[Senate Hearing 109-650]
[From the U.S. Government Publishing Office]



                                                           Hrg. 109-650
 
   S. 2381, A BILL TO AMEND THE CONGRESSIONAL BUDGET AND IMPOUNDMENT 
     CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION AUTHORITY

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               ----------                              


  May 2, 2006--S. 2381, A BILL TO AMEND THE CONGRESSIONAL BUDGET AND 
    IMPOUNDMENT CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION 
                               AUTHORITY

                                     
                                     



           Printed for the use of the Committee on the Budget
   S. 2381, A BILL TO AMEND THE CONGRESSIONAL BUDGET AND IMPOUNDMENT 
     CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION AUTHORITY


                                 ______
                                                        S. Hrg. 109-650

   S. 2381, A BILL TO AMEND THE CONGRESSIONAL BUDGET AND IMPOUNDMENT 
     CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION AUTHORITY

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

 May 2, 2006--A BILL TO AMEND THE CONGRESSIONAL BUDGET AND IMPOUNDMENT 
     CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION AUTHORITY

                                     
                                     

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                                   2
                        COMMITTEE ON THE BUDGET

                  JUDD GREGG, New Hampshire, Chairman

PETE V. DOMENICI, New Mexico         KENT CONRAD, North Dakota
CHARLES E. GRASSLEY, Iowa            PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               PATTY MURRAY, Washington
MICHAEL ENZI, Wyoming                RON WYDEN, Oregon
JEFF SESSIONS, Alabama               RUSSELL D. FEINGOLD, Wisconsin
JIM BUNNING, Kentucky                TIM JOHNSON, South Dakota
MIKE CRAPO, Idaho                    ROBERT C. BYRD, West Virginia
JOHN ENSIGN, Nevada                  BILL NELSON, Florida
JOHN CORNYN, Texas                   DEBBIE STABENOW, Michigan
LAMAR ALEXANDER, Tennessee           JON S. CORIZINE, New Jersey
LINDSEY O. GRAHAM, South Carolina

                  Scott Gudes, Majority Staff Director

                      Mary Naylor, Staff Director

 
                            C O N T E N T S

                               __________

                                HEARINGS

                                                                   Page
May 2, 2006--S. 2381, A Bill to Amend the Congressional Budget 
  and Impoundment Control Act of 1974 to Provide Line Item 
  Rescission Authority...........................................     1

                    STATEMENTS BY COMMITTEE MEMBERS

Chairman Gregg...................................................     1
Senator Conrad...................................................     2

                               WITNESSES

                               Panel One

Senator Byrd.....................................................12, 17

                               Panel Two

Cooper, Charles J., Cooper & Kirk PLLC...........................58, 61
Fisher, Louis, Specialist at the Law Library, Library of Congress77, 80
Marron, Donald B., Acting Director, Congressional Budget Office..49, 52
Smythe, Austin, Acting Deputy Director, Office of Management and 
  Budget.........................................................30, 32

                    ADDITIONAL STATEMENTS SUBMITTED

Senator Enzi.....................................................    95

 
   S. 2381, A BILL TO AMEND THE CONGRESSIONAL BUDGET AND IMPOUNDMENT 
     CONTROL ACT OF 1974 TO PROVIDE LINE ITEM RESCISSION AUTHORITY

                              ----------                              


                          TUESDAY, MAY 2, 2006

                                       U.S. Senate,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:38 a.m., in 
room SD-608, Dirksen Senate Office Building, Hon. Judd Gregg, 
chairman of the committee, presiding.
    Present: Senators Gregg, Allard, Sessions, Bunning, Ensign, 
Alexander, Conrad, Sarbanes, Murray, Byrd, and Menendez.
    Staff present: Scott Gudes, Majority Staff Director; and 
Jim Hearn, director of federal programs and budget process.
    Mary Naylor, Staff Director for the Minority; and Lisa 
Konwinski, Counsel.

            OPENING STATEMENT OF CHAIRMAN JUDD GREGG

    Chairman Gregg. We understand that Senator Byrd is on his 
way, but in order to expedite the hearing, because there is 
going to be a vote here at 10:45 and we have a number of 
excellent witnesses, we want to make sure everybody has an 
adequate amount of time. Why don't Senator Conrad and I make 
our opening statements and then hopefully Senator Byrd will be 
here by then.
    This hearing today is about the proposal of the 
Administration relative to what I call fast track rescission. 
Some people have called it line item veto. I do not think that 
is a proper title for it. Some people have called it 
impoundment. That certainly should not be the proper title for 
it. It should not be impoundment.
    But rather it is a proposal where basically the executive 
branch would say to the legislative branch here are some 
spending items, take another look at them and see whether or 
not you want to go forward with them.
    It is a proposal which, in concept, is an excellent idea. 
The fact is we need as a Government, to have different avenues 
to review spending and how we are spending the taxpayers 
dollars and be sure that we are doing it correctly and that 
those dollars are being spent appropriately.
    We know that as a Government we have a very serious problem 
with the deficit. We have a very serious problem with spending 
too much money, money that we do not have. And so anything that 
inserts into the process an opportunity to take another look at 
how much money we are spending, where we are spending it, and 
how we are spending it, and gives us an opportunity to review 
that in a constructive way is something that we should 
seriously consider.
    Obviously, the main issue here is the balance of power 
between the executive branch and the legislative branch. The 
legislative branch correctly has tremendous concern and a 
desire to maintain its authority over the purse. That is the 
key authority of the legislative branch, and transferring that 
authority to the executive branch in any significant way would 
be inappropriate.
    However, the proposal as it has come forward, if it were 
adjusted, in my opinion, in a number of substantive but not 
dramatic ways, does not represent, in my opinion, a dramatic 
shift in authority away from the Legislative to the Executive 
but rather, as I say, gives the Executive the chance to ask the 
legislative branch do you really want to spend this money and 
gives us the opportunity in the legislative branch to say 
either yes or no. And there are ways to do that which I think 
avoid the issue of impoundment, which is not appropriate, or 
the issue of line item veto which, although appropriate, is not 
constitutional unless the Constitution were amended.
    And so this fast track rescission proposal which the 
Administration has sent up is something we need to take a very 
serious look at. And I happen to think we should be able to put 
it in a form that the legislative branch will be comfortable 
with.
    We have excellent witnesses today on this point. Of course, 
Senator Byrd, when he arrives, is the leading authority in the 
Senate, if not in the country, on the issue of the prerogative 
of the Senate. I am sure he will have some very strong views on 
this proposal and we will look forward to hearing them.
    We have the Acting CBO Director here and the acting Deputy 
Director of OMB here, and a number of experts to give just 
their thoughts.
    So at this point I would yield to the Senator from North 
Dakota, the Ranking Member, for his thoughts.

        OPENING STATEMENT OF RANKING MEMBER KENT CONRAD

    Senator Conrad. Thank you very much, Mr. Chairman. And 
thank you for holding this important hearing.
    This is an area where we have very different views. I think 
it would be a profound mistake to adopt this proposal. The 
proposal that the President has made is not the answer to our 
budget problems. It would likely have little impact on the 
deficit but would significantly shift power from the 
legislative branch to the executive branch.
    The fact is under this Administration the deficits have 
skyrocketed, the debt is exploding. And that is because there 
simply has not been the will to put a fiscal policy in place to 
prevent those occurrences.
    Let me go to the first chart.

    [GRAPHIC] [TIFF OMITTED] T8460.001
    

    This is what has happened to the budget deficit under this 
President. We have had three of the largest deficits in our 
country's history.

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    The explosion of the debt is even more serious.
    Instead of paying down debt in preparation for the 
retirement of the baby boom generation, which the President 
promised, the debt has exploded. At the end of his first year, 
the debt was $5.8 trillion. It is headed for $11.8 trillion if 
the budget that is before Congress now is adopted.
    If that five-year plan is endorsed, we now anticipate that 
the debt will be $11.8 trillion by the end of 2011.
    The debt is increasing by more than $600 billion a year, 
every year over the next five years.
    The President's line item rescission proposal cannot 
replace a real commitment to reducing the deficit. Acting CBO 
Director Marron, who is one of our witnesses today, has noted 
that the proposal is unlikely to greatly affect the budget's 
bottom line.

[GRAPHIC] [TIFF OMITTED] T8460.003


    In testimony before the House Rules Committee he said, and 
I qoute, ``such tools, however, cannot establish fiscal 
discipline unless there is a politcal consensus to do so. In 
the absence of that consensus, the proposed changes to the 
rescission process are unlikely to greatly affect the budget's 
botton line.''
    A recent editorial in USA Today made essentially the same 
point. The President's proposal is not the answer to our budget 
problem. The editorial stated, and I quote, ``The line item 
veto is a convenient distraction. The vast bulk of the deficit 
is not the result of self-aggrandizing line items, infuriating 
as they are. The deficit is primarily caused by the 
unwillingness to make hard choices on benefit programs or to 
levy the taxes to pay for the true cost of Government.''

[GRAPHIC] [TIFF OMITTED] T8460.004


    Many analysts have noted that the primary result of the 
President's proposal would be to shift power from the 
Legislative to the executive branch. Columnist George Will 
wrote the following in a recent column in the Washington Post, 
and I quote, ``It would aggravate the imbalance in our 
Constitutional system that has been growing for seven decades: 
the expansion of executive power at the expense of the 
Legislature.''

[GRAPHIC] [TIFF OMITTED] T8460.005


    Let me just conclude by saying here are the problems that I 
see with the President's proposal. One, it fundamentally shifts 
the balance of power between the Legislative and executive 
branches.
    Two, it requires Congress to vote on the president's 
proposal within 10 days.
    Three, it provides no opportunity to amend or filibuster 
proposed rescissions.
    Four, it allows the president to withhold funds for 180 
days even if Congress disapproves of the rescission with a 
vote.
    Five, it allows the president to propose an unlimited 
number of rescissions at any time.
    Six, it allows the president to resubmit the same 
rescission again and again.
    Seven, it allows the president to cancel or modify 
mandatory spending proposals passed by Congress. If that is not 
an egregious, egregious expansion of executive power, I do not 
know what is.
    And eighth, the tax provisions are narrowly drawn, allowing 
the president to rescind only those tax measures affecting 
fewer than 100 people, while the spending provisions are 
broadly drawn, allowing the president to rescind any spending 
increase.

[GRAPHIC] [TIFF OMITTED] T8460.006


[GRAPHIC] [TIFF OMITTED] T8460.007


    Instead of this proposal, the President should be focused 
on fundamentally changing the failed fiscal policies he has 
embraced since taking office. That is the only way we are going 
to put our fiscal house back in order.
    With that, I very much look forward to the testimony of our 
witnesses, especially the testimony of our esteemed colleague, 
Senator Byrd, who is one of the most knowledgeable individuals 
in the country on the Constitution and the rules of the U.S. 
Senate.
    I thank the Chair.
    Chairman Gregg. Thank you, Senator.
    We will now turn to Senator Byrd. We appreciate his 
testimony today. As was mentioned by the Senator from North 
Dakota and myself, in my opening statement, Senator Byrd is the 
leading authority on the Senate's prerogative and the balance 
of power, one of the leading authorities in the country, 
certainly the leading authority in the Senate. His reputation 
for defending the prerogative of the Senate is second to none.
    We are interested in hearing his thoughts and know they 
will be very insightful and give us something to consider as we 
move forward.
    Senator Byrd.


