly supports the requirement that all savings from modified line 
item would go to deficit reduction. This requirement ensures that the 
authority will be used to improve the overall fiscal condition instead 
of simply reducing the priorities of Congress in order to fund the 
President's priorities.
    H.R. 4890 seeks to impliment this mandate by providing for an 
adjustment of spending allocations to reflect enacted rescissions and 
requiring the Director of the Office of Management and Budget 
Committees to adjust any statutory spending limits. Without these 
provisions the enactment of a rescission package would simply free up 
additional room within budget allocations and spending limits for other 
spending.
    This language is very useful as far as it goes. However, I would 
encourage the Committee to take it a step further and clarify that any 
savings from rescinding a tax or entitlement provision would not be 
credited to the paygo scorecard for purposes of Congressional rules or 
statutory budget enforcement rules. The principal that the purpose of 
the modified line-item veto should be to improve the budget's bottom 
line and not rearrange budgetary priorities should apply to tax and 
entitlement legislation as well.
    Although statutory pay-as-you-go rules expired in 2002, the Senate 
still has a ``post-policy'' paygo rule for tax and entitlement 
legislation which increases the deficit beyond the amount provided in 
the budget resolution. Approval of a Presidential proposal to rescind a 
tax benefit should result in a corresponding reduction in the amount 
available on the Senate paygo scorecard for tax cuts. More importantly, 
as I stated earlier The Concord Coalition continues to urge Congress to 
reinstate paygo rules for all tax and entitlement legislation which 
would reduce the deficit. We would therefore encourage the Committee to 
adopt language ensuring that any savings from rescinding a tax or 
entitlement spending provision would truly go to deficit reduction and 
could not be used to offset other tax cuts or entitlement spending 
increases.
                               conclusion
    The proposed modified line-item veto and similar proposals would 
not remotely begin to address the magnitude of our fiscal challenges. 
Budget enforcement tools such as pay-as-you-go rules for all tax and 
spending legislation which would increase the deficit would have a much 
greater impact on fiscal policy. Balancing the budget nd establishing a 
fiscally sustainable course for the future will require Congress and 
the President to confront tough choices regarding tax and entitlement 
policy. However, granting the President modified line-item veto 
authority could be a useful tool in improving the accountability of the 
budget process and achieving greater public confidence in the budget 
process that will be necessary to make the tough choices on much larger 
fiscal issues.

    Mr. Ryan. Next we will hear from James Horney, from the 
Center on Budget and Policy Priorities. Mr. Horney.

 STATEMENT OF JAMES R. HORNEY, SENIOR FELLOW, CENTER ON BUDGET 
                     AND POLICY PRIORITIES

    Mr. Horney. Thank you, Mr. Chairman. Congressman Spratt, 
members of the committee. I appreciate the opportunity to 
appear here today to talk about the line-item veto proposal. I 
am Jim Horney. I am a senior fellow at the Center on Budget and 
Policy Priorities, a nonpartisan, nonprofit research and policy 
institute which receives no government funds.
    Before going to the center, though, I did work for 20 years 
for the legislative branch; I worked for the House Budget 
Committee, the House Rules Committee, the Senate Budget 
Committee, the Government Accountability Office and the 
Congressional Budget Office. While Ed was staying put working 
for Mr. Stenholm, I was moving around.
    I would also, with the approval of the committee, like to 
submit for the record a paper authored by my colleague at the 
Center on Budget , Richard Kogan----
    Mr. Ryan. Without objection.
    Mr. Horney [continuing]. Which goes into more detail about 
the things I want to talk about today.
    [The information referred to follows:]

                  Proposed Line-Item Veto Legislation
                 Would Invite Abuse By Executive Branch

               president could continue withholding funds
                  after congress voted to release them

                            By Richard Kogan

    The Administration has proposed the Legislative Line Item Veto Act 
of 2006, which was recently introduced in Congress by Senate Majority 
Leader Bill Frist (R-Tenn.) as S. 2381 and by Representative Paul Ryan 
(R-Wis.) as H.R. 4890.\1\ Both the House and the Senate are expected to 
consider the proposal in coming months.
    The proposal would allow the President to sign appropriations acts 
and tax and entitlement legislation, and then strike specific 
provisions from them. He would be allowed to strike far more than 
``earmarks.'' For example, the President could, if he chose, leave all 
earmarks in place while eliminating all funding for the 91 programs he 
proposed to eliminate in his February 2006 budget.
    Under the proposal, when the President chose to strike amounts from 
appropriations acts, he could withhold the funds in question for 180 
days. During that time, Congress would be required to vote on whether 
to pass legislation eliminating the funding as the President had 
requested, without any amendments being allowed. If Congress turned 
down the President's request to eliminate the funds the President could 
continue to withhold them for months after Congress had voted to reject 
his request to eliminate the funding. Some of the funds could expire in 
the meantime if the 180-day period extended beyond the end of the 
fiscal year for which the funds had been appropriated.
    As acting Congressional Budget Office director Donald Marron 
explained in recent testimony on the proposal, the withholding of funds 
``would not end upon the Congress's rejection of the rescission 
proposals * * *,'' giving the President the ``power to unilaterally 
defer spending for 6 months, thereby effectively canceling some budget 
authority and some programs altogether (for which the funding would 
lapse at the end of the fiscal year * * *'' \2\
    The President also could use the new ``line-item veto'' procedure 
to strike provisions of new entitlement legislation and certain new 
``targeted tax benefits'' contained in recently enacted tax bills. This 
authority would be far broader with respect to entitlement expansions 
than with respect to tax cuts. In fact, it appears Congressional tax-
writers could draft new tax breaks in a way that made them exempt from 
the new procedure.
    how would the new proposal differ from the president's existing 
                   authority to propose rescissions?
    The new proposal would significantly expand the President's 
authority. Currently, the President can request that Congress rescind 
(or cancel) enacted appropriations, and he can temporarily withhold the 
money in question while Congress considers the rescission request. The 
new procedure the Administration is proposing would be in addition to 
these existing procedures. (If the President wished Congress to rescind 
funding, he would be free to submit his rescission proposals to 
Congress under either set of procedures.)
    The new procedure would differ from the existing rescission 
procedure in a number of important ways:
     The new procedure would give the President a ``fast 
track'' to force an up-or-down congressional vote on his package of 
terminations in its entirety. The package of cancellations could not be 
divided into separate parts, amended, or filibustered. The vote would 
occur within 10 days of the package's introduction in Congress as a 
piece of legislation, and within 13 days of the President's submitting 
the package. (The package would have to be introduced in Congress 
within 3 days after the President submitted it.)
     The President could package his proposed cancellations in 
any way he wanted. He could split his proposed cancellations of items 
from a single piece of legislation into a number of packages, sending 
Congress a separate ``package'' for each proposed cancellation and 
compelling Congress to take dozens of individual votes. Or, he could 
combine cancellations from different bills--both appropriations bills 
and bills affecting mandatory programs--into a single package. Congress 
would have to cast an up-or-down vote on each package exactly as the 
President had constructed it. In sharp contrast, the existing 
rescission procedure allows Congress to package the President's 
rescission requests in ways that are most convenient for congressional 
consideration, amend the President's rescission requests, or decline to 
vote on them.
     The new procedures would allow the President to withhold 
funding for 180 days after he proposed a package of terminations, even 
if Congress voted quickly to reject the terminations. If the President 
submitted a package of cancellations in the spring of a year, he could 
effectively kill various items simply by withholding funding until the 
end of the fiscal year on September 30, even if Congress had acted 
swiftly to reject his proposed cancellations.\3\
    This lengthy period of withholding obviously is not necessary, 
since the fast-track mechanism in the proposal would require a vote in 
Congress within 13 days of Congress' receiving the President's package 
of proposed cancellations. The existing rescission procedure allows the 
President to withhold funds requested for rescission for 45 days, not 
180 days. (In recent Congressional testimony, Rep. Paul Ryan stated 
that the bill's 180-day withholding provision ``is required to make 
sure that Congress has the opportunity to act if the President's 
rescission proposal is made directly before an extended recess.'' \4\ 
This argument does not withstand scrutiny. The bill could have followed 
the current rescission procedures, under which the clock on the 
withholding period does not run during Congressional recesses of more 
than 3 days. The Administration evidently made a decision not to follow 
that approach and instead to allow the President to continue 
withholding funds regardless of Congressional action.)
     Exacerbating this problem, it appears that if the 
President proposed the rescission of funds under either the existing 
rescission procedure or the new procedure and Congress did not accede 
to his request, the President could then re-propose the same 
rescissions under the other procedure, withholding the funds for an 
additional period of time and thereby increasing the chances that the 
funding would effectively be cancelled despite congressional opposition 
to the cancellation. (The funding would effectively be cancelled if the 
fiscal year ended before the withholding period did.)
     Another difference between the proposed procedure and the 
President's current rescission authority is that under the new 
procedure, the President could propose the elimination of 
appropriations for discretionary programs but not a reduction in 
funding for such programs. If the President wanted to reduce but not 
eliminate a program or line item, however, he could continue to use the 
existing rescission procedures.
     Another significant point is that under the new procedure, 
if Congress enacted a package of cancellations that the President had 
submitted, the Budget Committee Chairmen would reduce accordingly the 
amount allocated to the Appropriations Committees for the fiscal year 
in question. The effect would be to dedicate all savings from the 
cancellations to deficit reduction.
    This rigid approach is problematic, however, and could well prove 
self-defeating. A legitimate purpose of eliminating certain unworthy 
projects may be to direct scarce funds to higher priority programs, but 
that would not be permitted under the new procedure. And without the 
opportunity to redirect at least some of the savings to better uses, 
Congress is likely to be less willing to approve the President's 
package of cancellations in the first place.
     The new procedure could be applied not only to 
appropriations for discretionary programs but also to new entitlement 
legislation and to new ``targeted tax benefits'' contained in recently 
enacted tax bills. The President could propose to cancel or scale back 
an increase in benefits or eligibility in a provision of an entitlement 
bill if he submitted his request after enactment of the bill but before 
his next annual budget was issued.
    Since many entitlement increases work by making additional 
categories of people eligible for benefits or increasing benefits by 
changing the formulas for calculating them, the authority to scale back 
a new entitlement increase appears to give the President the authority 
to change entitlement laws in unexpected ways. For instance, if 
Congress created a Medicare ``buy in'' option for uninsured people 
between the ages of 62 and 65, the President might be able to use the 
new procedure to scale back this entitlement increase by raising the 
buy-in age to 63 for some types of people and to 64 for others, even if 
Congress had not created any such distinction between eligible 
individuals.
     The story is quite different with regard to ``targeted tax 
benefits,'' which the President could propose to cancel but not to 
scale back. Of particular note, under the Administration's proposal, 
the term ``targeted tax benefit'' would be defined so narrowly that it 
appears Congress could design special-interest tax breaks so they would 
be exempt from any possible presidential rescission.
    Targeted tax benefits would be defined as measures that provide a 
tax break to 100 or fewer beneficiaries. The definition of targeted tax 
break used in the proposal is identical to the definition used in the 
Line Item Veto Act of 1996. At the time the earlier legislation was 
enacted, the Joint Committee on Taxation indicated that tax benefits 
generally could be drafted in ways that would make them exempt from 
this presidential authority, even if they were targeted to 100 or fewer 
people.
    Note that the proposal would establish unequal treatment of 
entitlement increases and tax breaks. The President could use the 
proposed fast-track procedure to force a vote on the cancellation of an 
entitlement improvement that would benefit millions of people, but he 
would not be able to force a vote on a tax break if it benefited as few 
as 101 people. This is despite the finding by Congress's Joint 
Committee on Taxation, the Government Accountability Office, and former 
Federal Reserve Chairman Alan Greenspan that many tax breaks are 
analogous to entitlement programs and are properly thought of as ``tax 
expenditures'' or ``tax entitlements.'' \5\
    In addition, the President could modify and rewrite entitlement 
improvements and create new entitlement categories and program 
distinctions that Congress never intended, but he could make no such 
modifications even in targeted tax cuts affecting fewer than 100 tax 
payers; he could only accept these targeted tax breaks or propose to 
cancel them.
