[Senate Report 104-13]
[From the U.S. Government Publishing Office]



   104th Congress 1st            SENATE                 Report
         Session
                                                        104-13
_______________________________________________________________________

                                     

                                                        Calendar No. 26
 
                  LEGISLATIVE LINE ITEM VETO ACT OF 1995



                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                             together with

                            ADDITIONAL VIEWS

                              TO ACCOMPANY

                                  S. 4

     TO GRANT THE POWER TO THE PRESIDENT TO REDUCE BUDGET AUTHORITY




    March 7 (legislative day, March 6), 1995.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

 WILLIAM V. ROTH, Jr., Delaware, 
             Chairman
                                     TED STEVENS, Alaska
                                     WILLIAM S. COHEN, Maine
                                     FRED THOMPSON, Tennessee
                                     THAD COCHRAN, Mississippi
                                     CHARLES E. GRASSLEY, Iowa
                                     JOHN McCAIN, Arizona
JOHN GLENN, Ohio                     BOB SMITH, New Hampshire
SAM NUNN, Georgia
CARL LEVIN, Michigan
DAVID PRYOR, Arkansas
JOSEPH I. LIEBERMAN, Connecticut
DANIEL K. AKAKA, Hawaii
BYRON L. DORGAN, North Dakota
 Franklin G. Polk, Staff Director 
         and Chief Counsel
Joan Woodward, Professional Staff 
              Member
  Leonard Weiss, Minority Staff 
             Director
  Michal Sue Prosser, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Purpose of the Measure...........................................1
 II. Background and Need..............................................1
III. Difference With State Item Veto..................................2
 IV. Past Efforts to Enact Enhanced Rescission........................4
  V. Legislative History..............................................4
 VI. Committee Action and Tabulation of Votes.........................6
VII. Committee Amendments.............................................6
VIII.
     Section-By-Section Analysis......................................6
 IX. Cost and Budgetary Considerations................................9
  X. Regulatory Impact Evaluation....................................10
 XI. Additional and Minority Views...................................11
XII. Changes in Existing Law.........................................14

                                 (iii)

  
                                                        Calendar No. 26
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-13
_______________________________________________________________________


                 LEGISLATIVE LINE ITEM VETO ACT OF 1995

                                _______


    March 7 (legislative day, March 6), 1995.--Ordered to be printed

_______________________________________________________________________


  Mr. Roth, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                          [To accompany S. 4]

    The Committee on Governmental Affairs, to which was 
referred the bill S. 4, to grant the power to the President to 
reduce budget authority, having considered the same, reports 
thereon without amendment and without recommendation.

                       I. Purpose of the Measure

    The purpose of S. 4, as ordered reported, is to strengthen 
the President's ability to rescind budget authority. Under the 
reported bill, presidential recommendations to rescind funds 
will take effect unless disapproved by Congress during a 
designated review period.