 STATEMENT OF THE HON. ROBERT C. BYRD, A UNITED STATES SENATOR 
                FROM THE STATE OF WEST VIRGINIA

    Senator Byrd. Mr. Chairman, Plato thanked the gods for 
having been born a man, and for having been born a Greek, and 
for having been born during the ages of Sophocles.
    I thank the gods for having been born at a time when I 
could serve on the distinguished Committee and under such a 
distinguished and able Chairman, who always presides with a 
dignity that is as rare as a rose in June. And I am very 
privileged to appear before this Committee and this Chairman. 
That is what I have been talking about--
    I very much appreciate this opportunity to present my views 
on this in iniquitous act, the Legislative Line Item Veto Act, 
as proposed by the President.
    This is a subject that I view with the gravest concern. The 
Senate, to its eternal shame, once before approved a line item 
veto that would have eviscerated Congress's hold on the power 
of the purse, the power of the purse. The framers gave Congress 
the power over the purse. The power of the purse rests here.
    We are fortunate that the Supreme Court intervened to 
correct that egregious abominable error. We cannot count on the 
Court's being willing or able to do that again. This time 
around the Congress, and more particularly the Senate, may be 
the first, last and only line of defense.
    S. 2381 is an offensive slap at the Congress. It embodies a 
reckless disregard for the fundamental and sacred 
Constitutional principle of three separate and equal branches 
of Government. This bill, S. 2381, is anathema to the lawmaking 
powers granted to the Congress in Article I of the 
Constitution. As currently drafted, it would allow the 
president to roll over the procedures outlined in the 
presentment cause of Article I, Section 7 and effectively 
cancel individual tax and spending items in legislation by 
impounding such items indefinitely.
    Without exercising a veto, the president could effect the 
repeal of a law passed by the Congress, and then resist 
subsequent efforts by the Congress to ensure that law is 
carried into effect. S. 2381 is a thinly veiled attempt to 
circumvent the Constitutional test outlined in Clinton v. city 
of New York.
    S. 2381 would authorize the president, and all future 
presidents, to propose rescinding any item of mandatory 
spending, any item of discretionary budget authority, and 
certain targeted tax benefits enacted after the passage of S. 
2381, if it is enacted. It would require the Congress to vote 
on Presidential rescission requests within 13 days, without 
amendment.
    It would give the president complete control over the 
packaging and submission of rescission bills. It would empower 
the president to bundle hundreds of rescission proposals 
together or, if he chose, to submit them individually. A 
president could propose to rescind funds immediately after they 
are enacted into law, or decades after they are enacted into 
law.
    A president could even resubmit rescissions already 
rejected by the Congress.
    As proposed, S. 2381 would prohibit Members of Congress 
from offering amendments to the president's request. The 
Congress could not substitute its ideas for the president's 
ideas. Under S. 2381, members could only vote up or down on a 
measure of the president's choosing and they would effectively 
have to do so at a time of the president's choosing.
    This heinous proposal represents a complete and total 
abdication to the president of the legislative agenda with 
regard to rescissions.
    If a Republican or a Democratic president should decide to 
target an individual Member of Congress, this proposal would 
allow him to do that. The president could exert enormous, 
enormous pressure on individual members by targeting their 
spending and targeted tax items. Or he could curry favor by 
promising not to target those items. The president could submit 
and require votes on sensitive issues for members whenever he 
determined that such votes would be to his political advantage. 
The president could use this new leverage, be he Democrat or 
Republican or Independent, he could use this new leverage to 
squeeze, squeeze members. He could play election-year politics. 
It is a weapon that the president could use to threaten or to 
reward. And with the threat of that Damocles sword hanging over 
each member's head, the president could expect to have his way, 
his way on many issues.
    By permitting the president to package rescission proposals 
as he deems appropriate and prohibiting the Congress from 
amending the package, under S. 2381, Senators would be 
precluded from seeking a vote on individual items marked for 
rescission.
    If the president chose to send up a package containing 10 
rescissions the Senate would have to vote up or down on that 
package as a whole. Take it or leave it. Members would be 
denied their right to determine whether an individual item is 
an appropriate use of Federal funds and whether such an item 
deserves a vote.
    In a bizarre and grotesque twist of the presentment clause, 
it would be the Congress, the Congress that would have to 
accept or reject in toto a legislative package of the 
president's choosing, instead of the other way around.
    A Senator's right, a Senator's right to debate and to amend 
is what protects this body as a forum for dissent. And it is in 
this forum, and this forum alone, that a minority of Senators 
can put a bridle on a majority, at least for a little while 
until the country can be awakened to the mistakes that might 
otherwise be visited upon the people.
    We have no idea what kind of rescissions this or any future 
president will submit under the expedited procedures of this 
bill. Without the right to debate and amend, the Senate is 
inviting all future presidents to force their views and ideas, 
no matter how extreme, upon this body.
    Once proposed for rescission, under S. 2381, the president 
could impound funds for up to 180 days. That would quadruple 
the 45 day limit allowed for impoundment under current law.
    Given that the legislation simultaneously requires the 
Congress to act on the president's rescission proposals within 
13 days of their submission, this 180 day empowerment time 
limit is especially menacing and pernicious. Even if the 
Congress disapproves of the president rescission proposal, 
under S. 2381 the president is not obligated to release those 
funds for 6 months. The president could submit the same 
rescission proposal again and again, regardless of prior 
Congressional disapproval and thereby impound items 
indefinitely.
    In the case of discretionary budget authority, the 
president could impound funds until the pertinent 
appropriations law expires at the end of the fiscal year, 
effectively eliminating funding for any discretionary items 
which the president chooses.
    For the fiscal year 2006, $445 billion, $445 billion of the 
discretionary funds appropriated by the Congress are 1-year 
appropriations that will expire at the end of the fiscal year. 
This bill would allow the president by himself to effectively 
eliminate any of those funds by proposing to rescind, and then 
impounding them for 180 days at a time. By himself, with no 
legislative action whatsoever, the president could even 
eliminate a discretionary program supported unanimously by the 
Congress by simply deferring it and deferring it and deferring 
it to death.
    Our Constitution is based on a delicate balance of power 
between separate and coequal branches of Government, with the 
power of the purse in the hands of the people's representatives 
in the Congress, just as it should be. Under S. 2381 the keys 
to the U.S. Treasury would undeniably belong to the president, 
thereby eliminating the people's most effective tool to oppose 
a power hungry executive.
    Last year the President proposed terminating or reducing 
funding for 154 Federal programs and eliminated funding in his 
budget for discretionary items that were supported by both 
Republicans and Democrats. The Congress rejected 65 of the 
President's recommendations and restored funds in the annual 
appropriations bill for such items as Job Corps, essential air 
service, and Federal prison construction. Under S. 2381, the 
President could target those items for rescission and impound 
the funding indefinitely, without regard to a Congressional 
thumbs down on his rescission request.
    Under S. 2381, the president could also submit proposals to 
modify any item of direct spending, whether for Social Security 
and Medicare entitlements or veterans benefits, and those 
modification proposals would have to be considered under these 
same expedited procedures limiting debate and prohibiting all 
amendments. At any point after the enactment of this Act this 
or any future president could reach back and require the 
Congress to vote up or down, without amendments, on 
Presidential changes to entitlement benefits which are enacted 
after passage of S. 2381.
    Such broad authority could mean the loss of Social Security 
benefits. It could mean the loss of Medicare and Medicaid 
assistance. It could mean sweeping cuts in veterans benefits. 
Who knows what benefits may be targeted for rescission by a 
president not subject to the checks of the regular legislative 
process?
    This legislation, with its broad authority for the 
president to effectively cancel spending and tax items by 
indefinitely impounding them, despite Congressional 
disapproval, is clearly unconstitutional.
    This legislation, with its broad authority for the 
president to craft legislation and then force it down the 
throats of the Members of Congress without modification, is a 
gross, a gross distortion of the lawmaking powers granted to 
the Congress in Article I.
    If the Congress, God forbid, God forbid, were to approve 
this legislation as presented by the President and cosponsored 
by 29 Senators, it would forever put the Congress firmly under 
the thumb of a president.
    As every member of this Committee knows, the legislative 
process requires compromise and negotiation. Often legislation 
is enacted only because of a series of cooperative agreements 
that hold the bill together, that hold the bill together as a 
package. By empowering the president to pick those agreements 
apart and to modify or eliminate spending or targeted tax 
provisions, S. 2381 would allow the president to effectively 
create legislation that would probably never garner enough 
votes to pass the Congress.
    S. 2381 would fundamentally alter the legislative process 
forever and make the president legislator-in-chief.
    S. 2381 includes no sunset provision, none, no trial period 
to judge whether this new empowerment and rescission power is 
abused. It therefore leaves any future president the easy 
recourse of vetoing an attempt by the Congress to reclaim its 
previous authority. Without a sunset, it could require a two-
thirds vote of the Congress to override a Presidential veto and 
repeal this law. Even the equally ill-conceived and 
unconstitutional 1996 Line Item Veto Act had an 8-year sunset.
    Historically it is the Congress, not the president, which 
has achieved real savings through rescissions. Since the Budget 
Act was passed in 1974, the Congress has proposed and enacted 
$143 billion in rescissions compared to the $76 billion 
proposed by the president. Since 2001 the president has not 
proposed a single item for rescission under Title 10 of the 
Budget Act.
    This is a point that deserves our attention. President Bush 
has never proposed the rescission of any funds through the 
current Budget and Impoundment Act processes. He has never 
vetoed an appropriations or direct spending bill. The Congress 
has approved more than half of the $15.7 billion of the 
cancellations included in the President's budget submissions. 
In proposing changes to his rescission authority, the President 
cannot claim to have used his current authority to the fullest 
extent possible, nor has he even tried.
    I caution Senators, I caution Senators not to buy this 
tripe that the Administration is peddling, whereby the 
President's proposals are always good and the Congress's 
proposals are always bad. Presidents certainly enact their own 
earmarks, many of which may not withstand public scrutiny, 
while the Congress has been many earmarks that are critical and 
valuable investments of the taxpayer's money.
    Let me say just two examples. Senator Domenici initiated 
the Genome Mapping Project, a Congressional earmark that has 
resulted in extraordinary medical and scientific progress.
    Another Congressional earmark is now one of the most 
effective tools in the wars in Afghanistan and Iraq, known as 
the Predator Unmanned Aerial Vehicle. That program was 
initiated by Representative Jerry Lewis, now Chairman of the 
House Appropriations Committee.
    We must not allow the president to subjugate the priorities 
of the legislative branch to those of the Executive. The 
president has every right to protect his interest in the 
legislation before the Congress. Likewise Congress enjoys the 
same prerogative.
    The Constitution prescribes a system of Government that 
requires much more of the Congress than simply accepting or 
rejecting the president's proposals. The framers of the 
Constitution developed a system of Government that has 
sustained the Nation for centuries based upon the delicate 
balancing of power between the three branches. The power of the 
purse is the preeminent, the preeminent power in the 
Congressional arsenal. It guards against an all-powerful king, 
an all-powerful executive.
    U.S. Senators serve with, with I say, with, hear me, not 
under any president. The framers crafted a system that depends 
upon each branch defending its powers. The checks and balances 
come from that defense. There is no check, no balance if the 
Congress can be blackmailed and threatened by any chief 
executive to get his way.
    The power of the purse, entrusted to the Congress, is the 
ultimate, the ultimate check against the tyranny of an 
overreaching executive. It is the strongest bulwark of the 
people's liberties. If S. 2381 is passed as currently drafted, 
this unfortunate Congress will be remembered, yes remembered, 
yes remembered ignominiously as the Congress that gave away its 
mightiest weapon of protection for the people's liberties.
    In 1832, at the public dinner in Washington, D.C. on the 
centennial anniversary of George Washington's birthday, Daniel 
Webster spoke these words, this is what he said: ``If 
disastrous war should sweep our commerce from the ocean, 
another generation may renew it. If it exhaust our treasury, 
future industry may replenish it. If it desolate and lay waste 
our fields, still, under a new cultivation, they will grow 
green again, and ripen into future harvests. It were but a 
trifle even if the walls of yonder Capitol were to crumble, if 
its lofty pillars should fall, and its gorgeous decorations be 
all covered by the dust of the valley. All these might be 
rebuilt. But who, who shall reconstruct the fabric of 
demolished Government? Who shall rear again the well-
proportioned columns of constitutional liberty? Who shall frame 
together the skillful architecture which unites national 
sovereignty with state rights, individual security, and public 
prosperity? No, no if these columns ever fall, they will be 
raised not again. Like the Coliseum and the Parthenon, they 
will be destined to a mournful and melancholy immortality. 
Bitterer tears, however, will flow over them than were ever 
shed over the monuments of Roman or Grecian art; for they will 
be the remnants of a more glorious edifice that Greece or Rome 
ever saw, the edifice of constitutional American liberty.''
    [The prepared statement of Senator Byrd follows:]

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    Chairman Gregg. I thank the Senator for his insightful 
thoughts and appreciate especially his ending with a quote from 
a New Hampshire Senator--actually, it was not a Senator from 
New Hampshire but a New Hampshire person, Daniel Webster.
    Much of what he has said resonates, and I can believe can 
be addressed and still produce a bill that is reasonable, 
although it may not be acceptable to the Senator.
    But his points are well taken and obviously well presented 
and we appreciate his time.
    Senator Byrd. Thank you, Mr. Chairman. Thank you members of 
the Committee.
    Chairman Gregg. We are now going to hear from the Acting 
Deputy Director of OMB, Austin Smythe, who used to work for 
this Committee in his more youthful days, although he is still 
quite youthful. And we welcome him back to the Committee to 
testify on behalf of the Administration and present the 
concepts behind this legislation and look forward to hearing 
his thoughts.
    You might change his nameplate because, as much as he may 
have great thoughts, he is not Senator Byrd. Can we take that 
down so that we are not confusing the audience to the extent 
that they are looking at that.
    Thank you.