    Finally, the new procedure would place the savings achieved by 
vetoing an entitlement increase into a ``lockbox,'' as with vetoed 
items from appropriations bills. But the savings from vetoing a 
targeted tax benefit would appear not to be placed in a lockbox and 
thus would remain available for another tax cut (although the drafting 
of the bill is murky on this point).
                 would the proposal reduce the deficit?
    The Congressional Budget Office has suggested that the consequences 
of this proposal might be to increase total spending rather than reduce 
it, because ``Congress might accommodate some of the President's 
priorities in exchange for a pledge not to propose rescission of 
certain provisions, thereby increasing total spending.'' CBO says that 
studies of states with line-item vetoes have ``documented similar 
devices employed by state legislatures.'' \6\
    The columnist George Will makes the same point: \7\
    Arming presidents with a line-item veto might increase Federal 
spending, for two reasons. First, Josh Bolten, director of the Office 
of Management and Budget, may be exactly wrong when he says the veto 
would be a ``deterrent'' because legislators would be reluctant to 
sponsor spending that was then singled out for a veto. It is at least 
as likely that, knowing the president can veto line items, legislators 
might feel even freer to pack them into legislation, thereby earning 
constituents' gratitude for at least trying to deliver. Second, 
presidents would buy legislators' support on other large matters in 
exchange for not vetoing the legislators' favorite small items.
    Congressional Research Service senior specialist Louis Fisher also 
came to the conclusion that presidents would more likely use line-item 
veto authority to pressure lawmakers to support White House spending 
policies by threatening to cut Members' pet projects, than to reduce 
total spending or the deficit. In a 2005 report, Fisher warned that 
``experience with the item veto, both conceptually and in actual 
practice, suggests that the amounts that might be saved by a 
presidential item veto could be relatively small, in the range of 
perhaps one to two billion dollars a year. Under some circumstances, 
the availability of an item veto could increase spending. The 
Administration might agree to withhold the use of an item veto for a 
particular program if Members of Congress agreed to support a spending 
program initiated by the President. Aside from modest savings, the 
impact of an item veto may well be felt in preferring the President's 
spending priorities over those enacted by Congress.'' \8\
    Finally, Douglas Holtz-Eakin, director of the Congressional Budget 
Office from February 2003 to December 2005 and now a fellow at the 
Council on Foreign Relations, recently observed that, ``I don't think 
there's any evidence that this, in itself, is a powerful enough weapon 
to alter the path of spending.'' Holtz-Eakin noted that in studying the 
effect of line-item vetoes at the state level, he found they produced 
mixed results. He found no major differences in spending between states 
where governors had this power and states where they did not.\9\ 
Similarly, in his recent testimony on this proposal, the current acting 
CBO director noted that in the absence of a political consensus to 
establish fiscal discipline, ``the proposed changes to the rescission 
process included in H.R. 4890 are unlikely to greatly affect the 
budget's bottom line.'' \10\
would the proposal improve the quality of legislation and the political 
                                process?
    Mr. Will's second point, cited above, is not just about the size of 
the Federal budget but also about the political power of the President. 
The current division of powers gives the President the power to veto 
legislation, but balances this presidential power by giving Congress 
the power to package legislation. The new proposal would further weaken 
Congress in relation to the President by enabling the President to 
propose cancellations that could divide the congressional coalition 
that had negotiated the legislation in the first place. Mr. Will 
concludes that ``The line-item veto's primary effect might be 
political, and inimical to a core conservative value. It would 
aggravate an imbalance in our constitutional system that has been 
growing for seven decades: the expansion of executive power at the 
expense of the legislature.''
    As Will makes clear, the proposal would enhance the President's 
ability to engage in political ``horse-trading'' with Members of 
Congress. The President also would gain enhanced ability to engage in 
political horse-trading with outside groups. Whether dealing with 
legislators or outside groups, the President could threaten to propose 
the cancellation of their favored items--or pledge not to cancel their 
favored items--in return for their support on other, unrelated matters. 
The President's threat to cancel, or promise not to cancel, items of 
importance to legislators or to outside groups could be used to 
increase his leverage to advance policies unrelated to the budget, such 
as support for his nominees, for regulatory legislation, or even for 
foreign treaties.
    These effects were recently discussed by a former staff director of 
the House Appropriations Committee, who testified--
    There is no question that a nexus has developed between campaign 
fund-raising and the community that advocates on behalf of earmarks. 
The more earmarks a Senator or Congressman is able to win for a local 
university, hospital, city government or art museum, the more lobbyists 
he may expect to find in attendance at his fund-raisers. * * * Earmarks 
are increasingly used to persuade members to support legislation that 
they might otherwise oppose or oppose legislation that they might 
support. In the House this practice is now being extended to the 
granting of earmarks in one piece of legislation in return for a 
member's vote on unrelated legislation. Chairman Thomas joked openly 
about the delay in consideration of the highway bill last summer so 
that the leadership could gain more support for the Central America 
Free Trade Agreement.\11\
    Some would maintain that H.R. 4890 is intended to be a partial cure 
for these diseases. But it could just as easily aggravate the diseases 
by giving the President an easier and more direct way to play the game. 
The premise of the proposal seems to be that the President will be less 
political, less interested in rounding up votes for policy issues, 
nomination, and other proposals, and less interested than Members of 
Congress in securing the financial and political support of outside 
groups for such purposes. Would that really be the case? Norman 
Ornstein, of the American Enterprise Institute, thinks not.
    [T]he Republicans have rejected the one device that has been proved 
in the past to bring fiscal discipline, the pay-as-you-go provisions 
that governed fiscal policy through the golden years in the 1990's. 
Instead, they are pushing a sham version of the line-item veto, 
basically just a sharply enhanced rescission authority for the 
president. Congress would pass its spending bills, the president would 
pluck out items he did not like and send them back to Congress to vote 
on them again.
    Leave aside the simple abdication of responsibility by Congress 
here--the refusal to set up a provision to have separate votes on 
earmarks or related items before any bill gets to the president, and 
the basic message of ``stop us before we spend again.'' The larger 
reality is that this gives the president a great additional mischief-
making capability, to pluck out items to punish lawmakers he doesn't 
like, or to threaten individual lawmakers to get votes on other things, 
without having any noticeable impact on budget growth or restraint.\12\
                              key findings
     The line-item veto legislation would expand Presidential 
power to a greater degree than has been understood.
     If the President proposed to cancel funds appropriated for 
a program, Congress would have to vote on his proposal within 10 days 
from the bill's introduction in Congress. But even if Congress turned 
down his request, he could continue withholding the funds until 180 
days had passed.
     If the fiscal year ended before the 180-day period did, 
the funds could expire. This could enable the President to kill some 
types of programs even if Congress had rejected his proposals to cancel 
funding for the programs.
     The Congressional Budget Office, the Congressional 
Research Service, columnist George Will, and other analysts have 
concluded the legislation is as likely to increase expenditures as to 
reduce them, because a President could use this new authority to 
pressure Members of Congress to support some of his spending and tax-
cut priorities in return for a promise not to propose canceling 
appropriation items they favored.
     The legislation supposedly applies to both increases in 
entitlements and new ``targeted tax benefits.'' In fact, its 
application to special-interest tax breaks may be more apparent then 
real, as Congress would be able to draft new tax breaks in ways that 
exempted them from the line-item veto procedure.
   how does this proposal differ from the line item veto act of 1996?
    Unlike H.R. 4890, the Line Item Veto Act of 1996 granted the 
President the unilateral authority to cancel enacted appropriations. 
The Supreme Court ruled in 1998 that such authority was 
unconstitutional, since it allowed the President to change a law by 
himself, thus violating the constitutional rules for creating or 
amending laws. The new proposal is presumed to be constitutional 
because it does not grant the President the authority to change an 
appropriations act unilaterally; rather, he would request that Congress 
enact a change in the appropriations law.
    There are three ways in which the new proposal could grant the 
President more power than under the 1996 act. First, that act gave the 
President 5 days from the enactment of appropriations, entitlement, or 
tax legislation to decide whether to cancel some of its provisions, 
while H.R. 4890 gives the President up to a year. In addition, under 
the 1996 act, if Congress overturned a presidential rescission by 
statute, the withheld funds would have to be released; under H.R. 4890, 
if Congress overturns a presidential veto by defeating the President's 
proposal to cancel the funds, the President can continue to withhold 
the funds for the 180-day period--long enough, in some cases, to 
effectively cancel them.
    Second, the 1996 act allowed the President to cancel entitlement 
increases but not to scale them back. As noted in this analysis, the 
authority to scale back entitlement increases may permit the President 
to rewrite entitlement benefits in unexpected ways. (The drafting of 
the new proposal also suggests that the President could propose to 
cancel or modify provisions of new legislation that would reduce 
entitlement benefits. In short, it appears that he could veto or modify 
both entitlement increases and entitlement decreases.)
    Finally, the 1996 act included a sunset provision; the act would 
expire after 8 years if not reauthorized. This provision apparently was 
included due to the uncertainty about the effects that the line-item 
veto legislation would have. The new proposal, by contrast, has no 
expiration date. It would become permanent law.
                                endnotes
    \1\ The text of the proposal is available at http://
www.whitehouse.gov/omb/pubpress/2006/line--item--veto.pdf.
    \2\ Statement of Donald B. Marron, Acting Director, Congressional 
Budget Office, before the Subcommittee on the Legislative and Budget 
Process, House Rules Committee, March 15, 2006, available at http://
www.cbo.gov/ftpdocs/70xx/doc7079/03-15-LineItemVeto.pdf.
    \3\ The appropriations provided for most programs expire at the end 
of the fiscal year in question. In such cases, any funds that have not 
been obligated by September 30 revert to the Treasury. (If the line-
item veto legislation were enacted, it is possible that Congress would 
respond by lengthening the period of time for which appropriations for 
various programs would remain available, but it is unclear whether 
Congress would do so.)
    \4\ Statement of Rep. Paul Ryan before the Subcommittee on the 
Legislative and Budget Process, House Rules Committee, March 15, 2006.
    \5\ According to the Joint Committee on Taxation, ``special income 
tax provisions are referred to as tax expenditures because they may be 
considered analogous to direct outlay programs, and the two can be 
considered as alternative means of accomplishing similar budget 
policies. Tax expenditures are similar to those direct spending 
programs that are available as entitlements to those who meet the 
statutory criteria established for the programs.'' See Joint Committee 
on Taxation, ``Estimates of Federal Tax Expenditures for Fiscal Years 
2005-2009,'' January 12, 2005, p. 2. This equivalence is why former 
Federal Reserve Chairman Alan Greenspan has referred to these tax 
breaks as ``tax entitlements.''
    \6\ Testimony of Donald B. Marron, op.cit.
    \7\ George Will, ``The Vexing Qualities of a Veto,'' in the 
Washington Post, March 16, 2006, page A23.
    \8\ Louis Fisher, ``Item Veto: Budgetary Savings,'' Congressional 
Research Service, May 26, 2005.
    \9\ Jonathan Nicholson, ``Precursor to Line-Item 'Veto' Failed to 
Restrain Prior Spending, GAO Says,'' Bureau of National Affairs, Daily 
Tax Report, March 13, 2006, p. G-6.
    \10\ Testimony of Donald B. Marron, op.cit.
    \11\ The highway bill was a cornucopia of earmarked projects. The 
testimony was by Scott Lilly before the Subcommittee on Federal 
Financial Management, Government Information, and International 
Security, Committee on Homeland Security and Governmental Affairs, 
United States Senate, March 16, 2006.