                        II. Background and Need

    This bill responds to the overly restrictive effect of the 
Impoundment Control Act of 1974. Congress passed the statute in 
response to a series of executive actions in the early 1970s 
that terminated or severely reduced funds that Congress had 
appropriated for federal programs. The Impoundment Control Act 
established two procedures to guide executive officials. If the 
President wanted to delay the expenditure of budget authority 
he could submit deferral messages. Either House of Congress 
could disapprove deferrals at any time.\1\ If the President 
wanted to terminate budget authority he would have to submit a 
rescission message. Under the procedure established for 
rescissions, the funds would be released for expenditure unless 
the President obtained the approval of both Houses of Congress 
within 45 days of continuous session.
    \1\ As a result of INS v. Chadha, 462 U.S. 919 (1983), the one-
House legislative veto over deferrals was unconstitutional. A federal 
appellate court later held that the one-House veto in the Impoundment 
Control Act was inseverable from the deferral authority. Because of 
that ruling, Presidents could no longer propose deferrals for policy 
reasons (disagreeing with the purpose of a program). Future deferrals 
would have to be limited to routine administrative actions. City of New 
Haven, Conn. v. United States, 809 F.2d 900 (D.C. Cir. 1987). Congress 
enacted the principle of the 1987 ruling into law. 101 Stat. 785, sec. 
206 (1987).
---------------------------------------------------------------------------
    The statutory procedures for rescission are too stringent 
to achieve significant savings. From 1974 to the present time, 
Presidents recommended $72.8 billion in rescissions and 
Congress agreed to only $22.9 billion. On its own initiative, 
acting through the regular legislative process, Congress 
rescinded a total of $70 billion.
    The purpose of S. 4 is to reverse the burden by adopting a 
procedure called ``enhanced rescission.'' Instead of the 
President having to obtain the approval of both Houses within a 
specified number of days, Congress would have to disapprove a 
presidential proposal to rescind funds. The President could 
then veto the disapproval bill, forcing each House to muster a 
two-thirds majority to override the veto.
    The purpose of enhanced rescission is to confront the 
serious problem of pork-barrel spending. Each year wasteful and 
parochial projects--unlikely to pass on their own merits--are 
tucked into omnibus bills. Often these projects are not germane 
to the bill. They may be nothing more than extraneous and 
indefensible riders that hope to make it to safety in the 
company of a larger bill. They are added routinely as part of 
the price for getting a bill out of committee or passing it on 
the floor. Without item-veto power (the state variety) or its 
functional equivalent (enhanced rescission), Presidents must 
either sign the entire bill or veto it. S. 4 gives the 
President a tool to cancel these projects. It will force 
Congress to address, through the rescission process, the 
specific merits of these projects. Only if Congress, during 
this second review, votes to disapprove the President's 
rescission package and votes successfully to override an 
expected veto will those projects become law.

                  III. Difference With State Item Veto

    Although debates on S. 4 and other rescission reforms 
typically speak of ``line item vetoes'' and giving the 
President the same tool that 43 Governors now have, the 
procedures at the state and federal levels are fundamentally 
different. Governors exercise item-veto authority when a bill 
is before them. After striking out certain items the balance of 
the bill becomes law. S. 4 gives the President no such 
authority. If S. 4 is enacted, the President's power regarding 
disposal of a bill would be unchanged. The President could 
either sign the entire bill or veto the entire bill. There 
would be no authority to veto particular items in the bill.
    S. 4 applies to the process after a bill becomes law. For 
example, if the President signs an appropriations bill into 
law, he would then be able only to recommend the rescission of 
budget authority. Those recommendations would take effect 
unless Congress disapproved them in a bill or joint resolution 
that must be presented to the President. The President could 
veto the bill or joint resolution of disapproval, requiring a 
two-thirds majority in each House for an override of the 
presidential veto.
    For several reasons, the rescission process is more 
suitable for the Federal Government. First, appropriations 
bills are itemized at the state level but not at the federal 
level. Governors can wield item-veto authority because the 
bills presented to them are highly itemized. It is not unusual 
for state appropriations bills to descend to items as small as 
$2,000. Thus, at the time that bills are in front of governors, 
they can selectively veto the parts that they disapprove and 
sign the remainder of the bill into law.
    The federal budgeting process is different in its 
essentials. Appropriations bills consist primarily of large 
lump-sum accounts: $4.6 billion for ``Aircraft Procurement, 
Navy''; $3.3 billion in the Department of Energy for ``Energy 
Supply, Research and Development Activities''; $3.0 billion in 
the Department of Health and Human Services for ``Health 
Resources and Services'' (under the Health Resources and 
Services Administration); $2.6 billion for the ``Operating 
Expenses'' of the Coast Guard, and so forth. Occasionally these 
lump sums are subdivided to earmark funds for specific 
projects, but most of the details are placed in conference 
reports, agency justification materials and other nonstatutory 
sources. Presidents could not effectively use item-veto 
authority for the simple reason that appropriations bills do 
not contain items.
    Second, Congress and the executive agencies are in broad 
agreement that lump-sum funding is an effective way to manage 
the Federal Government. Because of lump-sum appropriations, 
federal agencies are able to shift funds within large 
appropriations accounts and therefore adjust to changing 
conditions during the course of a fiscal year. By making these 
shifts inside the account, the overall dollar figure for the 
activity is not violated and therefore there is no need to seek 
remedial legislation from Congress. Fund-shifting takes place 
under established reprogramming procedures, with agencies 
notifying designated committees of the shifts and in some cases 
seeking the advance approval of those committees.
    For example, the Energy and Water Development 
Appropriations Act for fiscal year 1995 contains the 
``Construction, General'' account for the Corps of Engineers. A 
lump sum of $983,668,000 is provided, including 34 earmarks 
ranging from $67,500 for a project in Rhode Island to a $20 
million project in Kentucky. These statutory earmarks total 
$130,126,500. The conference report, listing 210 projects in 40 
states, explains in great detail how the entire $983.6 million 
is to be allocated. The Corps of Engineers may depart from the 
specific amounts listed in the conference report by following 
reprogramming procedures. This flexibility is important for the 
agency and for Congress in its oversight capacity.
    It is possible, although not desirable, to apply the state 
budgeting system to the Federal Government and give Presidents 
the kind of line-item veto presently available to governors. To 
maximize item-veto authority for the President, the details in 
conference reports, agency justification materials, and other 
nonstatutory sources could be transferred to appropriations 
bills. Presidents would then have the range of choice available 
to governors. However, placing items in appropriations bills 
would produce an undesirable rigidity to agency operations and 
legislative procedures. If Congress placed items in 
appropriations bills, agencies would have to implement the bill 
precisely as defined by the individual items. In cases where 
the specific amounts detailed in the appropriations statutes 
proved to be insufficient as the fiscal year progressed, 
agencies could not spend above the specified level. Doing so 
would violate the law. Agencies and departments would have to 
come back to Congress and request supplemental funds for some 
items and rescissions for others, or request a transfer of 
funds between accounts. Neither Congress nor the agencies want 
this inflexibility and added workload for the regular 
legislative process.