 STATEMENT OF AUSTIN SMYTHE, ACTING DEPUTY DIRECTOR, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Smythe. Chairman Gregg, Senator Conrad and members of 
the Budget Committee, thank you for inviting me to testify on 
the President's proposed Line Item Veto Legislation.
    Let me start by saying that Congress has made excellent 
progress over this past year on spending restraint. In line 
with the President's budget request, the Congress sent the 
President appropriation bills that held the growth of total 
discretionary spending below the rate of inflation and cut non-
security spending.
    In addition, Congress adopted 89 of the President-proposed 
154 cuts and terminations, saving $6.5 billion. And Congress 
achieved nearly $40 billion in mandatory savings over 5 years, 
the first time the reconciliation process has been used in 8 
years to slow the growth in spending.
    This important progress is often overlooked, however, 
because of the attention paid to specific earmarks or line 
items that have not been well justified. While some earmarks 
have significant merit and represent an improvement to the 
President's budget request, many are wasteful or go to low 
priority programs.
    As the President has noted, he wants the Congress to pass 
earmark reform. But the Administration believes we can make 
even greater progress together in restraining spending and 
focusing taxpayer dollars on a central priority.
    As you know, spending legislation usually comes to the 
president in the form of very large spending bills that 
frequently amount to tens of billions or hundreds of billions 
of dollars. The president is left with the choice of either 
signing bills that contain spending items he does not support 
or vetoing an entire bill that has many provisions that he 
agrees with on balance.
    In his State of Union Address, the President asked the 
Congress to give him the line item veto. The need for an 
effective line item veto has long been recognized by president 
and Members of Congress from both political parties. In 1996, 
with strong bipartisan support, the Congress gave President 
Clinton a very powerful line item veto but the Supreme Court 
struck down that law as unconstitutional in 1998.
    On March 6th the President transmitted to the Congress the 
Legislative Line Item Veto Act. This legislation is designed to 
do two things: first to give the president a tool to reduce 
unnecessary or wasteful spending; and second, to improve 
accountability and cast a brighter light on spending items that 
probably would not have survived had they not been included in 
a much larger bill.
    This line item authority would allow the president to reach 
into these bills and subject unjustified spending to additional 
public scrutiny without endangering other priorities. While the 
line item veto will serve as a tool to remove unjustified 
earmarks included in enacted legislation, we also hope it will 
aid in Congress's efforts on earmark reform by fostering 
additional accountability and transparency.
    We are confident that the version of the line item veto 
proposed by the President will survive any constitutional 
challenges. A critical difference between this proposal and the 
1996 Act is that the President's proposed rescissions would 
only take affect if Congress passed a new law implementing his 
proposals.
    Specifically, the Legislative Line Item Veto Act would 
provide the president the authority to single out unjustified 
discretionary spending, new mandatory spending, or new special 
interest tax breaks given to a small number of individuals. 
Under the proposal, the president would send a message with a 
proposed rescission bill to the Congress. The president's 
proposal would require the House and Senate to hold an up or 
down vote on his proposed rescissions within 10 days of 
introduction. The rescission bill would not be amendable, could 
not be filibustered in the Senate, and would be sent to the 
president for his approval with the support of a simple 
majority in each chamber.
    The critical features of this legislation are the fast 
track procedures that ensure the president gets an up or down 
vote on his proposed rescission and ensure that they are not 
nullified by delay or derailed by amendments.
    The Act also gives the president the authority to defer 
spend for up to 180 days the spending he proposes for a 
rescission to allow the Congress time to consider his proposal.
    The Act also gives the president the authority to release 
these funds prior to the expiration of the 180 days, enabling 
him to respond if, for example, one of the chambers rejects the 
president's proposed rescissions.
    In President's proposal is consist with current authorities 
granted to him by the Congress in other contexts, like trade 
promotion authority, and it addresses the Supreme Court's 
concern that the enacted 1996 Line Item Veto did not provide a 
sufficient measure of respect for Congress's primary 
constitutional role in revenue and spending matters.
    We are very pleased with the strong support the President's 
bill has received in the House and Senate. On March 7th, 
Majority Leader Bill First introduced the Administration's bill 
which, as of yesterday, enjoyed the support of 29 cosponsors.
    We have heard concerns about how the authority provided 
under this bill would be implemented. We want to work with 
Congress to address these concerns. But it is important that 
the ultimate product provides an effective means for the 
president to get an up or down vote on his proposed package of 
rescissions. We hope the Congress will move quickly to pass 
this legislation and give the president and Congress a tool to 
reduce unnecessary spending.
    With that, Mr. Chairman, I would be happy to respond to any 
questions the Committee may have.
    [The prepared statement of Mr. Smythe follows:]

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    [GRAPHIC] [TIFF OMITTED] T8460.054
    