    \12\ Norm Ornstein, Three Embarrassments in an All-Around Shameful 
Congress, American Enterprise Institute, April 5, 2006, at http://
www.aei.org/publications/filter.social,pubID.24163/pub--detail.asp.

    Mr. Horney. I want to divide the testimony into two parts. 
The first part would talk about what I view as some of the 
fundamental problems with granting line-item veto authority to 
the President, and that is any President, not just to this 
President. And then second, I do want to talk about some of the 
problems or issues raised by the particular legislation 
proposed by the President and introduced in the House by 
Congressman Ryan. Some of those were already addressed by Ed 
Lorenzen, but I would like to talk a little bit more about 
them.
    The most fundamental aspect of any line-item veto proposal 
is a shift of power from the legislative branch to the 
executive branch. Whether it is because I spent most of my 
career working in the legislative branch or because I have a 
high regard for the wisdom of the Founding Fathers in balancing 
the powers between the branches of government, I have a great 
reluctance to see a further grant of power from the legislative 
branch to the executive branch.
    In this I agree with the columnist George Will, who has 
written: ``The line-item veto's primary effect might be 
political, and inimical to a core conservative value. It would 
aggravate an imbalance in our constitutional system that has 
been growing for seven decades: the expansion of executive 
power at the expense of the legislature.''
    I can understand how people who might even share the 
concern about that transfer of power would still say this might 
be worthwhile if giving this grant of power to the President 
had a real likelihood of doing anything to help bring our 
serious long-term budget problem under control. But I think, as 
other witnesses have testified, that is pretty unlikely, given 
the limited nature of the line-item veto.
    In particular, the long-term problem we face is posed 
primarily by the anticipated growth of three entitlement 
programs--Social Security and, more importantly, Medicare and 
Medicaid--that are anticipated to grow in coming decades much 
faster than the economy will grow and than revenues will grow.
    The line-item veto, of course, is not well designed to get 
at the problems either with those entitlement programs or with 
taxes because it deals only with new legislation, and the 
entitlement programs and revenues are generally controlled, 
governed by permanent law. So you can't use line-item veto to 
get the underlying policies governing those programs. What that 
means is you are left with the primary effect of the line-item 
veto potentially on about one-third to two-fifths of the budget 
represented by programs that are controlled by annual 
appropriations. That obviously is still a lot of money.
    And again, if the line-item veto offered a high likelihood 
of getting rid of wasteful spending in the discretionary area, 
again, I can see how people might say they are willing to 
chance this transfer of power. But, again, I think the 
likelihood of that happening, that the actual result of giving 
the President line-item veto authority will be to get rid of 
wasteful spending, is probably not very high.
    The assumption that we will get rid of wasteful spending, 
that that will be the primary effect of the line-item veto, is 
on the basis that the President will use the power primarily 
for that purpose and not to try to forward and advance other 
priorities that he has. But I know of no reason why we would 
expect we could give an additional grant of authority to the 
President and then the President would not use that to try to 
advance whatever policy he is focusing on at the moment. So I 
think again it is likely that you would end up with a President 
talking and at least hinting to a legislator that if the 
legislator would support him on a trade pact, on an immigration 
bill, on a judicial nominee, then he is likely not to propose a 
veto of some particular program that the legislator supports.
    Again, I am not the only person who thinks this. Norman 
Ornstein, the noted congressional scholar at the American 
Enterprise Institute, has written that the line-item veto 
``gives the President mischief-making capability, to pluck out 
items to punish lawmakers he doesn't like, or to threaten 
individual lawmakers to get votes on other things without 
having any noticeable impact on budget growth or restraint.''
    And again, even if you look only at the budget aspects of 
what the President might do with line-item veto, it is far from 
clear that the effect would be to reduce spending. Again, the 
President could use the promise not to veto a particular item 
that legislators are interested in in order to get support for 
tax cuts or entitlement increases that the President supports 
that cost far more than all of the items the President might 
consider vetoing.
    Again, not the only ones who think that. Acting 
Congressional Budget Director Donald Marron, in testimony to 
the Senate Budget Committee earlier this month, said that ``the 
Congress might accommodate some of the President's priorities 
in exchange for a pledge not to oppose the rescission of 
certain provisions, thereby increasing total spending.''
    Mr. Ryan. Sir, I am wondering if you could wrap it up.
    Mr. Horney. Okay. So the idea, it is entirely possible the 
effect of this would be to actually increase spending. As 
Congressman Spratt suggested that while many people could have 
a reasonable disagreement about how President George W. Bush 
might use the authority, it is hard to imagine anybody 
seriously arguing that a President like Lyndon Johnson would 
use it to reduce spending.
    Ed Lorenzen pointed out the various problems about the 
President's flexibility in packaging and sending up 
legislation. I think that is a real concern Congress needs to 
address and try to limit that. I think there is a particular 
concern--and I think many people share this--about the 180-day 
period the President can withhold the money, because, in fact, 
if he simply waits until the early part of April to submit a 
proposal, then the money, if it is 1-year money, expires at the 
end of the year. I think there are ways to get around that, for 
instance, the suggestion by Ed Lorenzen that once either House 
has voted down the resolution, then you release the funds. I 
think there may be a constitutional question with that. I think 
scholars differ on that.
    There is another way to do it, which is to reduce the 
period of withholding to--probably wouldn't need any more than 
15 days--but do the calculation of the withholding period on 
the same basis that you do the period when Congress has to act. 
In other words, under the requirement, Congress acts within 13 
days. If they go out on recess, the clock stops. Calculate the 
withholding period on the same basis; if Congress goes out on 
recess, the clock stops. So you can set it that some few days 
after Congress is required to act, then at that point the 
President has to release the funds unless they have enacted a 
rescission bill.
    One final thing, and then I will wrap up, is concern about 
the direct spending under the proposal. This proposal allows 
the President not only to strike----
    Mr. Ryan. We can get into these in questions. It is just 
that we are well beyond the 5 minutes, and I want to give 
Members a chance because we are going to have a vote relatively 
soon.
    Thank you very much, and I appreciate your comments, Mr. 
Horney.
    [The prepared statement of Mr. Horney follows:]

Prepared Statement of James R. Horney, Senior Fellow, Center on Budget 
                         and Policy Priorities

    Mr. Chairman, Congressman Spratt, and Members of the Committee, I 
appreciate the opportunity to appear before the Committee on the Budget 
today to discuss the line-item veto legislation proposed by the 
president and various members of Congress. I am currently a Senior 
Fellow at the Center on Budget and Policy Priorities, a nonpartisan 
policy and research institute, which receives no grants, contracts, or 
other funding from the government. Before going to work at the Center, 
I spent more than twenty years working in the Legislative Branch, as a 
staffer at the House Budget and House Rules Committees, the Senate 
Budget Committee, the Government Accountability Office, and the 
Congressional Budget Office.
    I want to divide my testimony today into two parts. First, I want 
to discuss what I consider the fundamental problems with granting the 
president--any president--line-item veto or expedited rescission 
powers. Then I would like to discuss some of the issues raised by the 
particular legislation proposed by the president and introduced in the 
House as H.R. 4890 by Congressman Ryan. With the permission of the 
Committee, I would also like to submit for the record a paper written 
by my colleague at the Center on Budget, Richard Kogan, entitled 
``Proposed Line-Item Veto Legislation Would Invite Abuse by Executive 
Branch.'' That paper goes into more detail about the matters I will 
discuss in my testimony.
    The most fundamental aspect of any line-item veto proposal is to 
shift power from the legislative branch to the executive branch. 
Whether because of a career spent primarily working for the legislative 
branch (although that ensures I know the shortcomings of Congress all 
too well) or my basic regard for the wisdom of the founding fathers in 
balancing powers in our government, I am troubled by the idea of 
further enhancing the power of the executive branch. I agree with 
columnist George Will, who has written that ``The line-item veto's 
primary effect might be political, and inimical to a core conservative 
value. It would aggravate an imbalance in our constitutional system 
that has been growing for seven decades: the expansion of executive 
power at the expense of the legislature.''
    I could understand, however, how even some who share my concern 
about shifting power to the executive branch in general might believe 
that giving the president line-item veto authority would still be 
worthwhile if it were likely to significantly help in bringing our 
long-term deficit problem under control. But I do not believe that 
giving the president line-item veto authority is likely to produce that 
result.
    First of all, a line-item veto is not well-suited to getting at the 
biggest cause of our real, long-term budget problem. That long-term 
problem is posed primarily by the fact that under current policies the 
cost of three big entitlement programs--Social Security, Medicare, and 
Medicaid--are projected to grow at a rate that will exceed the growth 
of the economy and revenues, leading to ever higher deficits, 
borrowing, and debt unless the policies guiding those programs and 
taxes are changed. Because those entitlement programs and revenues are 
generally governed by permanent law, the line-item veto--which provides 
only the opportunity to modify new legislation--is not a tool that can 
be used to make changes in the underlying laws governing entitlements 
and taxes (and, as I will discuss shortly, the ability to use the 
proposed line-item veto even to make changes in new tax legislation is 
very limited).
    As a result, the potential effect of the line-item veto is to a 
large extent limited to the one-third to two-fifths of the budget 
determined through annual appropriation legislation. That is, of 
course, still a large enough portion of the budget to be concerned 
about, and if the line-item veto offered a realistic chance of limiting 
unwise spending in that area, it might still be worth trying. But I 
think that the line-item veto is unlikely to have that effect.
    The success of the line-item veto in limiting unwise discretionary 
appropriations depends on the president using the authority solely or 
primarily to eliminate such unwise spending, as opposed to using the 
authority as leverage to gain support in Congress for any number of 
policies he is pursuing. But why should we expect that a president 
would not use this power to help him achieve a variety of goals; for 
instance, to promise a legislator that he will not veto an item favored 
by that legislator in return for a vote on a judicial nominee or a 
trade pact supported by the president. Norman Ornstein, the noted 
Congressional scholar at the American Enterprise Institute, concludes 
that the line-item veto ``gives the president a great additional 
mischief-making capability, to pluck out items to punish lawmakers he 
doesn't like, or to threaten individual lawmakers to get votes on other 
things, without having any noticeable impact on budget growth or 
restraint.''
    And, it is far from certain that any effect that the line-item 
authority might have on the budget would be to restrain spending. For 
instance, a president could promise not to veto a particular item in 
return for the sponsor of that item agreeing to support new spending or 
tax cuts proposed by the president that far exceed the cost of items 
the president might consider vetoing. It is not unlikely that giving 
the president line-item veto authority would actually increase spending 
and deficits compared to what would occur without the line-item veto.
    We at the Center on Budget are not the only ones who think this is 
a possibility. Acting Congressional Budget Office Director Donald 
Marron, for instance, told the Senate Budget Committee earlier this 
month that ``the Congress might accommodate some of the president's 
priorities in exchange for a pledge not to propose rescission of 
certain provisions, thereby increasing total spending. As CBO has 
previously testified, studies of the line-item veto at the state level 
have documented similar devices employed by state legislatures over the 
years * * *.''
    Columnist George Will also concluded that the line-item veto might 
not have the desired effect of reducing spending, explaining: ``Arming 
presidents with a line-item veto might increase federal spending, for 
two reasons. First, Josh Bolten, director of the Office of Management 
and Budget, may be exactly wrong when he says the veto would be a 
'deterrent' because legislators would be reluctant to sponsor spending 
that was then singled out for a veto. It is at least as likely that, 
knowing the president can veto line items, legislators might feel even 
freer to pack them into legislation, thereby earning constituents' 
gratitude for trying to deliver. Second, presidents would buy 
legislators' support on other large matters in exchange for not vetoing 
the legislators' favorite small items.''
    I would imagine that reasonable people could have different views 
about how president George W. Bush might use the line-item veto, but I 
wonder how many people would be willing to argue that giving line-item 
veto authority to a president like Lyndon Johnson would reduce 
spending.
    Let me turn now to a few of the problems that are presented by the 
particular version of the line-item veto proposed by the president.