    Chairman Gregg. Thank you very much.
    Since there are so many Senators here, we are going to 
limit the rounds to 5 minutes.
    There are a whole series of issues which are raised by this 
proposal. The concept, of course is to put forward the 
opportunity for the president to send up a series of items 
which he feels the Congress should take another look at and 
have the Congress have the authority to vote those items 
quickly and decide whether or not they should continue without, 
in the process, undermining what Senator Byrd has so 
appropriately pointed out, which is the authority which lies 
solely with the Congress, which is the power of the purse.
    There are specific points in the bill which I think are 
going to have to be addressed and corrected. For example, 180 
days. Clearly that can lead to impoundment. In my opinion it is 
going to have to be addressed.
    The issue of the inconsistency between the way spending is 
dealt with and tax authority is dealt with. Again, Senator 
Conrad raised this point and it is a valid point and it is 
going to have to be addressed.
    But in the more specific context, and Senator Byrd made 
this point I thought rather well and it is something that 
concerns me, is this question of the ability of the president 
to send up a rescission which could essentially rescind all of 
the discretionary accounts, for example, or he could attempt to 
rescind items again and again and basically control the 
Congressional calendar under the fast track procedure. Those 
issues need to be addressed.
    But in going to the underlying question, which is whether 
or not the rescission authority takes from the Legislative and 
moves to the Executive the power of the purse, I would like to 
hear the Administration's view as to why that is not the case 
and what is the defense on that constitutional issue, which is 
really at the essence of the debate.
    Mr. Smythe. Mr. Chairman, if you look back in 1996 what the 
Congress granted to President Clinton, that was an 
extraordinary tool in terms of what President Clinton had. If 
he chose to cancel provisions, it required a two-thirds vote of 
both houses of Congress to overturn his action. There is a span 
of options that the Administration could look at from what we 
could do in this area from expedited procedures to unilateral 
authority by the president to cancel spending.
    We chose toward the end of expedited procedures. The 
authority we are seeking today does not allow the president to 
act unilaterally. It requires the Congress to approve any 
rescission proposed by him, and with a simple majority of 
either the House or the Senate you can reject those proposals. 
So we do not see it as a dramatic shift.
    The other aspect, just to build on that point a bit, up 
until 1974 presidents frequently withheld funds, what were 
called impoundments up until 1974. Since 1974, with the 
enactment of the Budget and Impoundment Control Act, presidents 
have not had that authority. If they choose not to spend money 
they must propose a rescission or OMB has to release those 
funds for obligation to the agencies.
    The other thing that is occurred over time as you look at 
the budget, I think a case can be made that, in fact, the 
president's power over the budget is being diminished. One of 
the reasons that is the case is the fact that the budget over 
time, the budget that he signs into law each year is shrinking 
over time. Back in 1960 it was about 60 percent of the budget, 
was subject to the appropriations process. Today the president 
looks at about 40 percent of the budget in terms of what he 
must sign into law. The other 60 percent of the budget is 
entitlement programs and other mandatory spending that he has 
no ability to veto. They operate under permanent law.
    So we think we have come up with a proposal that is not a 
dramatic shift in power. It follows other existing procedures 
like trade promotion authority. And in the end it falls to 
Congress in terms of whether these are going to be implemented 
because it requires the Congress to pass a new law to implement 
the rescissions.
    Chairman Gregg. I think that is a good point to make, which 
is that so much of the budget is now off limits because it is 
entitlement activity. And I notice that this proposal addresses 
entitlement as well as discretionary as well as tax policy, but 
the proposal related to tax policy needs to be adjusted.
    Assuming we made the changes, some of which I have outlined 
and some of which will be, I am sure, discussed here as we go 
forward, would the Administration resist a prohibition on 
rescissions that were restatements of prior rescissions which 
had been rejected? In other words, sort of a one-time shot. And 
is it appropriate to characterize this more as a BRAC process 
than as a line item veto process?
    Mr. Smythe. Probably so. It has fast track procedures to 
approve the president's proposals.
    There have been a number of concerns raised about how this 
authority could be used. That is not our intent, to use the 
authority to offer multiple rescissions and indefinitely defer 
funds. That is not our intent. We want to work with Congress to 
limit the president's ability to choose to do that such that it 
could not be used to offer multiple rescissions after Congress 
had rejected a proposed rescission on an item.
    There are a number of other things have been raised. I can 
go through those. On the 180 days, we chose that period. It is 
the outer limit. The current Budget Act provides that--it was 
enacted before a decision called INS v. Chadha and provides 
that the president can defer money but that deferral is tied to 
the legislative calendar.
    We have been advised by the Justice Department that there 
is a constitutional problem with that under the one house veto 
approach in INS v. Chadha.
    But again, if there are concerns with the 180 days, we want 
to address those concerns. We want this mechanism to operate 
such that the funds would only be deferred for the period until 
Congress acts to reject them. And then it would be our 
intention to release them.
    I can go on and on and on. There has been concern about we 
might propose thousands of bills or hundreds of bills and tie 
up the legislative calendar. Again, that is not our intent, to 
tie up the legislative calendar. We want to give the president 
some discretion in terms of the number of bills and we would be 
willing to work with Congress to limit the number of bills that 
he could propose after an appropriations or direct spending or 
tax bill was enacted because we do think it is important to 
have some discretion on the number.
    But if the Congress is concerned about potential abuse in 
this area, we want to work with them, with you, pardon me Mr. 
Chairman, to limit the number of bills that could be proposed 
under this authority.
    Chairman Gregg. Thank you. Senator Conrad.
    Senator Conrad. Thank you, Mr. Chairman. Thank you, Mr. 
Smythe. It is good to see you back before the Committee.
    Under the Impoundment Act, how many rescissions has this 
President sent to Congress?
    Mr. Smythe. We have not sent any rescissions under Title 10 
of the Impoundment Control Act. We have proposed to cancel 
spending, which operates exactly the same way. A cancellation, 
it is just the wording is, instead of the statutory language 
saying that the money is rescinded, it has precisely the same 
legal effect. We propose to cancel funding that has been 
appropriated.
    Senator Conrad. But under the Impoundment Act there have 
been no rescissions submitted by the Administration.
    Let me just tell you what concerns me, and whether it is 
this president or another president is not the point to me at 
all. What concerns me, and I think should concern every one of 
our colleagues, Republican or Democrat, is this scenario.
    The president calls up a member, and I will personalize 
this, calls up me and says Senator, I have a controversial 
Supreme Court nominee and I need your vote. And by the way, 
Senator, you know it is time for rescissions and my staff has 
just handed me a list of matters in your state that are 
critically important to you. And my staff is recommending that 
I rescind these projects in your state. Now Senator, the two 
are not connected. You understand that. But as I am busy and I 
have only got the chance for one phone call, can you help me on 
this Supreme Court nominee?
    Now that is an extraordinary leverage that any president 
would be given under this Act. And when you say well, they 
would be able to, Congress would be able to overturn it, as I 
read this, the way you have done this is very clever. But the 
president would be able to defer spending for 180 days ad 
infinitum, not once but repeatedly. Even if Congress has voted 
to overturn the president's rescission.
    This looks to me like a power grab of stunning proportion. 
What would protect the current constitutional power of Congress 
against a president--and we will not say this president, a 
future president--who might decide to use his leverage in the 
way I have described. What would prevent a president from doing 
that?
    Mr. Smythe. Two things you raise. First of all, the issue 
of how Congress can respond. It is important to look back at 
the 1996 Law where Congress, on a bipartisan basis, gave 
President Clinton the authority where----
    Senator Conrad. That was unconstitutional. Deal with the 
question I am asking.
    Mr. Smythe. But the issue is in terms of what has Congress 
already chosen to give the president. In 1996 Congress gave the 
president the authority to allow him----
    Senator Conrad. But that was unconstitutional. Mr. Smythe, 
I have asked you a very direct question. Please respond to the 
question I have asked.
    Mr. Smythe. Under this proposal--it is difficult to respond 
to it because there were cases where President Clinton's vetoes 
were overturned. There was a military construction bill where 
Congress garnered the votes, two-thirds of both houses----
    Senator Conrad. I am not talking about--you keep wanting to 
talk about the past. I have given you a very specific situation 
where a president uses the power conferred by this legislation 
to leverage a Member of Congress on another matter. And I have 
asked you very directly what protects against the president 
using this power in that way? Can you respond to that question?
    Mr. Smythe. If an individual member gets a simple majority 
in either house, they can defeat the president's proposals. 
They are not implemented.
    Senator Conrad. But the president can extend by 180 days--
--
    Mr. Smythe. I have already stated that is not our intent. 
We want to tie this----
    Senator Conrad. But that is in what the proposal is.
    Mr. Smythe. We want to work with the Committee and with the 
Congress to make sure if there is a concern about that to limit 
the deferral of funds and try to find a way to try tie them to 
Congress's action. We have not been able to come up with a 
constitutional way to do that but we do not intend to have the 
deferral extend beyond Congress's action to reject a proposed 
rescission. We do not intend to, after Congress rejects a 
rescission, to offer the proposal again and again and again as 
you have suggested. That is not our intent.
    Senator Conrad. I would just say with this to you, and my 
time has expired, that may not be your intent but that is 
precisely what this legislative proposal would allow.
    Chairman Gregg. That is true and that will be changed.
    Senator Allard.
    Senator Allard. Mr. Chairman, I want to thank you for 
holding this hearing. I think this is a very important hearing. 
I think it is also a very important issue that we have before 
us. And I would agree with you, Mr. Chairman, it is actually an 
enhanced rescission, not a true line item veto. So in this 
piece of legislation, we are not granting to the president the 
same powers as though it was a line item veto, which we provide 
to a large number of Governors throughout the United States.
    I think if we look at what happened in the state 
legislature, I think that we would find that there is a decent 
balance between the legislative branch and the Governor, in 
which case I think that same balance can be established between 
the legislature and the Congress--I mean the Congress and the 
president.
    I think that the benefit of this particular piece of 
legislation is that it does bring more accountability to the 
budget process. I do think we have to have more accountability. 
I think that spending is out of control. And I think that we 
need to do more to rein in that spending. If that means that we 
have more oversight on the spending side, then I am willing to 
grant the president some limiting powers to do that.
    I also agree with the Chairman that we need to have some 
modifications on the proposal that is before us. For example, 
we do not want to let the president--the 180 days, I think, is 
a classic example.
    And my question to you, Mr. Smythe, is when this was 
drafted, was the intent originally was just to limit it 100 
days. And the fact that this could be perpetually extended, was 
that overlooked by the Administration in putting this proposal 
forward?
    Mr. Smythe. There are two aspects about the bill. The 180 
days refers to calendar days. The 10 days or 13 days that 
Congress has to act on legislation refers to days that Congress 
is in session. So we had a concern that we did not want a 
situation where the time for deferral would run out and the 
administration would have to obligate the funds and Congress 
would not have the opportunity to act because there can be 
cases where Congress passes an appropriation bill in early 
October, in election years for example, and then goes on recess 
until January, sometimes not coming back until late January, 
where you can have extended periods of time of much more than 
just 10 days or so.
    That was the issue. We view the 180 days as the outer limit 
in terms of what would be needed for the deferral of funds.
    And as I have stated before, our preference would be, our 
policy preference was too tie the deferral to one house acting 
to reject it. We could not find a constitutional way to do 
that. We want to work with the Congress. This concern of the 
180 days has come up over again. We want to work with you to 
find a way that ensures----
    Senator Allard. So your intent, and the Administration's 
intent, was just have one shot at the apple, so to speak, the 
180 days, and not to have this repeated over and over again?
    Mr. Smythe. That is correct.
    Senator Allard. I think that is important for us to move 
forward in our discussions with the Administration on what 
might be an appropriate way to amend this piece of legislation.
    Was there any intent--on the number of items, do you think 
it is appropriate to limit the president to the number of 
items? There has been some questions raised about, do you put 
the rescission to the whole piece of legislation or do you 
select sections out of there? What was the intent of the 
Administration proposing that?
    Mr. Smythe. Our intent was not to submit a multitude of 
rescissions and tie the Congress in knots. That is not our 
case. When you look at appropriation bills, they vary in terms 
of size. The Labor/HHS appropriations bill is a $141 billion 
bill. It covers at least three departments, probably more than 
that.
    Senator Allard. I think more appropriately, you ought to 
look in on omnibus bill.
    Mr. Smythe. Or even an omnibus bill. So we thought it was 
useful for the president to have some discretion to send up 
more than one rescission, to not just limit it to just one 
rescission per bill.
    Again, our intent is if there is a concern that this could 
be abused by an administration, to set up a multitude of 
rescission bills and tie up the calendar, that is not our 
intent. And we want to work with you to provide a limit if you 
want to do that.
    Again, our concern is that the president will be left with 
some discretion to propose more than one bill.
    Senator Allard. Mr. Chairman, I see my time is expiring. 
Thank you.
    Chairman Gregg. Senator Sarbanes.
    Senator Sarbanes. Thank you very much, Mr. Chairman.
    Mr. Smythe, I have to judge your intentions by what is in 
the bill. I have to look at the bill and read the bill. You all 
drafted this bill, did you not? Who drafted this bill?
    Mr. Smythe. Yes, sir. We drafted--the Administration 
drafted----
    Senator Sarbanes. Who is we?
    Mr. Smythe. The bill was drafted primarily by the Office of 
Management and Budget but we worked with other agencies in 
terms of developing legislation.
    Senator Sarbanes. OK. Now as I understand this bill, and I 
just want to go through and make sure I understand it, the 
president can submit a rescission, for 180 days. If that is 
rejected by the Congress, can the rescission stand for 180 
days?
    Mr. Smythe. The rescission cannot. The deferral of funds 
can stand for up to 180 days. The bill does provide----
    Senator Sarbanes. We could reject it right off the bat and 
the president could defer the funds for 180 days. Is that 
correct?
    Mr. Smythe. That is correct.
    Senator Sarbanes. Now my next question. He sent up one of 
these deferrals. It is rejected, 180 days pass. Can he send the 
same deferral and defer it for another 180 days?
    Mr. Smythe. Yes, but that is not our intention.
    Senator Sarbanes. Wait a second. Is that in the bill?
    Mr. Smythe. The bill provides that authority. That is not 
our intention to use----
    Senator Sarbanes. Who drafted this bill?
    Mr. Smythe. The Administration drafted the bill.
    Senator Sarbanes. All right. Now how can you come in here, 
having drafted the bill with these egregious provisions, and 
then say well, that is not our intention?
    What is the level of competence in drafting this 
legislation if you come to the table, the witness table here 
this morning, and immediately you start going through a 
recitation of these things that are obviously very serious 
problems and say well, that is not our intention, that is not 
our intention, that is not our intention.
    Under this legislation as written, the president could 
completely negate Congressional action. Is that correct? By 
just doing one deferral after another. Is that not the case?
    Mr. Smythe. The president has the authority to offer more 
than one rescissions. When we drafted this bill--it is 
important to note that when we drafted this bill, that under 
the Budget Act, under Title 10, the president can propose a 
rescission at any time. We looked to Title--the existing 
authorities in Title 10 in terms of deferral authority and so 
forth.
    Again, I think you could probably look at any statute that 
provides discretion to an administration and you can point out 
theoretically there could be enormous abuse under any statute 
that the president----
    Senator Sarbanes. No, no, no. Some statutes that are well 
done do not permit an incredible abuse. That is the whole art 
of crafting legislation.
    You are telling me that you formulated something and then 
you come in here this morning and say there are all these 
problems with it. And yet you send it up here that way?
    What about the problem of flooding the Congress with these 
Presidential proposals so that the Congress is completely tied 
up addressing these deferrals sent by the president? How many 
deferrals can the president send?
    Mr. Smythe. There is not a limit in terms--just like under 
the Budget Act, there is no limit in terms of the number of 
rescissions that the president can propose under Title 10. He 
can propose an unlimited number.
    Senator Sarbanes. For 45 days?
    Mr. Smythe. No. The period for the funds are deferred for 
45 legislative days but he could continue to propose 
rescissions one after another and tie up the entire amounts 
appropriated by proposing to rescind under Title 10. We have 
chosen not to do that.
    Senator Sarbanes. I thought you listed that as one of the 
problems you are prepared to concede up front this morning with 
this proposed legislation. You sat there at the witness table, 
I was sitting here increasingly astounded at this testimony, 
and even more so now that I have ascertained that the 
legislation was drafted in your shop, that you are the supposed 
craftsman of this legislation.
    And I am sitting here this morning and you are down there 
saying there is this problem but that was not our intention. 
There is this problem but that was not our intention. There is 
this problem but that was not our intention.
    How am I to read your intentions? I look at the legislation 
and the legislation is enough to curl your hair.
    Mr. Smythe. I guess all I can say, Senator, is we want to 
address those concerns. That is not our intention to use the 
authority in the manner you have described and we want to 
address those concerns.
    Senator Sarbanes. The Budget Act says funds made available 
for obligation under this procedure may not be proposed for 
rescission again, with respect to an answer you just gave me a 
minute or two ago.
    Mr. Smythe. Pardon me, I may have stated incorrectly. What 
I intended to say was that the president had authority to offer 
a multiple number of rescissions. There was no limit in terms 
of how many rescissions.
    Senator Sarbanes. Can he offer the same rescission again, 
under the existing law?
    Mr. Smythe. Not under Title 10.
    Senator Sarbanes. Can he offer the same deferrals again 
under your proposed legislation?
    Mr. Smythe. Yes, but as I stated, that is not our intent.
    Senator Sarbanes. Mr. Chairman, my time is up.
    Chairman Gregg. The Senator has raised three valid points. 
And the Senator was not here when I made my opening statement 
but I listed about five valid points, or six or seven.
    Senator Sarbanes. The point I want to make is not just the 
substance of them but the ineptness in the drafting of the 
legislation, and the witness coming before us. And it was done 
in his shop. And the first thing he does is start enumerating 
all of the problems with it. And he tries to explain it away by 
saying that was not our intention.
    They drafted the legislation. What was the intention when 
you drafted it?
    Chairman Gregg. That may be the Senator's point. If that is 
the Senator's point, I am not on his side.
    But on the issue of substance, when we get to a markup of 
the bill, some of the points the Senator made will be 
addressed.
    Senator Sarbanes. It does go to the question of competence, 
obviously.
    Chairman Gregg. Senator Allard. I am sorry, Senator 
Alexander.
    Senator Alexander. Thank you, Mr. Chairman.
    Mr. Smythe, as I understand it, you have said here is a 
proposal from the Administration. The Chairman has suggested 
some improvements in the legislation, which is what we do in 
the legislative process, usually with suggestions from the 
Administration. You have said that you are open to these 
changes and some additional changes.
    I would assume that among those changes are that if there 
are constitutional ways to say that the president would not 
intend to make multiple recommendations of the same item or if 
the 180-day limit seems too long, that those are areas you are 
open to change. Is that correct?
    Mr. Smythe. Yes, sir.
    Senator Alexander. It seems like I remember that in the 
U.S. Senate it is often the case that we Senators offer an 
amendment on the floor and we send to the desk sometimes 
changes in our own amendments. We have a right to do that. We 
do that after we learn from other colleagues or other places 
that what we might have originally thought could be improved.