    First are issues related to the submission of the president's 
proposed rescissions. Under the administration's proposal, the 
president would have enormous flexibility as to when he can submit 
proposed rescissions and how he could package his rescissions. For 
instance, the president would be able to propose to rescind a 
discretionary appropriation at any time as long as the funds 
appropriated remain available for obligation. For multi- or no-year 
appropriations that remain available for obligation for more than one 
fiscal year, the president could even wait several years after an 
appropriation is enacted before proposing the rescission. For 
entitlement program increases or targeted tax provisions, the president 
could submit a veto proposal any time after legislation is enacted and 
before his next budget is submitted. Furthermore, the president would 
be able to submit multiple rescission bills for any single 
appropriation, entitlement, or tax bill, or to submit a proposed 
rescission bill that includes rescissions of items from any number of 
different bills (combining, for instance, rescissions of discretionary 
appropriations, entitlement increases, and tax provisions in the same 
rescission bill). The Congress would then have to consider, but would 
not be able to amend or modify in any way, each of the bills the 
president submits. This gives the president the ability to affect the 
Congressional legislative agenda to a far greater degree than he 
currently can.
    Second, and perhaps more importantly, the administration's proposal 
would effectively allow the president to permanently rescind 
discretionary funding even if the Congress votes down his proposed 
rescission legislation. Under the administration's proposal, 
discretionary funds the president proposes to rescind can be withheld 
for up to 180 days after the president submits his rescission to the 
Congress, even if the bill proposing to rescind the funds is defeated 
by the Congress within days of being submitted. In the case of 
appropriations that are only available for one fiscal year, the 
president could wait until April 1 to submit rescission legislation and 
then withhold funds proposed for rescission in that bill until the end 
of the fiscal year, at which time the funds expire. Thus, whatever 
action the Congress takes on the proposed rescission legislation, the 
funds would be cancelled.
    It is not necessary to have this180-day withholding period in order 
to ensure that Congress could not put off voting on the rescission 
package and still secure release of funds proposed for rescission by 
taking an extended recess until the withholding period has passed. The 
simplest way to achieve this without allowing the president to withhold 
funds long after the Congress has voted against his proposed 
legislation would be to require the president to release the funds as 
soon as either House votes against the rescission package, but that 
approach might run afoul of the Supreme Court's decision that a one-
House veto is unconstitutional. But it is also possible to achieve the 
desired result by calculating the period for which the president can 
withhold funds on the same basis as the period during which Congress 
has to consider the proposed rescission package, with the withholding 
period extending a few days beyond the Congressional deadline. The 
administration's proposal requires the House and the Senate to vote on 
the rescission package within 13 days of session after receiving the 
president's proposed rescission package. If the president were allowed 
to withhold funds proposed to be rescinded for 15 days of session of 
the House or 15 days of session of the Senate, whichever is longer, 
then Congressional action would have to be completed before the 
president would be required to release the funds (assuming Congress did 
not pass the rescission bill). If Congress delayed acting on the 
rescission bill by taking an extended recess, the withholding period 
would be extended by the length of that recess.
    Finally, I want to briefly address concerns about the way the 
administration's proposed line-item veto procedures would apply to new 
entitlement legislation and to ``targeted tax benefits'' included in 
new tax legislation. The president would be allowed to propose to 
cancel or scale back proposed increases in entitlement spending 
contained in new legislation. Since many entitlement increases occur as 
a result of making additional categories of people eligible for 
benefits or increasing benefits by changing formulas that determine 
them, the authority to scale back a new entitlement increase appears to 
give the president the ability to change entitlement laws in ways the 
Congress never anticipated in drafting the legislation. For instance, 
if Congress created a Medicare ``buy in'' option for uninsured people 
between the ages of 62 and 65, the president might be able to use the 
authority granted by the line-item veto proposal to scale back the 
entitlement increase by raising the buy-in age to 63 for some types of 
people and to 64 for others, even if Congress had not created any such 
distinction between eligible individuals.
    In contrast, the administration's proposal would only allow the 
president to cancel, but not scale back, targeted tax benefits. More 
troubling is the fact that targeted tax benefits are defined--as they 
were in the 1996 line-item veto legislation--so narrowly that it 
appears Congress could design special-interest tax breaks so that they 
would be exempt from any possible presidential rescission. Only 
measures providing tax breaks to 100 or fewer beneficiaries can be 
considered as targeted tax breaks, and further restrictions on the 
definition led the Joint Committee on Taxation to conclude in 1996 that 
tax benefits could generally be drafted in ways that would make them 
exempt from the presidential line-item veto, even if they were targeted 
to 100 or fewer people.
    Note that the proposed line-item veto procedure would establish 
unequal treatment of entitlement increases and tax breaks. The 
president could use the proposed line-item procedure to force a vote on 
the cancellation of an entitlement improvement that would benefit 
millions of people, but would not be able to force a vote on a tax 
break if it benefited as few as 101 people. This is despite the finding 
by the Joint Committee on Taxation, the Government Accountability 
Office, and former Federal Reserve Chairman Alan Greenspan that many 
tax breaks are analogous to entitlement programs and are properly 
thought of as ``tax expenditures'' or ``tax entitlements.''
    In conclusion, there are a number of troubling aspects of the 
particular line-item veto plan proposed by the administration, but even 
if such flaws as the 180-day withholding period were corrected, I 
believe the fundamental problem with any line-item veto proposal--the 
shift in power from the Congress to the president without any real 
likelihood that the shift will improve budget outcomes--should deter 
Congress from enacting a such a plan.

    Mr. Ryan. I will start off. No. 1, Mr. Spratt, you raised a 
number of concerns--all very important and valid concerns, I 
might add--as to the issue of whether or not this line-item 
veto is the panacea that is going to balance the budget. No one 
is pretending that it is. Mr. Hensarling, Chocola, and I have 
introduced comprehensive budget process reform, as have many 
other Members. This is 1 of 16 ideas we are proposing on 
getting our hands around our fiscal house and reforming the 
budget process. So this was never meant to be the end of the 
system to change the way we spend money; this is one of the 
important components of doing it. That is point No. 1.
    Mr. Spratt, I would like to address some of the points you 
made, which I think are extremely important. When we introduced 
this bill a number of months ago, we introduced it with the 
sole intention of putting it out there to get feedback and 
responses from people as to how it can be improved. Let us go 
through a couple of these issues.
    Duplicative submissions. It was never the intention when I 
drafted this bill that the President could just keep redoing 
the same request over and over to run out the clock. I think 
that is something we can clearly address in the amendment 
process hopefully here in a markup.
    A sunset date, I think that is something we should also 
discuss.
    Bundling proposals. Can the President submit 115 proposals 
and tie Congress up in knots? That is not the intention either. 
And that is something we can also address, hopefully, in the 
amendment process.
    Limiting the number of requests. That as well I think is 
something we can address.
    Deferral. This is the big issue that I think Mr. Horney 
brought up and Mr. Spratt brought up, very important issue, a 
180-day deferral is long. Here is the reason why it is in this 
bill in its current form, which I am looking at ways of 
changing it. My original idea was to have a legislative day, 
say 10 to 20 legislative days, because then you can incorporate 
a recess. A legislative day calendar incorporates those 
recesses. My fear is that if we do an omnibus appropriation at 
the end of the legislative process--I am not a big fan of 
omnibuses, but we have done them--let's say we do one at the 
end of October, go into recess, we don't come back until 
January 20 for the State of the Union, Congress could set this 
up so that the President couldn't defer beyond that window and 
then run up the clock and not be prone to this tool.
    So that is why I thought legislative days would have been 
the answer. Constitutionally it doesn't work. You can't really 
find many lawyers that tell you that works, so we have a 
constitutional problem with that approach.
    The other approach, having it conditioned upon the recess 
date, we have constitutional issues there, I believe. So I am 
convinced that we would have a court problem if we did it that 
way. So it is difficult to find an airtight constitutional way 
of limiting this time, and that is something that we are still 
looking for.
    And, Mr. Spratt, I would really enjoy some suggestions from 
you on how best to improve that. One of the things that I think 
we can do to improve this so that this can't be a tool of abuse 
by any President with deferral authority is to limit the 
upfront time, limit the time in which he can submit this 
request after a bill is signed into law. That helps tighten the 
schedule at the front end, and then on the back end we have to 
work on making sure that the deferral isn't excessively long. 
Hinging it on whether Congress acts or not is something that I 
would like to do; again, I think we have some legal problems 
with that as well.
    So these all get into sticky constitutional issues. If we 
are not worried about that, we could make this easy, 10 
legislative days or something like that, done, case closed. I 
don't think you would have an abuse of power on deferral, and 
Congress would have an airtight system. There are some 
constitutional issues, and that is something we are going to 
have in a hearing here, I think, in 2 weeks with some 
constitutional scholars.
    Mr. Toomey, let me just ask you a quick question. You 
served here for 6 years, and you witnessed the process, you 
witnessed the process at the end of the stage of the process at 
the conference reports where a lot of things get stuck in a 
conference report. As a member of the Ways and Means Committee, 
I see it happen on tax policy all the time; as a member of the 
Budget Committee, watching the appropriation bills go through, 
you see a lot of stuff get put in at the end of the stage, 
provisions that never had hearings, provisions that never 
received scrutiny.
    Do you think this is a good tool that can help bring some 
kind of accountability at the end of the process? And the rest 
of the three of you witnesses, if you would like to comment on 
that point as well.
    Mr. Toomey. Well, I think it would. I think the tendency 
would be--first of all, I support a number of the other budget 
process reform measures that you and others have promoted. And 
I think the main common element in these things is more 
transparency, more openness, more scrutiny, allowing Members 
and the public to be more aware and give more consideration to 
some of these proposed spending measures, especially those that 
haven't gone through a normal hearing process. And it strikes 
me that if these provisions are subject to the review of the 
President and the possibility of a separate up-or-down vote, 
then it influences the beginning of the process as well.
    Just the awareness of that, I think, would suggest that 
Members might take a more cautious approach to what they will 
suggest. And while we all necessarily--we will have to 
speculate about what the net effect of this bill would be if it 
were signed into law, I have to disagree with some of the other 
panelists. I think the tendency would be to reduce the number 
of these earmarks and this kind of spending rather than to 
increase it. Ultimately we won't know unless and until it 
actually becomes law.
    Mr. Ryan. Thank you. And I apologize to the other 
witnesses. I spent too much time talking, but I want to stick 
to the 5-minute rule so Members get a chance to ask the 
questions. So if later on if you want to make those comments, I 
would encourage it.
    At this time I would like to recognize Mr. Spratt.
    Mr. Spratt. Thank you all for your testimony because we 
have pretty well the spectrum here.
    Ed, you will remember over the years this bill went through 
an evolutionary process, and I think Charlie Stenholm was one 
of the first to promote it, along with Tom Carper, and it went 
through a number of different committees, Government 
Operations, this committee and Rules Committee, and as it did, 
it got fine-tuned more and more.
    When we had the constitutional line-item bill on the House 
floor, I got up and offered as an addendum to it expedited and 
enhanced rescission. And I said this bill is unconstitutional--
excuse me, it was not unconstitutional, it was a statutory 
line-item veto based on the presumption that the President had 
this authority under the Constitution. As Bob Bork once said, 
if the President had that power, how come nobody has noticed 
for the last 210 years?
    In any event, what I said on the House floor to my 
Republican colleagues across the aisle was, add this to it as 
an addendum to it, and when the first section gets held 
unconstitutional, as it almost certainly will, you have some 
standing law as a fallback. They wouldn't vote for it. I am not 
even sure, Paul, that they allowed it to be made in order. I 
got up and made some kind of protestations about it, but it 
never became law.
    But the ostensible concern there was that the Senate would 
buy off on expedited rescission and not give passage to the 
tougher part of the bill. That was an opportunity to put this 
in law on a trial basis.