    I know when I was Governor, I found out early in my term 
that the legislature often changed what I proposed. And I just 
learned to accept those as improvements in what I had 
suggested. It kept my blood pressure down quite a bit during 
the 8 years I was there.
    I have this question. Would the Administration still 
support enactment of this bill if it did not become effective 
until July 2009, the start of the 111th Congress, and after the 
next Presidential election?
    Mr. Smythe. The President made it very clear in the State 
of the Union and when he transmitted this bill that he wants 
this authority. We want this authority for this president.
    Senator Alexander. Should this legislation include an 
expiration date so that we give a period to see how it works 
and then have the option of reauthorizing it, rather than 
having to repeal it if problems develop?
    Mr. Smythe. Our very strong preference would be that this 
legislation be provided not only for this president but for 
future presidents, as well.
    Senator Alexander. Do you consider this a partisan 
proposal? Or do you know of Democrats who have endorsed the 
idea?
    Mr. Smythe. When we were looking at the various proposals 
of how you can do a line item veto, and there are a number of 
different ways that this could be crafted. There is something 
called a separate enrollment. There is a view that you could 
give the president the authority to defer funds. Again, both 
would require a two-thirds vote.
    We took a look at what Senator Kerry had proposed during 
the campaign which, was more of a fast track type procedure. So 
he supported this proposal in the past.
    The line item veto in general has enjoyed broad partisan 
support in the past from Democratic and Republican presidents 
alike.
    Senator Alexander. Is it not true that 43 states now have 
so-called line item authority?
    Mr. Smythe. Yes, sir.
    Senator Alexander. And would the line item veto authority 
that these states have be broader than the kind of authority 
that you are proposing that the president have?
    Mr. Smythe. It ranges a great deal in the states. But I 
think as a general matter the Governors have a more powerful 
tool in terms of what the line item veto authority has, as 
compared to this proposal.
    Senator Alexander. Is it true that in most states, if not 
all states, budgets are balanced?
    Mr. Smythe. They do their budgets differently but yes, they 
balance their budgets.
    Senator Alexander. Why would a budget reform that works 
well in 43 states to help provide balanced budgets not be worth 
trying at the Federal level?
    Mr. Smythe. We very much want this authority as a tool to 
help reduce spending.
    Senator Alexander. I agree with the comment of the Chairman 
at the beginning that we have a great many forces on the 
Congress that encourage spending. I think we need some more 
forces that encourage restraint in spending.
    One such opportunity is a line item veto or some version of 
it such as the one you have suggested. Another might be 2-year 
budgets or 2-year appropriations which would give Members of 
Congress an opportunity to use the odd year, every other year, 
devoted primarily to oversight, when we might consider the laws 
we passed, consider repealing them, reducing them, changing 
them, improving them. Has the Administration given any thought 
to the idea of 2-year budgets or 2-year appropriations?
    Mr. Smythe. Each of the President's budgets have proposed 
that the 2-year appropriations and budget process, moving to 
that change. I would note however that on this proposal the 
President, during his State of the Union, asked for the line 
item veto bill. We submitted a separate bill on that proposal. 
And we are very much interested in getting this bill enacted 
into law and the line item veto authority enacted into law.
    We do support biannual budgeting, though.
    Senator Alexander. Thank you, Mr. Chairman.
    Chairman Gregg. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    I, having listened to both Senator Byrd and the answers to 
some of the questions, and to my original review of the bill, 
it just seems to me that what you pursue here on behalf of the 
Administration moves us closer and closer to this theory of a 
unitary president and makes it extremely dangerous.
    Let me ask you, in Section 1021 of the bill, what do you 
mean by the language of modify?
    Mr. Smythe. Regarding direct spending?
    Senator Menendez. Yes. On Section 1021, in the definitions 
under rescind the decision, are defined to mean to ``modify or 
repeal a provision of law to prevent A, budget authority from 
having legal force or effect; B, in the case of entitlement 
authority, to prevent the specific legal obligation of the 
United States from having legal force or effect; and C, in the 
case of the Food Stamp Program, to prevent the specific 
provision of law that provides such benefit from having legal 
force or effect.''
    Mr. Smythe. In the case of discretionary spending, 
discretionary appropriations, it would have the effect of 
either reducing or eliminating the appropriation, changing the 
statute to either reduce the appropriation or zero out the 
appropriation if we were to propose to rescind the entire 
amount.
    Direct spending is a different case because direct spending 
bills, we will measure the impact relative to a baseline. This 
authority does not apply to current law. So all existing 
entitlement programs with respect to Medicare, Social Security 
and Food Stamps and so forth, this does not apply to any 
existing law.
    If however, Congress passed a new law that expanded 
mandatory spending then the president would have the authority 
to come back and propose that that spending, that additional 
spending, be either eliminated or reduced.
    Senator Menendez. It seems to me that the way that that 
whole section is structured, that authorizing the president to 
propose the rescission of any dollar amount of discretionary 
budget authority, in whole or in part, and then later looking 
at the definitions of rescinding or rescission as defined to 
mean to modify or repeal a provision of law under those 
sections that I cited before ultimately appears to be something 
much more than repeal.
    It seems to me that it would be contemplating giving the 
president authority to rewrite mandatory programs defined by 
the Congress.
    Are you not having language that is broad enough to go 
beyond the question of how much is actually spent in changing 
the legislative intent of the Congress under that power of 
modifying?
    Mr. Smythe. The way we would interpret the law in terms of 
applying it is that we would only be allowed to propose changes 
that eliminated the new spending that was created in a 
mandatory bill. We would not have the authority to go back and 
change the underlying law. We would only be able to go back and 
change what new spending was added.
    Senator Menendez. Could the president potentially change 
various and specific provisions of a new entitlement program 
under your modifications?
    Mr. Smythe. If it created new mandatory spending, yes.
    Senator Menendez. So then ultimately it----
    Mr. Smythe. To reduce, reduce or eliminate.
    Senator Menendez. It seems that modify, in this regard, it 
seems to me to be so broadly defined that you could change 
various and specific provisions of a program that the Congress 
itself decided to have that goes far beyond the questions of 
how much money will be spent but goes to the very essence of 
the legislative intent of what Congress intends to have as it 
relates to an entitlement of an American to a specific set of 
services and/or privileges. And that is a broad expansion, 
beyond what has already been mentioned here.
    Mr. Smythe. In the case of entitlement programs, and the 
Director of CBO could speak to this, they do cost estimates on 
bills all the time. But frequently, with respect to direct 
spending or mandatory spending, you can have cases where you 
have interaction between different provisions of bills.
    Mandatory spending bills usually do not provide a lump sum 
or an amount like an appropriation bill. They usually deal with 
changes in terms of eligible populations, the nature of 
benefits and so forth, the timing of those benefits. And as a 
result, the estimates, in terms of their budget impact and what 
their actual budget impact is, is based on the interaction of 
those provisions.
    Senator Menendez. I think you need some really greater 
tightness in your definitions. Because while the president 
would like to have unfettered power, that is not the essence of 
the constitutional democracy we have enjoyed in this country. 
And the language in this bill, as presently defined, is so 
broad, you might argue that it is both your intention--we know 
that the road of good intentions sometimes lead us very often 
far from where the good intentions meant us to go to as a goal.
    But I have to be honest with you, this modify provision, in 
addition to the others, are just so broadly defined that it 
allows for enormous potential power which would really be, in 
my mind, a violation of the very underpinnings of what is the 
check and balance between the Congress and the executive 
branch.
    Thank you, Mr. Chairman.
    Chairman Gregg. Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman.
    Mr. Smythe, I have long supported giving the president, 
regardless of party affiliation, line item veto authority. S. 
2381 would allowed the president to withhold budget authority 
proposed for rescissions for up to 180 days even if the House 
and Senate objected.
    Why do you believe that the president's 180 days 
discretionary authority in this legislation is constitutional?
    Mr. Smythe. The Congress has granted the president the 
authority to defer funds in the past, so we do not think there 
is a question----
    Senator Bunning. I know that. I voted for it.
    Mr. Smythe. We do not think that there is a constitutional 
issue with respect to deferring the funds for up to 180 days. I 
have already responded to the question about the concern of the 
180 days. We view that as the outer limit, in terms of the 
amount of time, that money would be deferred. And our 
intention--and the bill actually provides clear authority to 
the president, to release funds prior to that if either house 
were to reject the president's proposed rescissions.
    Senator Bunning. I was here when the last line item veto 
was passed and given to William Jefferson Clinton at the time. 
And I do not know of one instance that Bill Clinton, as 
President of the United States, ever made a phone call to 
somebody and threatened them with rescissions or with line 
items scratched out of their state or their district--I was in 
the House at the time--in regards to the power of the president 
having line item veto.
    Do you know of any case like that?
    Mr. Smythe. I cannot speak to what the Clinton 
Administration did. I am not aware of how they arrived at their 
decision. My impression was that they did their best to put 
forward proposals. That is not our intent, to use it in that 
manner. We would use it to go after spending that we felt was 
not justified, was not a high priority, that in the context of 
our fiscal situation that the Congress should look at 
rescinding.
    Senator Bunning. How does this legislation provide the 
president and Congress another tool to address the problem of 
large increases in the number of earmarks that Congress has 
added to the bills?
    Mr. Smythe. According to CRS, there has been a large growth 
in earmarks, I think on the order from about 4,000 in 1994 up 
to about 14,000 in 1995. Again, as I stated in my testimony, 
earmarks are not necessarily bad or wrong that Congress 
provides.
    Senator Bunning. I will agree with you 100 percent on that.
    Mr. Smythe. But there are cases where there are earmarks 
that are added to bills that we feel may not be well justified, 
that they may have been added late in the process. In those 
cases where we feel an earmark does not have full justification 
and is not a priority, it would be something that we would look 
at and possibly propose for rescission.
    Senator Bunning. Does this line item legislation allow the 
president to propose the repeal of language in a bill that does 
not explicitly provide funding? For example, a bill that 
contains language stating that none of the funds may be used 
for specific purposes?
    Mr. Smythe. It does not provide that authority.
    Senator Bunning. It does not?
    Mr. Smythe. Correct.
    Senator Bunning. In other words if----
    Mr. Smythe. We could not use this authority to strike a 
funding limitation.
    Senator Bunning. Does S. 2381 provide the president with a 
wide range rescission authority that includes the ability to 
cancel or modify mandatory spending items? If so, why does the 
authority for mandatory spending need to be broader than any 
for discretionary provisions?
    Mr. Smythe. The authority for mandatory spending is only 
for new mandatory spending.
    Senator Bunning. I understood what you said to Senator 
Menendez.
    Mr. Smythe. It would not apply to existing entitlement 
programs. And even programs that expire, like the Food Stamps, 
when they are extended it would apply to the extension of 
existing mandatory programs.
    It would, however, apply to an expansion in existing 
mandatory program or the creation of a new mandatory program. 
We think it is important that this authority apply not only to 
the appropriation side of the budget, which is 40 percent of 
the budget, but also apply to new mandatory or expansions in 
mandatory spending.
    Senator Bunning. Well, I can tell you this. There are some 
of us that sit on this side, away from the great office of OMB, 
that think that this legislation is off to a bad start because 
of the language in the legislation, 180 days, 13 days, and 
things like that. But we want to clean it up. But we want your 
cooperation if we clean it up because we want to pass it when 
it gets to the floor of the U.S. Senate. And the way it is 
written is never going to get past the U.S. Senate.
    Thank you.
    Chairman Gregg. Senator Ensign.
    Senator Ensign. Thank you, Mr. Chairman.
    This is a very important hearing and discussion. The reason 
we are here is because we have huge annual budget deficits and 
a huge national debt that we are passing on to future 
generations. Members of Congress complain about it but with 
each year that goes by we do nothing and things just get worse.
    I listened to Senator Conrad talk about the scenario with 
the President exercising considerable power and influence. I 
think that is a legitimate concern.
    But consider our current practice in the Senate and House 
with respect to the appropriatons process. If you do not vote 
for the appropriators bills, the appropriators threaten that 
they will not put any projects in the bill for your state.
    So when Congress is looking at reforming the spending 
process, I hope we will truly consider earmark reform. The 
spending process is broken because of the imbalance of power 
that exists right now between the authorizing committees and 
the appropriations committee in the House and the Senate.
    I believe, and have always thought, that if earmarks are 
considered in the light of day, if there can be transparency, 
if you can stand on the floor of the U.S. Senate and justify 
your earmark, fine. It is the earmarks that get put in without 
scrutiny, that are done as a little favor, that people do not 
want to have subjected to the light of day are problematic.
    The other problem relates to the number of earmarks, which 
result in increased spending. Often that spending is not in the 
budget. Supplementals have not kept down the level of spending 
set in the budget. They further drive up spending. The use of 
supplementals is out of control.
    The Chairman had a great op-ed in the Wall Street Journal 
addressing the second budgets that occur with supplementals. It 
is a serious, serious problem that we have to get under 
control.
    There are problems with your legislation. I support the 
intent of your legislation. Several other members of this 
committee do as well. We want this bill as a tool to control 
spending. That is the bottom line.
    I do not have to reiterate some of the problems. They have 
been clearly laid out. Some of the problems with the 
legislation can easily be fixed.
    The idea that 302(a) allocations have to be adjusted within 
5 days by the Budget Committee, is the intent to make sure that 
that money is not taken from one program and spent someplace 
else?
    Mr. Smythe. That is correct.
    Senator Ensign. So the intent is not just to rearrange 
spending. The intent is actually to bring some kind of fiscal 
sanity into the budget process, into the appropriations 
process?
    Mr. Smythe. Yes, sir.
    Senator Ensign. Thank you.
    Mr. Chairman, I think that as part of the whole budget 
reform, and getting spending under control, we have to look at 
this proposal. And I am glad that we are having this hearing 
today. But there are a lot of other problems. I mentioned the 
earmark reform as being part of it. The way that we treat taxes 
versus the way that we treat entitlements is another aspect 
that should be addressed. We need to consider biannual 
budgeting.
    I think that all of those reforms need to be on the table 
when we are talking about reform because some Senators think 
that spending is out of control. Unfortunately, legislators are 
thinking more about reelection than they are thinking about the 
future and the future consequences of this debt they we are 
leaving to our children.
    I support the Administration's effort and I look forward to 
working with you and with the Budget Committee on these 
reforms.
    Thank you, Mr. Chairman.
    Chairman Gregg. Thank you, Senator.
    There is a vote on relative to cloture.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman. Thank you for 
your leadership and your concern for integrity in the budgeting 
process.
    Mr. Smythe, let me just ask with regard to what goes on in 
your office and in every Federal agency every year as we do an 
annual budget and have you explain something to the American 
people about the number of hours and effort that goes into 
presenting that budget and what difference that would make if 
you had a 2-year budget. Would you share some thoughts on that?
    Mr. Smythe. Yes. I would like to say that the budget really 
is--we are juggling three budgets at any point in the year. 
Right now we are in the process of executing the 2006 budget. 
We are in the process of--including trying to get a 
supplemental enacted that is being debated on the Senate floor.
    We are in the process of trying to seek enactment of the 
2007 budget and the proposed changes that we proposed in the 
2007 budget.
    And we are just starting the 2008 budget, in terms of the 
process of giving guidance to the agencies. The agencies are 
starting their initial work on the 2008 budget.
    So it involves an incredible amount of time in terms of 
putting together these three budgets and working on them and so 
forth.
    A biannual budget, we believe, would provide for better 
planning, more planning, and free up time to focus actually on 
the management of programs from the Administration's standpoint 
and hopefully the oversight of programs from Congress's 
standpoint.
    Senator Sessions. When you cited the agencies, if you would 
explain for the American people how this works. In other words, 
the president proposes a budget. But he does not go down to 
every single one of the programs and the subprograms and the 
sub programs and agencies and subagencies that exist. That 
filters up through them and then through to you? Is that 
correct?
    Mr. Smythe. That is correct. They submit to us--in 
September they will submit to us their proposed budget 
submissions. We put that into a stack of five volumes that 
represents the $2.8 trillion Federal budget.
    That is only the aggregated amounts for the budget. Each of 
the agencies then submit very detailed justifications that 
detail the spending down to the line items that are well below 
the actual budget that the president transmits. So there is an 
extraordinary amount of detail in terms of the items and so 
forth that fit into that budget that are developed by the 
agencies.
    Senator Sessions. And they have, within each one of these 
agencies I presume, teams that work virtually year-round 
preparing budgets. And they are left in some degree of 
uncertainty because, since it is just a 1-year budget, there is 
some degree of uncertainty in certain programs I assume that 
probably calls for inefficiencies because you are not sure it 
will be appropriated the next year. Is that a problem that you 
face?
    Mr. Smythe. Yes, it is an annual process. If we had 2-year 
budgets it would provide more certainty.
    Also, Congress does not always get the appropriations 
enacted by the beginning of the fiscal year, by the October 1st 
deadline. Our fiscal year begins on October 1 of the calendar 
year. And frequently bills are enacted after that. That 
generates additional uncertainty about what the funding level 
is going to be for a particular program.
    Senator Sessions. Just finally, the number of hours that go 
into this, has anyone calculated how much it is within the 
agencies? I will not mention how many in the Senate and how 
much time and effort and grief we go through to try to move 
individual appropriations and budgets every year. But what 
about the agencies? Has there been any calculation of how much 
work has to go into that?
    I have heard from the Defense Department it is just an 
incredible effort in the Defense Department as they prepare 
their annual budget.
    Mr. Smythe. The budget has some big numbers in it. I have 
not calculated how many numbers go into it, but that would be a 
big number, as well. It is an extraordinary effort that goes 
into the annual budget, both the formulation, the development 
of the budget and then the execution of it.
    Senator Sessions. Thank you very much.
    Senator Allard [presiding]. Mr. Smythe, I want to thank you 
for your testimony. And that concludes the number of members 
that we have here. And we now have a vote going on on the floor 
of the Senate, so most of the members have left to make that 
vote. But I want to continue with the hearing and we will 
continue with the next panel.
    Before you leave Mr. Smythe, I just want to thank you for 
your testimony. There are a number of issues that have been 
raised by members of this Committee during your testimony. 
Obviously there are some areas we need to work on, and we look 
forward to working with you to move this piece of legislation 
forward.
    Mr. Smythe. The issues that were identified and so forth 
are something that have been brought to our attention on a 
number of concerns about the way this legislation would 
operate. And if there are concerns about that, we very much 
want to work to address those concerns in the bill that 
hopefully the Committee will mark up.
    Thank you, Mr. Chairman, for allowing me to testify today.
    Senator Allard. Thank you very much.
    Now I will call the next panel, which is Don Marron, who 
has become our CBO's Deputy Director in October of last year 
and began serving as Acting Director as of the end of last 
year. Dr. Marron was the Executive Director and Chief Economist 
of the Congressional Joint Economic Committee, and we are 
looking forward to hearing your comments on the proposed piece 
of legislation which the Chairman has referred to as an 
enhanced rescission.
    Dr. Marron, you may proceed with your testimony.