    One of the things that came out of our study of the bill 
and our consideration of the bill was this idea to have a 
petition of, say, 50 Members who would be able to break out an 
individual item, an individual cluster of items, and have a 
separate vote on it. You recall the pros and cons of that, Ed?
    Mr. Lorenzen. Yes. The pros of that approach is that it 
allows Members to get an individual vote on their item; that if 
a military construction appropriations bill was passed, and the 
President submitted 25 rescissions of that package, that there 
may be an individual Member may feel like his or her individual 
project is defensible, but would not want to be dragged down by 
the other proposals that are in there. So allowing the 
individual Member to get a vote on his or her individual 
projects, if they could convince enough of the Members, would 
allow them to separate that out. And also, absent this type of 
process, the President could intentionally--potentially thwart 
the will of Congress by packaging one or two rescissions that 
Congress wouldn't support in a package of many other provisions 
that Congress would never--would be reluctant to reject.
    So again, the ability to strike out these more 
controversial ones would prevent the President from abusing it. 
And furthermore, it may make it more likely that you not have 
one or two controversial items sink down the savings in the 
rest of the package.
    Mr. Ryan. Can I ask a clarifying question; was it 15 or 50?
    Mr. Lorenzen. It was 15 in the House and 15 in the Senate.
    Now, the two arguments against it are, No. 1, the President 
submitting an entire package, and the view that the President 
should get a vote on his package as a whole. The other concern, 
as it comes to the procedural matter, is under the expedited 
rescission, without a separate vote, the House and Senate would 
either pass or reject the identical versions, there would be no 
conference. There is the issue that if the House were to strike 
out two package provisions, and the Senate were to strike out 
two separate provisions, you have to go to a conference. And 
there would be serious constitutional problems with trying to 
maintain an expedited process at that point.
    Mr. Spratt. Let me switch over to a couple other things. 
That is one idea for modifying it so that the President has to 
choose selectively, or at least we get the opportunity--now, 
some people say that means the committee chairmen would get all 
their stuff approved, and the back benchers would never be able 
to carry a vote. There are all kinds of political 
considerations at stake here.
    Mr. Schatz, did I understand your testimony to be that you 
thought the President could defer signing an appropriation bill 
for up to 6 months?
    Mr. Schatz. I did not speak to that provision, Mr. Spratt. 
It is something that I think should be examined by the 
committee. It is certainly different than the prior enhanced 
rescission procedures that we have supported. So I would like 
to certainly encourage the committee to think about that. I 
understand what Mr. Ryan said and is trying to do. There has to 
be some time limit; 6 months is probably too long.
    Mr. Spratt. Mr. Toomey, you have served here before. 
Wouldn't you agree there has to be some sort of pretty narrow 
window within which the President has to act or forego the 
option?
    Mr. Toomey. There probably ought to be some constraint on 
the time. And I think, as Congressman Ryan mentioned, there are 
probably a number of areas where this proposal could be tweaked 
and improved.
    Mr. Spratt. Thank you. My 5 minutes is up.
    Mr. Ryan. Mr. Ryun is gone.
    Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman.
    Personally I find it difficult to believe that any work of 
yours would need improving or tweaking, but I can at least 
admit to the possibility.
    Mr. Schatz, in your testimony you mention that--and I think 
we all agree--that relative to the size of the Federal budget 
and relative to the size of the Federal deficit, that line-item 
veto geared toward earmarks is a relatively small portion of 
the budget--huge compared to the salaries of the American 
people. But you mention that even though the money saved is 
relatively small and limiting waste, it could have a 
substantial effect on the spending culture. Can you elaborate 
on that statement in your testimony?
    Mr. Schatz. Yes, Mr. Hensarling. The appropriations 
process, as you are all certainly aware, consumes an enormous 
amount of time. And given the number of requests that go to the 
subcommittees, those in turn also take a tremendous amount of 
time. And I think the consequences of those activities have 
been seen, the Jack Abramoff scandal, the Duke Cunningham 
sentencing, that it can literally get out of control. Some say 
it borders on legalized bribery, and in some cases obviously it 
has been illegal.
    We are not trying to stop that or address it. If somebody 
is going to be bribed, they are going to be bribed, but the 
point is that it would--in terms of the time that these 
appropriations subcommittee should be spending, it would take 
up less of their time.
    One of the reforms that we have suggested is that nothing 
should be appropriated if it has not been the subject of a 
hearing. Now, there were thousands of requests last year; we 
understand they are down this year because of the earmark 
reforms being proposed, and the fact that the committee might 
be recognizing it takes a lot of their time, but we have 
hearings on everything else, and it would take up even more 
time if hearings were held on these various proposals. So that 
is our point that it is not a lot of money, but it takes up a 
lot of time and energy.
    There is a whole business out there of people going out 
recruiting municipalities--the Montgomery, Alabama, YMCA has 
its own--to go get earmarks lobbyists. It is just extraordinary 
where we have come over the years in terms of what people are 
looking for from Congress. If there is a lack of oversight 
generally, it makes it even harder to do that job.
    Mr. Hensarling. Thank you.
    Mr. Toomey, I think that Mr. Horney had made the point that 
he could envision a scenario where if we passed some version of 
Mr. Ryan's legislation, it could actually lead to more 
spending. I believe in your testimony you mentioned that I 
think 43 or 50 Governors have something similar to the Ryan 
idea. So what do we observe in the real world in these other 
States? Have you looked at the actual case histories in our so-
called laboratories of democracy? Are they spending more money 
or less money than they otherwise would because of this tool?
    Mr. Toomey. I don't have with me a systemic analysis of 
those States that have versus those States that have not, but I 
think that is certainly a very worthwhile exercise to 
undertake. But I would like to make an observation, something 
that we understand about our political system, both at the 
State level and the Federal level, and that is by its very 
design, every elected member of the legislative bodies 
necessarily have a somewhat narrow and parochial obligation to 
represent this fraction of the overall geographical area they 
represent, be that a State or the entire country. And it is 
only the executive that is elected to represent the entire--in 
the case of the Federal level, the entire country. So it is 
only the President that has no narrow geographical, limited 
parochial interest in mind, and has necessarily the entire 
country's interest, and so there is a fundamental dynamic here. 
And we have seen that that dynamic has led to an explosion in 
these earmark requests here at the Federal level, and we think 
that it is time for a counterweight to that, some measure that 
would shift a little bit of--and power is almost too strong a 
word. It is an opportunity to focus a spotlight. It is really 
little more than that. To give that opportunity to the person 
who is elected to represent the entire Nation just seems to 
make a lot of sense to us.
    Mr. Hensarling. If I could interrupt my friend--I know the 
chairman is running a pretty mean gavel. I would like to slip 
in another question in 24 seconds.
    Mr. Lorenzen, in your testimony you talk about your Fiscal 
Wake-Up Tour, and I think you made a fascinating point there, 
that the individuals who were involved in this know that tough 
choices have to be made in entitlement spending, but they are 
not willing to make them if they think that earmark pork barrel 
spending will continue.
    So what is the nexus that you see between some version of 
enhanced rescission and changing the attitude of the American 
public and their willingness to open their minds to entitlement 
spending reform?
    Mr. Lorenzen. Well, as I said in my testimony, I believe 
that having a greater confidence that the tax dollars are being 
spent wisely--and Congress has already gone after the waste and 
abuse--will make a greater willingness to make greater 
sacrifices. I think that it will send a signal that elected 
leaders are willing to give up what is perceived as sort of 
their special-interest spending, and therefore--and they are 
willing to make sacrifices, and the public is willing to do 
that.
    As I said, at every one of these Fiscal Wake-Up Tour 
events, we go through in great detail talking about the long-
term problems and dealing with entitlements, and people 
recognize that and agree with that, yet the questions still 
come back to let us get rid of waste.
    So I think it was a very clear message that we have seen 
that they want to first see the sacrifice being shared by 
everyone, and bringing out waste is a way to ensure that 
Members of Congress are contributing to some of the sacrifices.
    Mr. Hensarling. Thank you. My time is expired.
    Mr. Ryan. At this time I would like to ask unanimous 
consent to allow Mr. Spratt to ask a quick follow-up question.
    Mr. Spratt. I just want to make an observation in response 
to your question about what did we learn about the actual 
results.
    A number of Members who had served in State legislatures 
when we were processing these bills in the past recalled and 
observed that where there Governors had very strong veto 
authorities, the tendency of the legislature was to lob on a 
lot of these special projects, knowing that the Governor would 
have to exercise his veto and prune and purge the bill, and it 
tended to give them an incentive, actually, to add this stuff 
in, knowing it would eventually be filtered out. Whether you 
can document that or political scientists could make the case 
for that, I am not sure, but it certainly came up anecdotally 
in a lot of testimony we received in years past.
    Mr. Ryan. Well, if I knew you were going to make that 
point, I am not sure I would have yielded to you.
    At this time, I want to yield to Mr. Neal.
    Mr. Neal. Thank you very much, Mr. Chairman.
    For the members of the committee panel, just ask you a 
question--I think this can be done with a yes or no--in our 
constitutional system, do Members of the Congress serve under 
the President?
    Mr. Toomey. No.
    Mr. Schatz. No.
    Mr. Lorenzen. No.
    Mr. Neal. So we serve with the President.
    Is it the position of the members of the committee, Mr. 
Toomey, you were a pretty capable guy when you were here. Does 
Congress currently have the tools that are necessary to balance 
the budget?
    Mr. Toomey. Together with the President. The President has 
to sign anything that Congress----
    Mr. Neal. But are the tools available to us?
    Mr. Toomey. Theoretically, sure.
    Mr. Neal. It is more than theory, because we did it.
    Mr. Toomey. More often than not, we have not done it.
    Mr. Neal. That is not the point. The point is why embrace 
an artificial solution when Congress already has the ability to 
do this.
    I liked your suggestion about transparency. That would go a 
long way toward curtailing some of these suggestions about 
spending.
    Now let me ask you another question here. Why would Members 
of the Congress, given what we have witnessed for the last few 
years--and I have been consistent on this because I opposed the 
line-item veto when Clinton was President, and I want to remind 
Members of the body here how chilling that effect was when it 
was in place for a brief period of time--to call down to the 
White House to ask them if they would look favorably upon your 
proposal.
    I think we are going down this term limits argument--and, 
by the way, they are all still here, the ones that were for it, 
a lot of them are. Then we embraced the issue of, remember, the 
balanced budget amendment to the Constitution. We are here 
because of what the majority has done. Everybody is familiar 
with the K Street Project and what happened. That is why we are 
here today with another artificial solution. I thought these 
issues in some part were settled at Runnymeade in 1215.
    The argument that we don't want to arm Lyndon Johnson 
during Vietnam with more tools than were necessary--and, you 
know, Lyndon Johnson said to Richard Russell in 1965 that 
Vietnam is a mistake and that things look very glum. McNamara 
on those tapes is saying the same thing in 1965 and 1966.
    So I would remind our colleagues they acknowledge in 1965 
that it is a mistake and that it is not going anywhere, and the 
war went on until 1974. How many kids were killed? You can come 
up with a pretty good number. We went from 20,000 to 58,000 
when, in the privacy of the White House, there was an 
acknowledgment that it wasn't going to be won on the terms that 
were being offered.
    What I am arguing with you today about is why would Members 
of Congress cede their authority to the White House, to any 
President? Transparency, as Mr. Toomey suggested, is the 
answer. Put it out there. Let people see what is being 
requested.
    You and I know, Mr. Toomey, based upon your experience 
here, that some of the Members of the House that did the most 
screaming and hollering about spending sent the most letters to 
the appropriators. Just kick the letters out there, and there 
will be far fewer of those people in the well. And this is not 
an attempt to gain any upper hand.
    Did you ever request an earmark when you were here?
    Mr. Toomey. Probably two or three.
    Mr. Neal. Okay.
    Mr. Ryan, have you requested any earmarks?
    Mr. Ryan. Probably two or three.
    Mr. Neal. Two or three.
    Mr. Ryan. None this year.
    Mr. Neal. We all know the reason why they are not being 
requested this year. But I have requested them this year 
because I am pleased to defend the ones I have requested.
    Back to another point here that I think is essential. One 
of the reasons we find ourselves in the position that we are in 
today is because Congress for the last few years, probably 5 or 
6, has forfeited oversight responsibility. All you do with the 
line-item veto proposal is shift spending priorities to the 
White House. Then the President will determine what the 
priorities are for the country, rather than the ability to 
share that responsibility, as Mr. Toomey has accurately 
suggested.
    Mr. Toomey. May I respond briefly?
    First of all, I share your preference for greater 
transparency, as I pointed out before. I share your view there 
should be greater oversight and that has been a shortcoming of 
Congress for a number of years.
    But I would simply suggest that there is an infinite 
possible array of rules by which Congress could conceivably go 
about the spending process. There is a long number of proposed 
reforms, including PAYGO in various forms, sunsetting 
provisions, requiring hearings, requiring authorization 
legislation, any number of these things. They are all 
reasonable for a topic of discussion, and I think that this is 
one.
    Mr. Neal. How about a 3-day layover on conference reports?
    Mr. Toomey. There is a very long list of very reasonable 
ideas. We happen to think this is one very such reasonable idea 
that could help us do a better job getting spending under 
control, not the only one. Frankly, we support all of the 
proposals that Congressman Ryan and some of his colleagues have 
proposed by way of budget process reform. This is not a 
panacea, but we think it is a very constructive step in the 
right direction.
    Mr. Neal. But there is general agreement that the Congress 
currently possesses the tools to balance the budget.
    Mr. Toomey. Sure.
    Mr. Neal. Thank you.
    Mr. Ryan. The gentleman's time has expired.
    At this time, we will recognize Mr. Conaway.
    Mr. Conaway. Thank you, Mr. Chairman. Thank the panel for 
being here.
    Certainly we have got the tools, but I don't know whether 
we have got the will to do it. Anybody that can read or 
actually stay within lines--this is a chart David Walker gave 
us this morning. We have all seen it. Growth in this Federal 
Government over the next 40, 50 years, which is the single 
biggest threat to our life, our grandchildren's way of life. I 
have got an 8-year-old that will be in this position in 2050. 
When left unchecked, this Federal Government will soak up about 
50 percent of GDP, and he will have to figure out how to live 
and prosper on the other half.
    It is also kind of like the fellow that fell off the 10-
story building. As he passed the fifth floor, he said, wow, so 
far, so good. So far, so good.
    Last year, or, actually, earlier this year, we passed the 
Deficit Reduction Act, which trimmed mandatory spending by some 
$37 billion, I guess. We proposed a much bigger number in the 
House. The Senate whittled it down. The rhetoric on both sides 
was overdone. Our side bragged way too much; the other side 
cried disaster way too much.
    The truth of the matter is that modest attempt to changing 
mandatory spending would have less than a half a percent affect 
on these numbers. Maybe $29 billion this year doesn't have an 
effect, but given how hard it is to make even modest changes to 
spending in this Federal Government, where is the biggest bang 
for our buck in terms of--there is going to be screaming and 
hollering from both sides about trying to get it done and 
trying to create this political will to use those tools to rein 
all this stuff in. Where is our biggest bang for our buck?
    We can't go through the rhetoric we went through last year 
for only $36 billion and keep the thing working and have a 
meaningful impact on these numbers. Anybody, where would be the 
biggest bang for our buck in terms of relooking at how the 
Federal Government spends money?
    Mr. Schatz. If I may, one of the proposals that has been 
used at the State level--and I don't want to get into a long 
discussion of tax and expenditure limitations, but that is one 
concept, to strictly limit overall the amount of increase in 
the growth of the Federal Government.
    Any organization that needs to look at its bottom line 
picks a number somewhere that makes sense and says we will 
spend 3 percent more than the current year, we will spend at 
the rate of inflation, we will increase salaries by 2 percent 
or 3 percent or whatever it is. And it is interesting, because 
Congress increases the salaries of Federal workers at a certain 
rate, but then everything else goes up far more than that. 
Well, tie wage increases to spending increases.
    So if you set--this would go across the board--a limit of 
some kind, that would help address this growth that we see in 
all of these programs; and it would force Congress to make more 
of the choices that we think they should be making now.
    Mr. Toomey. If I could briefly respond, I think you have 
observed yourself in the long run if we don't address the big 
entitlement programs, then the rest is fiddling around the 
edges. However, from my 6 years in the House, I learned one 
thing early on which is sometimes we have to settle for very, 
very modest victories and you make very incremental progress.
    So if we can make this incremental improvement, what I see 
is an improvement in the budget process, spending process, and 
maybe change the culture of spending a little bit by putting 
greater scrutiny behind some of these projects, maybe we are 
taking a small step in a long journey to get this budget under 
control.
    Mr. Horney. If I may, I think the key thing is what I have 
learned about budget process over the years, and I think it is 
very important, the process is not good at forcing the Congress 
and the President to do things they haven't decided are worth 
doing. So what you really want to do is work on getting the 
will; and then, once you do that, budget procedures can be very 
useful in enforcing the decisions.
    I think that is the lesson from 1990 where the President, 
the Congress, Republicans, and Democrats got together. The 
first thing they did was make changes in policy. They increased 
revenues, cut spending. They did it together; and then they put 
in place the PAYGO rules and the statutory caps on 
discretionary spending that helped enforce that agreement. It 
wasn't the other way around. They didn't change the rules and 
then go and come to the policy decisions.
    I think trying to achieve the results through process rules 
like overall spending limitations can be difficult; and I think 
the experience of the one State that has really tried that, 
Colorado, after several years of doing it, as a result of 
things that happened, what happened in the State, they have 
suspended it.
    So I think there are some real questions about whether 
things like that work; and what you really need to do is what 
David Walker is trying to do, the Concord Coalition and others, 
is get the public and lawmakers to realize what needs to be 
done.
    Mr. Lorenzen. I would concur for the most part with what 
Jim said about budget enforcement, trying to enforce policy 
decisions.
    The one additional place for the budget process is to bring 
greater transparency and at least force accountability. So if 
spending were to go above certain levels or revenues above 
certain levels, I don't think the process could dictate the 
outcome, but it could potentially at least require an 
acknowledgment and a discussion of that. And the policy outcome 
may be the one that the Concord Coalition might like, may not, 
but at least that debate and recognition of an issue and 
consideration of it.
    Mr. Ryan. At this time, I would like to recognize Mr. 
Baird.
    Mr. Baird. Thank you, Mr. Chairman; and thanks to the 
witnesses. This is a very important and fascinating topic, and 
I appreciate you raising the issue.
    A word about transparency. I think Mr. Neal mentioned the 
3-day layover. That is already in the House rules, but we waive 
it with alacrity. I have introduced a bill, 72-hour rule, which 
would require 72-hour barring two-thirds majority vote and with 
exceptions for emergencies, et cetera.
    By the way, it also provides not only that we have 72 hours 
to look at bills, but so would you. Bills would have to be made 
available on the Internet. I think that would actually go a 
fairly long way toward shining the light of day on frivolous or 
egregious abuses of the earmark system.
    I also want to commend you. Because one of the problems we 
face, one of the reasons people don't seem to read bills is 
what we do, as we all know, is go down on an appropriation bill 
that we have had 6 hours to read and we don't say what is the 
broad sweep of this bill. Instead, we say, is my project in it? 
It is a little bit like asking Santa, did I get what I asked 
for? And if Santa says yes, then you love Santa, regardless of 
who else gets what in the bag. It is not a very good way to run 
a government.
    Having said that, I am not sure the alternative is good, 
and I want to play around with this. So if we don't put the 
earmarks, we who represent the districts--and I would warrant 
that I know my district a good bit better than the President of 
the United States who has never been there. If we don't put 
them in, how is the money spent? Is it not going to be spent by 
a bureaucrat and are they not then subject to their own 
political agendas?
    I sincerely would be interested in answers to that.
    Mr. Schatz. If I may, and this is part of our All About 
Pork Report, and among other pieces I have read about this. I 
find it interesting that Members of Congress talk about these 
nameless, faceless bureaucrats that make these decisions, 
where, in fact, they give that authority through legislation.
    So it seems to me that you, in some cases, have it both 
ways in some particular project and programs. For example, the 
Save America's Treasures Program under the National Park 
Service got $15 million, totally competitive, Department of 
Interior, went into the appropriations bill. The Appropriations 
Committee added $16,750,000, all earmarked.
    So, clearly, someone thought that this project should have 
more money, this program should have more money but somehow 
didn't trust the same people they had already entrusted to make 
the initial decisions with all of the decisions. So I don't see 
how it can be done both ways.
    In terms of what the decisions are and how the decisions 
are made, if Congress doesn't like how they are being made, 
they can change the law, they can change how these grants are 
made, and they can change the process. But I don't think it is 
fair to say you want to have it both ways.
    Mr. Baird. Let me ask this question, and I appreciate the 
point you just made. That would seem to argue for me 
legitimately to make a case against earmarks per se. But I am 
not sure that then is an argument in favor of the rescission 
authority for the President.
    Mr. Schatz. If you have earmarks and they are being added 
on in ways that are noncompetitive and without hearings, then 
someone has to at least point that out and force Congress to 
vote separately on those items. Because in the appropriations 
bills you don't have that opportunity, at least not right now.
    Now if the earmark reforms were done in a way that there 
would be a greater opportunity for amendments to be offered on 
the floor, and certainly a lot of Members, including some who 
are here, are trying to do that, that might make it a little 
bit less important for a line-item veto. But I still think at 
the back end there is always going to be something we would 
like to see being brought back to the floor for consideration.
    Mr. Toomey. I would like to add one thought.
    Mr. Baird. I want to get an alternative view.
    Mr. Toomey. Sure. I would suggest that the alternative to 
having fewer earmarks on the part of Members of Congress is not 
necessarily that bureaucrats would do them instead. It is 
possible that they could be discontinued.
    Mr. Baird. No.
    Mr. Toomey. I think in some cases it is pretty clear that 
earmarks are used to get funding for something that really 
wouldn't be able to withstand the scrutiny of a normal process 
of hearings, consideration, authorization, a vote on the floor 
on a free-standing measure. It wouldn't pass the giggle test 
sometimes.
    Mr. Baird. If I may, I appreciate the point.
    Mr. Horney. I think, in earmarks, it is hard. I think there 
is nothing evil about earmarks. A lot of the ones--for 
instance, look at the foreign operations bill. It is filled 
with earmarks. But that is because Congress thinks it is 
appropriate for Congress to decide how much money goes to 
Israel, how much to Egypt, and so on.
    There is a balance. What I think is really key is to 
realize the line-item veto is not even close to being limited 
to earmarks. We are talking about much broader power than that. 
The President could ignore every earmark in an appropriation 
bill and instead to propose to eliminate the 91 programs that 
the President proposed to eliminate in his budget this last 
year.
    So if you want to get at earmarks, and I think you need to 
be careful about how you do that, the line-item veto is much 
broader and sort of a blunt tool to do that.
    Mr. Baird. I appreciate the response on both sides of this. 
Thank you, Mr. Chairman.
    Mr. Ryan. Mr. Cuellar.
    Mr. Cuellar. Thank you very much, Mr. Ryan. Thank you for 
taking the leadership on this particular issue. I know this is 
an issue that Mr. Spratt and some of the folks who have been 
here before have been working on; and I do appreciate--to the 
witnesses, I appreciate your comments.
    I think we all understand the great magnitude of facing the 
fiscal challenges that we have. Of course, all of us are 
looking at the different tools that are available to improve 
accountability in the budgetary process; and, of course, I 
think the end result is to get greater public confidence in the 
work that we do here in the budgetary process.