 STATEMENT OF DONALD B. MARRON, ACTING DIRECTOR, CONGRESSIONAL 
                         BUDGET OFFICE

    Mr. Marron. Thank you, Acting Chairman Allard. It is a 
pleasure to be here today to discuss S. 2381, which would 
create an expedited process for considering rescission 
proposals by the president.
    To help put this proposal in context, it is useful to start 
with an overview of how the existing rescission process has 
been used. As is discussed in my written testimony, the 
existing process appears to have had relatively little impact 
on the overall budget. There are several reasons for this.
    First, presidents have made relatively little use of the 
authority to recommend rescissions. From 1976----
    Senator Allard. Dr. Marron, let me interrupt you. I think 
Dr. Fisher is supposed to be part of this panel. Dr. Fisher, 
why don't you come up.
    Mr. Marron. I believe we have a third member, as well.
    Senator Allard. And then Mr. Cooper.
    Thank you, I am sorry. Now our panel is complete. Go ahead, 
Dr. Marron. Sorry to interrupt you, but I wanted to get the 
other panelists up there.
    Mr. Marron. No problem. Thank you.
    So from 1976 to 2005, for example, proposed rescissions 
totaled only about half of 1 percent of discretionary budget 
authority. Those are the rescissions proposed by Presidents. 
Congress, in turn, enacted only about one-third of those 
proposed rescissions into law.
    Rescissions initiated by Congress were substantially larger 
but still totaled less than 1 percent of discretionary budget 
authority on average. Thus, the average amount of rescissions 
has been relatively small.
    Second, the rescissions that have been enacted have often 
been used to offset new spending rather than to achieve actual 
spending reductions.
    Third, the rescissions that have been proposed and adopted 
have often been focused on budget authority that is not being 
spent or that would not be spent for several years. That, too, 
limits the budgetary impact of rescissions.
    And finally, the existing rescissions process is limited to 
discretionary spending, which currently makes up about 38 
percent of Federal spending, a share that may decline even 
further if mandatory spending continues its rapid growth.
    All these factors have limited the budgetary impact of the 
current rescissions process and suggest that rethinking the 
process may be beneficial. S. 2381 would address some of the 
reasons for the limited impact of the current process. Perhaps 
most importantly, it would require the Congress to act on the 
President's rescission proposals. The current process does not 
require the Congress to act, so rescission proposals may simply 
be ignored. That, in turn, may have reduced the President's 
incentive to use the rescission authority in the past.
    Second, the proposal would prevent rescinded funds from 
being used to offset additional spending. This would increase 
the odds that rescissions result in actual budgetary savings. 
In addition, the proposal would expand the rescission authority 
to certain items of new mandatory spending and targeted tax 
benefits not just discretionary spending.
    In evaluating the potential impacts of the proposed 
legislation, it is essential to consider not only its visible 
direct effects, but also its indirect effects. The visible 
direct effects of the legislation would, of course, be the 
rescissions proposed and adopted under the new procedures.
    At least as important, however, would be the indirect ways 
that the procedures might affect the legislative process. 
Proponents argue, for example, that the existence of expedited 
rescissions would deter legislators from pursuing some projects 
that would appear to benefit only a small constituency. Such 
deterrence could lead to a different mix of projects and 
spending bills and conceivably even a lower level of overall 
spending.
    However, the proposed rescission authority would also shift 
power to the President, as has been discussed at length in the 
two previous panels. By requiring Congressional action on 
proposed rescissions and by allowing the president to choose 
how to package those rescissions, it gives the President 
greater influence over the Congressional agenda. By allowing 
the President to defer funds for up to 180 days, it gives the 
President greater control over the execution of spending 
programs. By placing no time limits on when the president must 
submit rescission proposals, it gives him as much flexiblility 
as possible in exercising his powers under the proposal.
    For all these reasons, expedited rescission, as proposed, 
may give the President greater leverage to pursue his agenda. 
The ultimate impact on spending in fiscal outcomes would then 
depend on whether spending discipline is a presidential 
priority.
    It is difficult to predict how S. 2381 would affect the 
legislative process and consequently whether the changes 
proposed in the bill would actually improve fiscal discipline 
or would simply shift spending priorities to those favored by 
the President. Experience at the state level, however, suggests 
that the overall budgetary effect may be minor.
    Moreover, as this Committee is well aware, our primary 
fiscal challenges in coming years will come from spending 
programs that are already on the books. Existing mandatory 
spending programs, in particular Social Security, Medicare and 
Medicaid, will comprise a growing share of the budget in coming 
years. They are permanent programs, so expedited rescissions 
would likely have no effect on them.
    Just to wrap up, our posture and view is that budget rules 
can be very beneficial, they can be very helpful. But it is 
important to go in with a suitable humility about what they can 
actually accomplish. Experience suggests that budget rules are 
most effective when they help the Congress and the President 
implement a consensus about budget policies and budget 
outcomes. Absent such a consensus, the rules may only have 
limited impact on actual budget outcomes.
    Thank you. I would be happy to answer any questions.
    [The prepared statement of Mr. Marron follows:]

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    Senator Allard. I will now call on Mr. Cooper as a founding 
member and the Chairman of Cooper and Kirk. And also, in 1985, 
President Reagan appointed Mr. Cooper to the position of 
Assistant Attorney General for the Office of Legal Counsel.
    We look forward to your testimony, Mr. Cooper.


      STATEMENT OF CHARLES J. COOPER, COOPER & KIRK, PLLC

    Mr. Cooper. Thank you very much, Senator Allard.
    It is a great honor for me to be here this morning to 
present my views on this important measure. And it was 
certainly a special honor for me in 1997 to represent Senator 
Byrd and Senator Levin and other members of this body in a 
constitutional challenge to the 1996 Line Item Veto Act. That 
challenge was not taken up by the Supreme Court for lack of 
standing in Members of Congress, but the Court did later strike 
down the 1996 Line Item Veto Act in a case in which I was 
involved. And I think it controls the constitutional analysis 
here and it is that case to which I will direct my testimony.
    The Line Item Veto Act of 1996 provided that the president 
may ``cancel in whole'' the same types of spending and tax 
items that are at issue in the measure before you. Cancellation 
took effect when Congress received a message, a special message 
from the president, to that effect.
    The Act defined cancel as ``to rescind'' and ``to prevent 
from having legal force or effect.'' That term and its 
definition were carefully crafted to make clear that the 
President's action would be permanent and irreversible.
    Thus, a Presidential cancellation under the 1996 Act 
extinguished the canceled provision, as though it had been 
formally repealed by an act of Congress. And neither the 
President who canceled the provision nor any successor 
President could exercise the authority that the provision 
before its cancellation had granted. So the president could not 
change his mind after he had canceled it. The law itself was 
gone. And it could be restored only by a disapproval bill that 
was enacted according to the procedure prescribed by Article I, 
Section 7.
    In striking down the Line Item Veto Act of 1996, the 
Supreme Court in the Clinton case concluded that vesting the 
President with unilateral power to cancel a provision of duly 
enacted law could not be reconciled with the procedures 
established under Article I, Section 7 for enacting or 
repealing a law, bicameral passage and presentment to the 
President.
    The Court struck down the Act because--and these are the 
Court's words--``Cancellations pursuant to the Line Item Veto 
Act are the functional equivalent of partial repeals of acts of 
Congress that fail to satisfy Article I, Section 7.''
    The Legislative Line Item Veto Act of 2006, the measure 
pending before you, 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 this bill to cancel 
any spending or tax provision or otherwise to prevent such a 
provision from having legal force or effect.
    To the contrary, any spending or tax provision duly enacted 
into law remains in full force and effect under the bill unless 
and until it expires on its own terms or it is repealed in 
accordance with Article I, Section 7--that is after this body 
and the House pass it and it is presented again to the 
President for his signature.
    To be sure, S. 2381 would authorize the President to defer 
or to suspend execution of the spending or tax provision at 
issue for up to 180 calendar days. The President would be also 
authorized to terminate his deferral if, according to the 
statute, ``the President determines that continuation of the 
deferral would not further purposes of this act.''
    This delegation of deferral authority does not raise, in my 
opinion, a serious constitutional problem with this measure. 
The Congressional practice of vesting discretionary authority 
in the President to defer and even to decline expenditure of 
Federal funds has been commonplace since the beginning of the 
Republic, and its constitutionality has never seriously been 
questioned. Indeed, in the first Congress, President Washington 
was given discretionary spending authority in at least three 
appropriations bills to spend as much as he pleased or as 
little as he pleased, and the remainder obviously to be 
restored to the treasury.
    In the Clinton case, the Government's constitutional 
defense of the 1996 Line Item Veto Act relied heavily on that 
long interbranch tradition of Presidential spending discretion. 
The Government argued in that case that the President's 
cancellation power was not really a unilateral power of repeal 
but rather was simply--I am quoting from their brief--``in 
practical effect no more and no less than the power to decline 
to spend, specify sums of money, or to decline to implement 
specified tax measures.''
    But the dispositive distinction is that a discretionary 
spending statute grants the President discretion in the 
implementation of the spending measure while the Line Item Veto 
Act of 1996 granted the President discretion to extinguish the 
spending measure. The President may exercise lump sum spending 
discretion at any time during the appropriation period. And if 
the president decides not to spend some or all of the 
appropriated funds, the authority to spend the funds--that is, 
the law itself--nonetheless remains in place until it expires 
in accordance with its terms or is repealed by this body. The 
President however, as long as that law remains, is free to 
change his or her mind about that spending decision.
    In contrast, under the 1996 Act, the President's 
cancellation discretion operated directly on the law itself, 
effectively revising its text to strike the spending or tax 
provision itself permanently. And if the President or his 
successor subsequently changed his mind about a canceled item, 
he was powerless to revive it.
    Nothing in the bill before you, S. 2381, grants the 
President a unilateral power to rescind or amend the text of a 
duly enacted statute in the fashion that the 1996 Line Item 
Veto Act did.
    Again, a deferral under the S. 2381 can last no longer than 
180 calendar days. And immediately thereafter the President is 
obliged to execute the spending or tax provision for which he 
has unsuccessfully sought Congressional rescission. And the 
President's discretionary authority to terminate the deferral 
and to execute the spending provision at issue remain in full 
force and effect right up until the moment that the 
appropriations statute expires under its own terms or is 
rescinded by Congress.
    The short of my testimony is this: the Supreme Court's 
decision in Clinton recognizes and enforces the constitutional 
line established by Article I, Section 7 between the power to 
exercise discretion in the making (or unmaking) of the law, on 
the one hand, and the power to exercise discretion in the 
execution of law, on the other. Congress cannot 
constitutionally vest the President with the former 
discretion--that is the discretion to make our unmake law but 
it can the latter, and has done so repeatedly throughout the 
Nation's history.
    So in my opinion, the powers granted the President under 
the legislative Line Item Veto Act of 2006 fall safely on the 
constitutional side of that line.
    Again, Mr. Chairman, I appreciate very much this 
opportunity to share my views with you on this important 
measure.
    [The prepared statement of Mr. Cooper follows:]

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    Chairman Gregg [presiding]. Thank you very much, Mr. 
Cooper. I have read your statement. I have read Dr. Marron's 
statement also. I wish I could have here to hear the entire 
statement in person, but we did have this vote and we did not 
want to hold you folks up.
    Dr. Fisher.