    I think if you look at the different budgetary tools, there 
is a lot of them out there on the table, some of them already 
in law, some of them have been debated already and been ruled 
unconstitutional, and some of them are still going to be 
considered, like we are today. But I think we all have an 
obligation to consider and debate the different tools, 
budgetary tools that are out there.
    No. 1, PAYGO, the 1974 Empowerment Control Act, Sunset 
Commission, Performance-based Budget Team, that is legislative 
oversight, a modified line-item veto, these are different tools 
out there.
    In my State, for example, in Texas, we have the following 
budget tools, and I support tools like this: PAYGO, I support 
that; Sunset Commission, I support that; Performance-based 
Budget Team; Legislative Oversight, I definitely support that; 
line-item veto, I support that, and in fact I am a cosponsor 
with Mr. Ryan here.
    What I ask is the witnesses to work with us so we can fine-
tune this particular tool; and today, of course, we are talking 
about the line-item veto. I do understand--I think Mr. Spratt 
is correct on this--any time you propose something, you will 
have little challenges. New challenges will arise where--I call 
it sparring between the executive branch and the legislative 
branch.
    For example, if you are talking about line-item veto what 
is going to happen is Congress will find a way to try to design 
a bill so it doesn't become line-item veto; and you will have 
conversations between individual Members and the President. 
Look, we will work with you on this one if you don't line-item 
veto our thing. But I think that is part of the process.
    The only thing I do ask is that you work with us to fine-
tune the legislation. Because, again, we didn't invent this. 
There has been--43 other States have gone through this, other 
Members of Congress went through this, and what we ask you is 
to just help us fine-tune this legislation to make it as best a 
product as possible. Nothing is perfect.
    I am a big believer of putting the tools out there, 
consider them, debate them, and then see what we can do to 
work, and understanding that there will be sparring between the 
legislative and oversight.
    I am a cosponsor of this legislation. I do want to fine-
tune it, but I still believe that the will is so important, the 
legislative will is so important and legislative oversight. I 
think that is the most basic things that I think we always talk 
about, but we need to do more to provide oversight.
    Pat, any of you, if you have any thought on this, I would 
be happy to work with you, along with the other members.
    Mr. Toomey. I would just very briefly say that we agree 
there is a very wide range of tools that are available for the 
budget process. We support many, many of the reforms. We think 
this is a great start, a great idea; and we look forward to 
working with you and other members of the committee in the 
hopes of refining it so that it can pass and be effective.
    Mr. Schatz. We are happy to contribute as well.
    Again, I think there are plenty of individuals--and my 
understanding is with the next hearing you will be listening to 
some of them--with the constitutional background to also 
address some of the issues related to this legislation.
    Mr. Lorenzen. In my testimony, I raise several issues for 
consideration. A couple I would bring to your attention is 
ensuring that all the savings go to deficit reduction, 
including savings from rescinding a tax cut or entitlements, 
and, obviously, the issue that has been discussed about the 
release of funds and how long the President can defer funds and 
striking the balance between ensuring the funds are spent with 
the will of Congress while ensuring that the money isn't spent 
until Congress has acted.
    Mr. Horney. While our preference would be that no bill is 
enacted, we have made suggestions about the way it can be 
improved, and we have talked with House and Senate staffs about 
those things, and we will continue to do that.
    Mr. Cuellar. Mr. Ryan, again, as one of your cosponsors, I 
hope you work with us on fine-tuning this legislation. There is 
no Republican way, there is no Democratic way, but if you can 
work with Mr. Spratt and some of the other Members, I think 
this is a good piece of legislation, and if we can tinker 
this--fine-tune, not tinker--fine-tune it, I would appreciate 
your consideration.
    Mr. Ryan. I couldn't agree more.
    We were sitting here talking about ways of fine-tuning it 
back here. The deferral issue is an important one, and my 
intention is not to give the President any more undue power. At 
the same time, we have got Chada issues, constitutional issues 
that we have to make sure we accommodate; and we also have to 
make sure that Congress can't run out the clock with the recess 
beyond the deferral.
    So it is not as easy as it seems at first, but, absolutely, 
my full intention is to fine-tune this legislation to address 
these very valid concerns, some of which Mr. Horney brought up, 
I think each witness brought up, and Mr. Spratt brought up. So 
I look forward to doing that.
    At this time, I recognize Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Chairman.
    I, too, am a cosponsor of your legislation but a reluctant 
cosponsor. I think the record should show that I believe you 
are the only Republican on the committee who is in the room 
right now, and that has been true for some time, so I wish you 
could muster more interest in this hearing on your side of the 
aisle.
    I think what we have here--as was said in the movie Cool 
Hand Luke, what we have here is a failure to communicate, not 
necessarily among so-called experts but with the American 
people. So, with your indulgence, let me put the cookies on a 
real low shelf.
    The President already has tremendous power to cut spending 
and yet, as the Cato Institute and the Heritage Foundation have 
demonstrated, government has grown more dramatically than at 
any time since Lyndon Johnson and probably exceeding LBJ 
himself and the Great Society.
    So what has the President done with his cutting tools?
    He has got the chain saw of a real constitutional veto. He 
has never used it, the longest-serving President since Thomas 
Jefferson never to use it.
    He has also got a smaller tool, something like scissors, 
that every President since Richard Nixon has had. He has really 
never used that either, even though every President back to 
Nixon has used it hundreds of times.
    Now this whole hearing is about hedge clippers, some sort 
of intermediate tool that he probably should have, and we are 
debating the fine point of hedge clippers. Meanwhile, he has 
never used the chain saw or the scissors.
    And you and I both know, while an intermediate tool might 
be helpful, if you have never tried the bigger tools or smaller 
tool, he hasn't even approached the intermediate problem that 
we are addressing here today.
    So I would suggest what we have here today is not a tool 
problem, it is a timidity problem. So probably we shouldn't be 
having a hearing about line-item veto, it should be more on the 
subject of Levitra. Probably shouldn't talk about 
constitutionality, maybe more Cialis. We probably need Viagra 
to stop the Niagara of spending and promises that are being 
made. Because it is a willpower problem. It is something more 
than a chain saw or scissors or hedge clipper problem.
    Mr. Spratt. Mrs. Capps is blushing.
    Mr. Cooper. I told you it would be a real low shelf.
    As the Comptroller General has testified to us, the cost of 
delay in addressing these problems is extraordinary. It is far 
more than even Members of Congress can imagine. It approaches 
$3 trillion a year. Now we will work less this year than any 
Congress since 1948, and the problem will be $3 trillion worse 
when people regain their resolve next January.
    I am worried that, as convenient as it is for some of these 
groups to raise money off of this new issue, this recycled 
issue, this bang the drum slowly issue of line-item veto, we 
should be focusing on more immediate action because it is a 
dangerous debate that diverts attention from our real problems 
and why we aren't using the chain saw or the scissors.
    Now let me remind you I am for the hedge clippers, but it 
is a lot like asking us in Congress, stop us before we spend 
again. Look at the appropriations bills we have just gone 
through. Look at how few votes the Flake amendments have 
received. All they would do is ask us to live up to the 
transparency and disclosure requirements that most all of us 
voted for in the earlier lobbying reform bill.
    We are not taking action, nor is the White House taking 
action. That is why I am a reluctant cosponsor. Because we are 
debating the fine points and the niceties. Meanwhile, the 
problem is getting worse every day, every week, every month to 
the tune of $3 trillion a year; and we are jawboning about 
intermediate tools. It is a willpower problem; and, hopefully, 
with clearer communication, folks back home can understand how 
to give us more backbone. Because that is what it boils down 
to.
    Forgive me, Mr. Chairman, for the statement and for my 
reluctance in cosponsoring your fine measure, but that is where 
I think the communication needs to go on.
    If any witness would like to make a comment, I would be 
happy to hear you.
    Mr. Schatz. Certainly the idea of the President not using 
his veto has been prominently used by our organization and I 
know by Mr. Toomey's as well. We are not reluctant critics of 
the lack of fiscal discipline on both sides of the aisle. So I 
would like to just make that point. In fact, we have been 
disappointed by the fact that spending has grown so much; and 
it wouldn't have mattered under whom that occurred.
    One quick comment totally off what you had said but what 
Mr. Horney said about foreign aid. I don't think that the line-
item veto will be looking at the Israeli or Egyptian 
appropriations. I think they are looking at the $13-1/2 million 
for the International Fund for Ireland which this year included 
plans to fund the World Toilet Summit.
    Mr. Neal. Might I respond?
    Mr. Ryan. It is Mrs. Capps' turn next. Maybe she can yield 
to you. I want to keep it clean on time. Let me recognize Mrs. 
Capps. It is her turn.
    Mrs. Capps. I would like my time, but I would also want to 
yield to Mr. Neal.
    Mr. Neal. Thank you.
    Mr. Schatz, you do a disservice to the Ireland Fund when 
you don't point out the success that it has had by singling out 
one part of the Ireland Fund that you disagree with. The border 
counties of Ireland, beginning in Dundalk and moving all 
through the north, have had an experience that is unparalleled 
with the help of American foreign policy. In fact, if every 
achievement in American foreign policy came close to what has 
happened in Ireland over the last decade, we would all be 
standing here with a round of applause.
    The Ireland Fund has worked quite well, despite the single 
issue that you raise. It has been an extraordinary success in 
those border counties. Members of the Protestant community, 
members of the Catholic community herald it, as well as the 
European Union and Australia. They all participate.
    Mr. Ryan. This is when you get someone who is Irish up--as 
an Irishman.
    Mrs. Capps. Is it time for me to reclaim my time?
    I also just have to say to Mr. Spratt, the mention of chain 
saws always makes me blush. I know all the quotable quotes have 
been said, and I am kind of doing cleanup.
    Mr. Conaway left, but he sort of yielded the fact that 
there is tremendous lack of will both in the leadership in the 
administration and also in the House now to--which is quite a 
statement--to do anything about balancing the budget.
    Another quote comes from ``USA Today'' editorializing that 
the line-item veto is a convenient distraction, that the 
deficit is caused primarily by an unwillingness to make hard 
choices on benefit programs or to levy the taxes to pay for the 
true cost of government.
    I would like--that admission of failure on the other side--
I could say, in a partisan way, the Democrats would like a 
chance to balance the budget. And I didn't serve here then, so 
I can't take credit for what happened in the '90s. I came in at 
the end of it. But I want to use my time or let you use my time 
to illustrate for me what happened in the '90s that made it 
work.
    But, before I do, I think there are two elephants in this 
room that I haven't heard mentioned today. I just want to put 
them out there. Elephants is a good symbol. One is the war cost 
and the other is the huge tax cuts. These have got to have 
something to do with our deficit.
    I also want to make one other point--I am hoping I am going 
to hear in your comments that there should be an effort in a 
bipartisan way to deal with this.
    But, we have a Speaker now who says he is looking for a 
majority of the majority to make decisions. A classic example 
is what happens in my years of serving honorably under the good 
leadership on this committee. I can count only three or four 
bipartisan amendments that were voted on in a bipartisan way in 
this process of drafting a budget.
    Mr. Horney, you sort of put your finger up first.
    Mr. Horney. If I could, I think that we have a serious 
long-term problem, no question about that, very serious. What 
needs to be done, the only way it is going to be dealt with is 
when Republicans, Democrats, the President, Congress come 
together and look at everything, put everything on the table 
and consider everything.
    That is exactly what happened in 1990 when the current 
President's father worked together with congressional Democrats 
and Republicans. I was on the House Budget Committee staff at 
that point. I was out at Andrews Air Force Base for part of 
that time. A lot of people say that was a terrible experience, 
but, in fact, it was an incredible experience of people saying 
we think we have got an important problem, and that means 
giving up some things I care about.
    Democrats were not eager to cut Medicare, but they said, in 
order to get deficit reduction, I will do it. Republicans were 
not eager to raise taxes but said we are willing to do it in 
order to reduce the deficit. They put together a package with 
bipartisan support, President and Congress, that reduced the 
deficit by $500 billion over 5 years and set the stage--it 
didn't by itself achieve the balanced budget, but it certainly 
had an important effect.