   STATEMENT OF LOUIS FISHER, SPECIALIST AT THE LAW LIBRARY, 
                      LIBRARY OF CONGRESS

    Mr. Fisher. Thank you, Mr. Chairman.
    I will summarize the major points I have in my paper. As I 
indicated in my paper, I appreciate that the motivation for 
this bill would be to take care of what is considered 
unnecessary spending and high deficits. I think the history we 
have of this, the different studies that are available and the 
experience also during the Clinton Administration with the item 
veto, I think the evidence is very strong that not much would 
be saved through this process and not much of a dent in the 
deficit.
    So on the economic side of the budget issues, I do not 
think there is going to be a material difference. My point 
would be that the major impact would be on constitutional 
balance here and institutional strengths.
    Mr. Cooper has just given a very good analysis, and I read 
it before I came here, on the impact of the Supreme Court 
decision in the Clinton case. I would make the point that I 
think a Member of Congress has to do more than to look at case 
law or to anticipate how a court would decide. You take an oath 
to support and defend the Constitution. I think the framers 
anticipated that each branch would take care of itself.
    Which means that regardless of even if after obviously 
there being changes in this bill, even after those changes if 
you felt comfortable that the bill would pass muster under the 
Clinton decision, I do not think that is enough. I think you 
have to then say what does this do to you as an institution? 
What does this do to you in your capabilities to discharge your 
constitutional responsibilities?
    I say this because I think the framers did not believe that 
individual rights and liberties were to be protected solely by 
the judiciary or through litigation. I think they believed 
strongly that the best protection for rights and liberties was 
the way you structure Government. And much of that is the 
separation of powers and the checks and balances and the 
strength of Congress to watch for abuses both within itself and 
outside itself.
    I think the bill, as drafted, and even I think after it 
would be amended in markup, does damage to Congress as an 
institution. First of all, we are talking about the spending 
power always associated with democratic Government.
    Second, I think the passage of the bill would send a very 
clear signal that Congress is admitting that it is not 
responsible and it cannot adequately do its job and it is 
setting up a process to give a President the chance to send 
back to it what the President considers wasteful spending. I 
noticed that the language OMB says that the President could 
single out ``unjustified items''.
    Well, Congress decided when it passed it that it was 
justified. So why should we have a process where the President 
alone is the one to decide what is justified and what is not 
justified?
    So the Congress, by passing a bill like this, would be 
saying that we do not have a process here where we are 
responsible. I think that sends a bad message inside the 
institution that the members do not feel adequate to do their 
job and need a President to send back a list of things that the 
President decides are unjustified.
    My work over the decades has been on Presidential spending 
power and I do not see myself that the President has a really 
terrific track record in being the fiscal guardian. My 
impression is that most of the big spending items come out of 
the executive branch. Most of the Federal highway programs or 
space programs or supercolliders or supersonic transport, those 
come out of the executive branch.
    I think when we get in trouble in terms of high deficits 
and so forth, to me my impression is basically what the 
President has done, not what Congress has done. And on the 
whole I think what happens, for both legal reasons and 
political reasons, Congress seems to stay pretty much around 
the aggregates that the President has submitted. You change the 
priorities, of course. But the size of the deficit, the size of 
the spending and so forth is basically what you get up front 
with the submission.
    So why we would say that the President is a special 
guardian of the purse is hard for me to understand.
    How the item veto would operate, I think, would be damaging 
to Congress. The President would send up a list. If you support 
the list, if you approve it, then that sends another signal 
that indeed there were wasteful things in the bill you 
presented to the President and the President, you agree, was 
good to send up the items and now they are going to be 
canceled.
    The other choice is for you not to approve the President's 
list, which then the President could say I have sent up a list 
of wasteful items and I cannot get Congress to approve. And no 
one in the country is going to be able to look at that list and 
make an intelligent decision as to whether those items are 
wasteful or not. It is all going to be rhetoric.
    We have already talked today about this being a tool for 
the President to contact members and say they are trying to 
preserve that project in your state and they just incidentally 
want to know what you are going to do on a nomination or a 
treaty or the legislation. It does not have to be the President 
calling you. It could be a staff person calling a staff person 
and so forth. You get the message pretty soon. That is why a 
process like this could end up spending more money because each 
side would agree.
    How much saved? I do not think much. I have all the details 
in my statement. The GAO study and the Clinton experience.
    Another thing that is hard to predict here is every time 
you change procedure you change behavior. So if you had a 
process set up where the President could siphon off certain 
items and send them back, would that really help 
accountability? Or why would not, with a process like this, 
Members of Congress be even freer, if you added 100 things that 
the President did not want, why not add 200 or 300 things, 
since he has a process to send them back? So I think we lose 
visibility and accountability.
    I just mentioned in my statement about targeted tax 
benefits in the Clinton Administration. I just thought it was 
interesting. You would think that any targeted tax benefit for 
100 or fewer members would be sort of a definition of a special 
interest. But President Clinton had 70 opportunities to cancel 
those. He picked two and he made the point, what I think is 
valid, that just because something is for a special interest 
does not mean it is not in the national interest. Most of those 
proposals came out of the Treasury Department. They were 
approved. So it is not as though Members of Congress are 
tucking these in. These had good understandable support.
    I think the last point I made in my statement is are you 
delegating spending authority or also legislative authority 
because of this word that we have talked about here today, 
modified. It sounds to me it is not just sending up a list. It 
is allowing the President to rewrite. So not only does the 
President get a chance to drive your legislative calendar 
through submissions and packages but through modification. The 
definition of the legislative power is being able to shape and 
modify. You would not have that at all. The President would 
have that entirely. Your choice would be just to vote up or 
down without any chance of amendment.
    Finally, my major point is I would only say that if you are 
worried about spending and you are worried about deficits, the 
answer is not through a process like this. The President has 
tremendous control over both his veto and his threatened veto. 
When a bill is in conference they can say we will veto it 
unless you take out these items. That goes on all the time.
    As I mentioned, the biggest power the President has is 
submitting a responsible budget. That governs how Congress 
acts. If you are worried about aggregates, I think the pressure 
has to be on the President to submit a responsible budget.
    Thank you.
    [The prepared statement of Dr. Fisher follows:]