    Mrs. Capps. Do you think a bipartisan coming together is 
essential to this process?
    Mr. Horney. I don't see how it can be done otherwise. 
Because when you are dealing with Medicare, Medicaid, Social 
Security and taxes, it has got to be a combination of 
reductions in those programs and increases in revenues. I don't 
see how either party can do those things by themselves.
    Mrs. Capps. Would any of the others like to comment?
    Mr. Lorenzen. I agree with everything Jim said about the 
need for everything to be on the table and making tradeoffs, 
that we are never going to be able to balance the budget by 
cutting everyone else's priorities; and I think bipartisanship 
is necessary to assure that any agreements are sustained so you 
don't have the tough choice made for deficit reduction reversed 
as soon as the other party is in power.
    I think in the 1990s the other key was that there was a 
bipartisan consensus that deficits mattered, were a problem, 
and a bipartisan consensus we should achieve a balanced budget. 
There were differences about how to achieve that, but when you 
started with that goal, that it was the goal we wished to 
achieve, that was able to focus the discussion in a way that we 
have lost in recent years. Once you have that political will 
and put everything on the table, then you can have the type of 
discussions; and that is where budget enforcement tools such as 
PAYGO and discretionary caps and others can help enforce and 
further that will.
    Mr. Toomey. I would like to address, if I could, very 
briefly. We strongly disagree that the main reason we need to 
get spending under control is because of the size of the 
current deficit.
    First of all, it is less than 3 percent of GDP, that is a 
modest level.
    More importantly, if the deficit as it is today were a 
serious problem for the economy, everybody acknowledges it 
would manifest itself in high interest rates, which we don't 
have. We have extremely low interest rates.
    The last point I would make is, you mention the tax cuts, 
and I think it is indisputable that, at least if you dispute 
the cause and effect, you can't dispute the fact that since the 
tax cuts there has been a tremendous, robust and broad and 
sustained economic recovery; and revenue to the Treasury has 
grown and is at an all-time record high.
    I wouldn't suggest that raising taxes is in any way a good 
solution to the deficit program.
    Mrs. Capps. Would you agree that there was a burst in the 
economy in the '90s as well?
    Mr. Toomey. Absolutely.
    Mrs. Capps. So there might be some correlation.
    Mr. Toomey. There was a whole different set of factors that 
were going on then.
    Mrs. Capps. I have one further question. You said that 
deficits don't matter to the economy. Would you agree--did I 
quote you right?
    Mr. Toomey. What I am saying, the deficit at the current 
size is not a constraint on economic growth.
    Mrs. Capps. Would you share my concern that the trend might 
be significant economically? And, also, would you think there 
might be other considerations besides the economy that would be 
important to consider with our deficit?
    Mr. Toomey. First, the entitlement programs are
    unsustainable; and they would lead to deficits that are 
unmanageable. I will acknowledge that.
    But I think the main reason to focus on the deficit is if 
you believe it causes economic problem. If there is no economic 
problem because it is so small, and it could well be that it is 
that small at the moment, then I would say certainly don't 
raise taxes to deal with something that is not an economic 
problem.
    Mrs. Capps. I am going way over my time. I have a naive 
question to ask. Why do we never consider the war cost when we 
talk about budget?
    Mr. Toomey. Well, we do. Our organization doesn't get into 
foreign policy matters, but we acknowledge it is very 
expensive. War is always very expensive. We think, frankly, 
that, given the costs of the war, it creates an even greater 
need to have fiscal discipline on the discretionary and the 
domestic side of spending.
    Mr. Schatz. Mrs. Capps, we would actually like to see 
offsets to pay for the cost of the war. This was done in the 
Korean War and----
    Mrs. Capps. Do you think we should do that now?
    Mr. Schatz. We object to these supplemental appropriations 
with offsets. I know Mr. Ryan and others have tried to offset 
the nondefense part, but it seems an interesting way to fund 
something you know you are going to spend money on because it 
frees up money to do things we may not necessarily need in 
other areas.
    Mrs. Capps. It also precludes some oversight.
    Mr. Ryan. If the gentlelady will yield, because you are the 
last speaker. We did put $50 billion in the budget. Now as a 
down payment on the next supplemental, I will be the first to 
tell you I don't think that is enough, but there was an attempt 
to try and acknowledge, at least in our baseline and our 
deficit projections, the cost of the war. I agree with Mr. 
Schatz. We should be seeking offsets for these things.
    Mrs. Capps. For the cost of the war?
    Mr. Ryan. I would love to cut the spending to pay for the 
war. I am not going to win on that point. We have attempted to 
offset the nonwar spending, and we have made some success on 
that.
    But I just wanted to make a point to you, which is the 
budget resolution that just passed has $50 billion in it as a 
down payment on the next war supplemental, so there is a 
recognition in the budget that the war will cost money. The 
administration never acknowledged that until, I think, this 
year. I think OMB put it in their submission. So we in the 
House have been recognizing that a lot longer than OMB has.
    Mrs. Capps. Let me ask, why is it that we want to offset 
the cost of the war with cuts to Medicare and Medicaid?
    Mr. Ryan. Who said we are cutting those to pay for the war?
    Mrs. Capps. Are there no other choices to pay for a war? 
Where is the sacrifice?
    Mr. Ryan. Well, I don't think anybody said cut Medicare and 
Medicaid. We have not cut them. We have only restrained the 
increase in spending on Medicare and Medicaid. So we have not 
been cutting Medicare an Medicaid.
    Let's stick with the topic at hand. I want to keep order 
here.
    Let me stop with this. I want to thank the witnesses for 
coming and presenting very articulate testimony. I think each 
of you raise a lot of insight into this issue. I think each of 
you raised some of the issues we are dealing with, which is a 
deferral authority, bundling duplicative submissions, all very 
important issues that we have to grapple with; and, yes, I 
think that there is some improvement in the fine-tuning area 
that needs to happen.
    I see Mr. Cooper.
    Let me just say two reasons why we are doing this and why 
we are talking about this.
    No. 1, this bill introduces a new element of transparency 
and scrutiny at the very stage in the process where it is 
lacking. Provisions which typically have not faced scrutiny 
hearings or good legislative oversight make it into the bills 
at the conference stage. Members of Congress have one choice, 
vote for or against the entire conference report. Oftentimes, 
you will find you want to vote for a bill because of other 
meritorious things like veterans, health care or something like 
that; and so, therefore, you are forced to vote for other 
things that are wasteful, unnecessary spending that haven't 
gone through committee process.
    The President has the same decision. Yes, it is a chainsaw.
    So let's take a veterans bill. The President can either 
sign it into law and get important things done like veterans 
health care or take a chainsaw and veto the entire bill because 
there are parts of it that never went through congressional 
scrutiny, never went through hearings, and are wasteful 
spending.
    I think we need to change the culture of the way we spend 
money here. This will not balance the budget, but this tool 
will bring more transparency, more scrutiny, more 
accountability at the very stage in the spending process where 
it is so lacking. That I think will help change the culture of 
spending here in Congress so we can get on to the bigger 
picture, get on to the bigger things, change our culture and 
talk to each other about how to actually balance a budget and, 
yes, prepare for the retirement of the Baby Boom generation 
which we are so ill-prepared for.
    I will control the time right now and then yield. Mr. 
Cooper raised his hand first.
    Mr. Cooper. Thank you, Mr. Chairman.
    I just wanted to ask Mr. Toomey because I think he said in 
response to Mrs. Capps a couple of times that deficits at the 
current level don't pose an overwhelming threat. I would just 
like to ask Mr. Toomey to speculate, what about deficits that 
were twice as large as those you acknowledge today?
    Mr. Toomey. It is hard to say on precisely what level the 
markets would start to say this is not sustainable and we need 
higher interest rates. I think the right way to look at this is 
not in absolute dollar terms but in terms of percentage of GDP.
    Mr. Cooper. I agree. Right now, it is 2.6 percent. What if 
it were 6.2 percent?
    Mr. Toomey. I think it is fair to say, based on other 
historical facts, if it looked like it would be sustained at 
that level, that would start to probably become problematic.
    Mr. Cooper. If it starts becoming a problem at the doubling 
level, what would it be like if it were 10 times larger?
    Mr. Toomey. I think it would be a very serious problem.
    Mr. Cooper. Let me point out to you that the U.S. 
Department of Treasury issued a report in December of last year 
that said the real U.S. deficit wasn't $319 billion for the 
year 2005, it was $760 billion, or 6.2 percent of GDP; and it 
seems to be climbing, according to that analysis. So you would 
indicate that would start being a problem.
    Mr. Toomey. The analysis includes really the way the 
counting occurs for the big entitlement programs.
    Mr. Cooper. Social Security and Medicare. It does include 
Civil Service retirement and some veterans benefits, but it 
completely excludes Social Security and Medicare. If you add 
those in, according to Harvard Law School Professor Howell 
Jackson, the 1-year deficit for America for 2005 was $3.3 
trillion, or 10 times larger than the acknowledged figure of 
$319 billion.
    Mr. Toomey. I would simply suggest that what we choose to 
acknowledge and how we describe it and whether we include the 
unfunded mandates and the accrual of those liabilities, when 
the entitlement programs--that matters much less than the real-
world observation of the marketplace and the judgment the 
market makes on the sustainability. Right now, the market is 
saying what we are currently doing is sustainable to the extent 
that 30-year bonds have 5 percent yields.
    Mr. Ryan. We are going way beyond line-item veto. You guys 
can have this conversation another time over in the corner if 
you want to. I want to just keep order here.
    Mr. Spratt has asked to be recognized, and at this time let 
me recognize Mr. Spratt.
    Mr. Spratt. Mr. Chairman, let me make an observation in 
light of what you said a minute ago.
    As I sat here listening, I was trying to discern what is 
our purpose. Is it to reduce, if not wipe out, the deficit? Is 
it to deal with this thing called earmarking? Or is it some 
other purpose? What is our objective here?
    What you suggest is, no, we probably won't do much more 
than dent the deficit at best. We might be able to control a 
bit of spending, but mainly it is to change the culture of this 
place. If that is our objective, then I think it probably ought 
to start here.
    The reforms we are focusing on should be more internal 
reforms, as opposed to going to the White House and have the 
White House superimposed upon our processes. Let's look around 
here.
    Let's be honest with ourselves. One of the problems we have 
with devising any truly strong budget controls is that we have 
something called the Rules Committee, which has almost 
unbridled authority when it comes to mowing down most of the 
barriers that we would put in place simply by overriding points 
of order and things of that nature.
    So if that is the objective--and I think you probably put 
it right, that should be the objective--then let's go at it 
from that point of view and deal internally with this 
institution, clean out our own closet before we go downtown and 
ask the President----
    Mr. Ryan. Let me reclaim time and summarize, just give you 
one example of how the Rules Committee did not waive points of 
order.
    Last week, we had a military quality of life bill which 
left unprotected $500 million in spending that occurred above 
the 302(b). Mr. Hensarling went to the floor with six points of 
order which were unprotected which were allowed in the rule and 
knocked that spending out.
    So the Rules Committee did not wipe this away. The Rules 
Committee allowed a Member of Congress, any Member of Congress, 
to go to the floor and literally wipe out $500 million in 
spending just last week.
    So I have would say that there are some positive 
developments in the culture around here. This would be yet 
another positive development in bringing more scrutiny, 
transparency and accountability to the budget process precisely 
at the stage where it lacks.
    Let me just conclude by thanking our witnesses for coming. 
I am just going to adjourn the hearing, and we can talk in a 
minute. Because we are way past the time we had planned on it. 
So I want to thank the witnesses for coming.
    This hearing is adjourned.
    [Whereupon, at 11:46 a.m., the committee was adjourned.]

                                  
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