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    Chairman Gregg. Thank you, Dr. Fisher.
    I appreciate Senator Allard taking over while I was gone. 
So why do we not go to Senator Allard for questions, then 
Senator Conrad, and then back to me.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. I want to thank 
the panel for their testimony.
    Dr. Marron, on the fiscal note of the previous enhanced 
decision rescission, referred to as line item veto, I think 
that was a positive fiscal note if I remember correctly, then 
one that ended up passing and then got challenged in the 
Supreme Court.
    Have you looked at this particular piece of legislation? 
Are we looking at a positive or negative fiscal note? Could you 
give us some reasons why, whatever your decision might be, if 
you have reached that decision?
    Mr. Marron. Certainly. So in my testimony I refer to what 
evidence is available on--I believe you are referring to the 
items that were line item vetoed in essence by President 
Clinton.
    The amounts we had were 82 cancellations by the President 
that would have saved about $355 million in 1998 and just under 
$1 billion over 5 years. Some of those were overturned by 
Congress, some were overturned by courts, and so the actual net 
was somewhere in the neighborhood of $600 million.
    As to whether that is a large number or not depends on your 
perspective. It is obviously relatively small relative to the 
overall size of the budget and spending at that time. But on 
the other hand it is still $600 million.
    Senator Allard. Would you expect the same dynamics with 
this new piece of legislation if it were to pass?
    Mr. Marron. It is difficult to predict because a lot will 
depend on how the President would choose to exercise it and how 
the Congress would respond. As I said, the history of the 
current rescission process suggests that it is not used that 
much. This proposal before us would give the President more 
incentive to use it, so you might imagine it would be used 
more. But then you would still face the question about whether 
or not the Congress would go along.
    Senator Allard. Have you had a chance to look at the fiscal 
note of the previous veto that was ruled unconstitutional by 
the Court?
    Mr. Marron. I am sorry, when you say fiscal note?
    Senator Allard. The fiscal note upon--the line item veto 
that was eventually adopted by the Congress and then went 
before the Court, it had a positive fiscal note on it, if I 
recall.
    Mr. Marron. You mean it had a net savings, as it was used?
    Senator Allard. That is correct.
    But then as we heard in testimony from Mr. Cooper, the 
argument was made it permanently eliminated the program, to put 
it in plain English. Was the fiscal note based on that, do you 
recall? Or was it based--and would you anticipate a future 
fiscal note would have that same--would they balance that 
against the previous note that was presented to the Congress 
from the other line item veto legislation being considered, as 
opposed to this one here?
    Mr. Marron. I guess I am not entirely sure what you mean by 
fiscal note.
    Senator Allard. Well, when you make--you look at the impact 
of the budget.
    Mr. Marron. Oh, you mean the cost impact.
    Senator Allard. Yes.
    Mr. Marron. So in terms of the provisions that end up being 
vetoed?
    Senator Allard. Yes.
    Mr. Marron. For discretionary items, we would score the 1-
year discretionary amount of money because then Congress has 
the opportunity to revisit the level of discretionary spending 
the following year. For any mandatory item that would flow 
through the baseline, we would score it for however long the 
provision would have existed.
    Senator Allard. How would you project in this piece of 
legislation that passed, how would you project its cost out 
over 5 years?
    Mr. Marron. So for this provision itself, one of the 
fundamental constraints that we operate under at CBO is that we 
cannot predict the behavior of Congress. So we have to take 
current law as it is written.
    So to make a decision about how this proposal would affect 
the 10-year budget window, that would require a judgment on our 
part not just of how the President would use it but then how 
the Congress would respond. And so that is not something that 
we can directly go out and score.
    There might be some cost of implementing it that we might 
evaluate. But beyond that, it is not something that we could 
score.
    Senator Allard. Thank you.
    Mr. Cooper, in your argument, the main argument was before 
the Supreme Court. Is your view that this piece of legislation 
we have now, based on the arguments by the Supreme Court in the 
previous legislation, would that pass constitutional law?
    Mr. Cooper. That is my view of it, Senator Allard. As I 
mentioned, I was involved in the litigation of both the Raines 
case, representing Senator Byrd and other members of this body, 
and in the Clinton case in which the Supreme Court did strike 
down the previous 1996 Line Item Veto Act.
    And its central basis was the determination that to cancel 
an item of spending or a tax benefit was to eliminate it from 
the law as surely as a repeal by this body would. So a 
President would not be able to, or a successor President, would 
not be able to think differently about that decision, which is 
the key difference between a discretionary authority to spend 
or not to spend, which this body, this Congress has accorded to 
the President since the days of President Washington.
    And Presidents have been able to exercise that discretion 
with essentially the same result, moneys not spent do not get 
spent in the same way that moneys canceled do not get spent.
    But the difference is the difference between a President 
canceling or repealing a law which only this body can do and 
simply exercising a discretion that this body has given to him 
to exercise. That is the constitutional difference. And I think 
it is an outcome determinate difference, Senator, in these 
proposals.
    And so it is only with great reticence that I venture into 
disagreement with Senator Byrd, my former client, on a 
separation of powers issue but I do see it differently.
    Senator Allard. Thank you very much for your response. My 
time has expired, Mr. Chairman.
    Chairman Gregg. Thank you, Senator Allard.
    Senator Conrad.
    Senator Conrad. Thank you, Mr. Chairman.
    And I want to thank this group of witnesses. We appreciate 
very much your being here. I, too, apologize for being called 
away to a vote. But I did have a chance to review all of your 
testimony before this session.
    Dr. Fisher, I started out this session by talking about the 
single greatest concern I have about this measure is a transfer 
or power from the legislative branch to the executive branch. 
Do you see that danger in this provision? And what tells you 
that there would be a transfer of power if such a measure were 
to pass?
    Mr. Fisher. I think a transfer of power is both what you do 
in the bill language, and also I would say transfer of power is 
in the perception of individual members and the public. So I 
was concerned, in my statement for the Committee, that the mere 
passage of the bill would send a signal that Congress is not up 
to the task, that the President is. That is a perception. And 
to me it is a very damaging perception. I happen to not believe 
that it is true. I think the record of Congress is as good as 
the President, if not better. So that is a perception.
    And then the actual, beyond the perception, is what we 
talked about here is the way this would play out, the President 
getting credit when he submits this. If you approve it, he gets 
more credit. If you do not approve it, he gets credit for 
putting it to you. And then, of course, there is the leverage 
we talked about.
    So I think on multiple levels there is a weakening of 
Congress as an institution. When you do that, you are weakening 
representative government and the placement by the framers of 
the spending power in the legislative branch. So I see it as 
very damaging.
    Senator Conrad. Let me just ask you, on the question of 
leverage, because I have been here now 20 years and I have had 
Presidents come at me many different ways in order to persuade 
me to support a position or reject a position.
    Do you see it is possible that the scenario that I 
described at the beginning, that the President might be in 
conversation with a member, or as you described it could be a 
staff member, and just linking the two--that is, perhaps the 
President has a controversial nominee before the Senate, and at 
the same time is considering rescissions on members' spending 
matters that are critically important back home.
    I come from Bismarck, North Dakota. We have a bridge called 
Memorial Bridge. That bridge desperately needs replacing. It is 
the gateway to the capital city in Bismarck, North Dakota. That 
bridge is being replaced on the Highway Bill.
    I do not think it is too far-fetched to think a President 
or his staff might let it be known to this member on a 
controversial appointment that he was at the same time 
considering building that Memorial Bridge. And maybe that would 
be a matter of rescission that would come before Congress.
    Does that sound far-fetched to you?
    Mr. Fisher. No, I think it is a real threat. There is 
always this effort of the two branches eventually to coordinate 
and find a consensus. But under the process in this bill, I 
think you are under pressure to play ball the way the President 
wants to play ball. And if you do not want to there is a 
penalty there.
    Senator Conrad. Dr. Marron--thank you.
    Dr. Marron, you indicated that during the period that 
President Clinton had rescission authority only $600 million 
was rescinded over a 5-year period? Is that correct?
    Mr. Marron. That is correct.
    Senator Conrad. What was the total budget during that 5-
year period? Do you know?
    Mr. Marron. In 1998, just for that year alone, it was $1.7 
trillion. So multiply that by five.
    Senator Conrad. So that would be $8.5 trillion over 5 
years?
    Mr. Marron. Yes.
    Senator Conrad. $8.5 trillion. So $600 million of $8.5 
trillion is an asterisk, almost, is it not?
    Mr. Marron. It is small in relative terms, yes.
    Senator Conrad. It is a very modest amount. It really made 
no significant difference in the trajectory of Federal 
spending. Of course, in that time we were not having deficits. 
We were having surpluses, were we not?
    Mr. Marron. Toward the latter end of that period, yes.
    Senator Conrad. So the fact is it made virtually no 
difference.
    I would go to Mr. Cooper if I could. My time is--just one 
final question, if I could. I thank the Chairman.
    Mr. Cooper, have you looked at this language with respect 
to this 180 day deferral and how that could play out with 
multiple requests and just continuing to extend? Does that 
cause you a question in terms of constitutionality?
    Mr. Cooper. I have looked at it, Senator Conrad. And 
frankly, when I first looked at it, it was not all that clear 
to me that it did authorize serial rescissions with respect to 
the same item.
    Also, frankly, it is hard to imagine how such serial 
rescissions with respect to the same item would be consistent 
with what appears to be, on the face of the bill, its central 
purpose, which is simply to give this body the chance to vote 
up or down on the President's proposal and consider his opinion 
as to whether or not a certain spenduing measure is well taken 
or not. One opportunity and then he either wins or----
    Senator Conrad. After listening, though, to the testimony 
this morning----
    Mr. Cooper. It is pretty clear that the Administration's 
witness agreed that the President, that the bill would, in 
fact, authorize serial rescissions with respect to the same 
item.
    Senator Conrad. Could you help me and reflect on how a 
court might see that provision?
    Mr. Cooper. Well, I am reluctant to predict how a court 
would see it, but based on my own study of the authorities, 
Senator Conrad, I do not think it would represent a 
constitutional threat.
    Senator Conrad. It would not fail on the constitutional 
question?
    Mr. Cooper. On the constitutional issue.
    Senator Conrad. It may fail on other matters. It may fail 
as a question of policy, which I would strongly argue.
    Mr. Cooper. Yes.
    Senator Conrad. But would not fail on the constitutional 
question.
    Mr. Cooper. And it appears to me that nobody on either side 
of this table wants to bring about the kinds of abuses or 
authorize the kinds of abuses that apparently might be possible 
under the bill, as written. It would be a simple matter, I 
think, to address.
    Senator Conrad. I thank you for that.
    I want to thank the witnesses. Dr. Fisher, did you have a 
final----
    Mr. Fisher. On what Mr. Cooper just said. I would think if 
you have a fiscal year beginning and way into the fiscal year 
130 days, and then the President gets a bill, and there is no 
time limit on when he has to send it up. And when he sends it 
up and then you add 180 days, the fiscal year is over and the 
money has been lost. It is expired.
    I just think that is flat out against the Clinton case. I 
just cannot imagine the Court allowing the President, through 
that process, to terminate something without any congressional 
action. It is the Clinton problem.
    Senator Conrad. It strikes me that way, as well. I am not a 
lawyer, I would be the first went to confess. But it strikes me 
as he could accomplish the same purpose as what concerned the 
Court in the Clinton case.
    I am going to thank the witnesses very much for their time, 
their attention, and for their contribution to the Committee.
    Chairman Gregg. Thank you.
    To use a legal term, that is a moot point, in my opinion, 
because we are obviously not going to mark up a bill which 
allows that to happen.
    We are also not going to mark up a bill which would allow 
serial rescissions period. We are also not going to mark up a 
bill that does not give more authority in the area of tax 
rescission.
    So many of the issues which you raised here, which are 
legitimately raised, I think will be addressed in the vehicle 
we mark up.
    I think there are two points which this panel has made 
which I need to make note. First, the bill is constitutional, 
it appears.
    Second, the essence of Dr. Fisher's complaint, if I 
understand it, is basically the perception or shift of 
authority and the capacity of the President to game the process 
potentially.
    And I would accept that argument if it were not for the 
fact that the omnibus appropriations bills have changed the 
playing field. We have gone to an omnibus appropriating process 
around here. You can even argue that we have gone to an omnibus 
mandatory program process such as the Part D drug program, 
which was a huge bill, sections of which probably should not 
have been put in but were put in.
    The President is put in a position where, on an omnibus 
bill, he is signing legislation which can spend $300 billion or 
$400 billion. In fact, he spend the entire discretionary budget 
in some instances, which would be approximately $900 billion. 
He has no capacity to get at specific programmatic activity.
    And so the chance to take what I call a second look fast 
track rescission process is, I think, a legitimate right that 
should be considered for the President. The question is how you 
do it without creating disproportionate authority within the 
executive branch.
    But the one issue that has been raised, and was touched on 
by Senator Byrd, that I am not comfortable yet with how to 
address--and this is what I want to get your thoughts on. Most 
of the items, especially which were raised by the Senator from 
North Dakota in his list of eight, I think we can address.
    But the one issue which does concern me is this question of 
whether we should give the right to amend to the rescission 
package when it comes up. In other words, should there be 
motions to strike against that package or does it have to be an 
up or down vote?
    The BRAC Commission is really, I think, the template to 
look at here. The theory was if you do not have an up or down 
vote on the final product as presented to the Congress, the 
Congress will simply eviscerate it and make it a nonfunctional 
event.
    On the other side of the coin, what limits the President's 
ability, if he has to send up a package where everything has to 
be taken and nothing can be taken out, is the fact that if he 
puts too much in there that has too many constituencies in 
opposition, then he is not going to be able to pass his 
package.
    I think the classic example here would be agricultural 
issues, where log rolling has become the process by which 
agricultural appropriations occur, where the sugar people 
support the cotton people, the cotton people support the 
soybean people, and so on and down the road. As individual 
groups they do not have the authority to pass their bill, but 
as a log rolling exercise they always get their legislation 
through, some of which is quite egregious in the area of 
spending money.
    So I guess I would be interested to know what the panel 
thinks about whether we should allow the package to be picked 
at through the motions to strike, which would address one of 
the key concerns that Senator Byrd had? Or whether the basic 
impetus or the basic influence on the President's presentation 
is going to be such that he is going to have to send up 
packages which can pass the Congress and therefore not have so 
many constituencies against it that it is an irresponsible 
package or a package which is unsalable.
    Which one of those approaches is most appropriate, the one 
the President has chosen? Or the Byrd approach, which would be 
motions to strike against the package?
    If we could start with Dr. Marron and move down the line as 
to what your thoughts would be on that.
    Mr. Marron. A lot is going to depend on what the incentives 
are of the President in designing what packages to send up. As 
I understand the proposal, the President would already have the 
ability to parse it up as narrowly as he would like and in 
principle could thereby offer up whatever he thinks are sort of 
the right size packages, the right combination of things to get 
through, and also in essence to pre-strike those things that he 
thinks would be problematic and that Congress would advise him 
would be problematic.
    So I think the more that you strengthened the opportunity 
to strike provisions, the more you would see the President 
going to smaller and smaller packages that would be suggested.
    Chairman Gregg. Let us say we limit the number of packages 
he can send up on the theory that we do not want him 
controlling the legislative calendar? This was a point which 
was made earlier, and I think it is legitimate.
    So he maybe only gets the opportunity after an omnibus is 
sent up, to send up say two motions for rescissions and two 
rescission packages and they have to be--and they cannot be 
over a certain threshold of spending, or something like that 
that does not allow him to rescind the entire exercise.
    Would that address the issue or aggravate the issue?
    Mr. Marron. That would place more pressure on the President 
to figure out the optimal bundles to send up. He would have to 
exercise presumably more choice in deciding which to include in 
a very limited number of packages. So then it is the usual 
question of does the ability for the Congress to strike 
provisions, does that make it easier or harder for him to 
accomplish what he has in mind?
    I would have to defer to you, actually, on that.
    Chairman Gregg. Do not do that, that is a mistake.
    Mr. Cooper?
    Mr. Cooper. Unfortunately, I am going to have to do the 
same thing, Mr. Chairman, and defer to you on that. I do not 
think that these issues rise to the level of constitutional 
moment.
    Chairman Gregg. I understand that.
    Mr. Cooper. Whatever ultimately this body determines shall 
be the President's discretion in this area will be what it is. 
And I defer to the greater expertise of my panel members here 
and their understanding of this process and of the real politik 
that underlies it. Of course, I am sure that Mr. Smythe would 
have some opinions from the Administration on those issues. But 
I honestly do not.
    Chairman Gregg. Dr. Fisher, I see you have the Dartmouth 
mantle, so I know you must have an answer to this question.
    Mr. Fisher. I would say it might not rise to a 
constitutional moment, the way Mr. Cooper just said it. I think 
it is a constitutional moment for Congress protecting itself 
and whether a court would find it OK or not. I think you still 
have to worry, as you are, about how many packages. So I think 
there are a lot of things you could do to make sure there is 
not as much mischief and abuse.
    I did like the comparison you were making with the BRAC 
because if you look at it the way this item veto bill would 
work, even if you modify it, is still looks like the President 
has total control over what gets in the package whereas BRAC 
seems like it is a multilayered process where there is a list 
of things and it is publicly--and people scream and shout. And 
eventually it comes up. And then Congress, once it comes up, it 
is an up or down vote.
    I think the same thing goes through in the trade packages 
where when the implementing bill comes up with the fast track, 
it is no amendments, it is up or down. But before the 
implementing bill comes up, it comes up in some informal way 
and there is a lot of back channel way for Congress to 
participate in what the final implementing bill is.
    So that part, I think, is very healthy, that give and take 
on an informal and formal basis, and these other BRAC-type 
trade agreements.
    So I think obviously you can do a lot of things in this 
bill to place limits on what a President can do and also on the 
opportunity to strike certain items. There are many things you 
can do to adjust the executive/legislative balance.
    Chairman Gregg. The problem with the BRAC, of course, was 
there was a commission in between the Executive and the 
legislative branch. The Commission held hearings. I am not sure 
that that is probably constructive to the process in something 
like this, to put a commission in the middle of it. But it did 
give you an airing opportunity, which my state took advantage 
of and was successful with.
    But the issue of whether or not you give the authority to 
strike as versus you have to vote up or down the package is, I 
think, a key issue here. So if you folks have some more 
thoughts on it as you are reflecting on the testimony today, we 
would appreciate getting your input.
    There is another vote on, so we are going to have to 
adjourn the hearing. But I certainly appreciate your testimony. 
It has been very substantive and to the point and very helpful 
to us.
    Thank you taking the time to come by.
    [Whereupon, at 11:56 a.m., the committee was adjourned.]

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