             IV. Past Efforts To Enact Enhanced Rescission

    On several occasions in recent years, the Senate has 
considered and voted on bills to provide the President with 
enhanced rescission. On November 9, 1989, Senator Coats' 
amendment to provide for enhanced rescission was rejected on a 
vote of 40 to 51 to waive the Budget Act. On June 6, 1990, 
Senator McCain's enhanced rescission amendment was rejected on 
a vote of 43 to 50 to waive the Budget Act. Two years later, on 
February 27, 1992, another enhanced rescission amendment by 
Senator McCain was unsuccessful on a vote of 44 to 54 to waive 
the Budget Act. In that same year, on September 17, 1992, an 
enhanced rescission amendment by Senators McCain and Coats was 
rejected on a vote of 40 to 56 to waive the Budget Act. The 
next year, another vote occurred. On March 10, 1993, the Senate 
voted on an enhanced rescission amendment, sponsored by Senator 
McCain, to S. 460. The vote to waive the Budget Act failed on a 
vote of 45 to 52.

                         V. Legislative History

    S. 4 was introduced by Senator Dole on January 4, 1995, for 
Senators McCain, Coats, Kyl, Helms, Murkowski, Ashcroft, Bond, 
Grams, and Gramm. The bill was referred jointly to the 
Committees on the Budget and Governmental Affairs, with 
instructions that if one committee reports, the other committee 
would have thirty days to report or be discharged.
    The Senate Committee on the Budget held a markup on 
February 14, 1995, and reported S. 4, as amended, without 
recommendation on a rollcall vote of 12 to 10. The Budget 
Committee adopted two amendments. Senator Domenici's amendment, 
to provide that enhanced rescission authority will cease 
(sunset) in 2002, was approved by voice vote. Senator Conrad's 
amendment, to provide that whenever funds are rescinded the 
discretionary caps will be lowered to ensure that rescinded 
funds are allocated to deficit reduction (``lock-box''), was 
approved by voice vote.
    A joint hearing was held on January 12, 1995 by the House 
Committee on Government Reform and Oversight and the Senate 
Committee on Governmental Affairs to explore the merits of 
enhanced rescission. The first panel heard testimony from 
Senators John McCain and Dan Coats and from Representatives 
Gerald Solomon, Jack Quinn, Mark Neumann, and Michael Castle. 
Also testifying at these hearings were Governor William Weld of 
Massachusetts; Dr. Alice Rivlin, Director of the Office of 
Management and Budget; Dr. Robert D. Reischauer, Director of 
the Congressional Budget Office; Judge Gilbert S. Merritt, 
Chief Judge of the Sixth Circuit and Chairman of the Executive 
Committee of the Judicial Conference; Joseph Winkelmann of 
Citizens Against Government Waste; David Keating of the 
National Taxpayers Union; and Dr. Norman Ornstein of the 
American Enterprise Institute.
    In testifying for the Clinton administration, Dr. Rivlin 
expressed support for the strongest possible version of 
presidential authority to cut spending. She noted in her 
statement that President Clinton has repeatedly favored 
enactment of item veto legislation. During the 1992 campaign he 
supported a tool ``to eliminate pork-barrel projects and cut 
government waste.'' That support was repeated in the February 
17, 1993 document, ``A Vision of Change for America,'' and in 
speeches and letters during the last Congress. In a letter to 
the congressional leadership early this year, he wrote:

          The line item veto authority will help us cut 
        unnecessary spending and reduce the budget deficit. It 
        is a powerful tool for fighting special interests, who 
        too often are able to win approval of wasteful projects 
        through manipulation of the congressional process, and 
        bury them in massive bills where they are protected 
        from Presidential vetoes. It will increase the 
        accountability of government. I want a strong version 
        of the line item veto, one that enables the President 
        to take direct steps to curb wasteful spending. This is 
        clearly an area where both parties can come together in 
        the national interest, and I look forward to working 
        with the Congress to quickly enact this measure.

    Dr. Rivlin emphasized that the President's letter indicated 
support for ``the strongest version of the line-item veto, one 
which ensures that he can cut unnecessary spending, reduce the 
budget deficit, and fight attempts by special interests to fund 
wasteful projects at taxpayers' expense. The Administration 
believes that the line-item veto must be broad in scope and 
become effective as soon as possible.'' She also noted that S. 
4 and H.R. 2 (passed by the House on February 6, 1995) ``give 
the President the most new authority, providing that 
Presidential proposals stand unless both Houses pass a bill to 
overturn them and the bill is enacted.'' Bills such as S. 14 
(expedited rescission), she said, ``provide less new 
authority.''
    Dr. Robert D. Reischauer, Director of the Congressional 
Budget Office, noted in his testimony that the procedure in S. 
4 (enhanced rescission) ``provide the President with greater 
potential power than a constitutionally approved item veto.'' 
He explained that a constitutional amendment would limit the 
President to approving or vetoing dollar amounts only to the 
extent that they appear in appropriations bills. However, the 
dollar figures in appropriations bills are usually large lump-
sum amounts, not itemized details. The President could not 
reach within those dollar amounts. With enhanced rescission, 
the President is able to reach within appropriation accounts 
and select specific amounts. Because of this authority, the 
President can propose rescissions for all or part of an 
appropriated amount. To that extent, Dr. Reischauer said, 
enhanced rescission ``is equivalent to some of the strongest 
item veto powers possessed by state governors. Such `reduction 
veto' authority is possessed by chief executives in only 11 
states.''

              VI. Committee Action and Tabulation of Votes

    The Committee on Governmental Affairs held an additional 
hearing on February 23, 1995. Testimony was heard from Senator 
Bill Bradley, Representative Peter Blute, Louis Fisher of the 
Congressional Research Service, and Allen Schick of the George 
Mason University. Issues explored during the hearings included 
the extension of rescission authority to tax expenditures and 
the definition of targeted tax benefits; comparisons between S. 
4, S. 14, and the House-passed enhanced rescission bill, H.R. 
2; exempting the judiciary from the President's exercise of 
rescission authority; the question of whether S. 4 and S. 14 
could reach entitlements such as social security; and the 
balance between the executive and legislative branches, 
including the issue of how much legislative power may be 
delegated to the President.
    On March 2, 1995, the Senate Governmental Affairs Committee 
held a markup on S. 4. Senator Glenn moved that the Committee 
report S. 4 with recommendation. Senator Stevens then moved to 
amend the Glenn motion, to report S. 4 from the Committee 
without recommendation. A vote then occurred on the Stevens 
amendment to the Glenn motion. The Stevens amendment prevailed 
with roll call vote of 9 to 6. The following Senators were 
recorded as voting AYE: Roth, Stevens, Cohen (by proxy), 
Thompson, Cochran, Grassley, McCain (by proxy), Smith, and 
Lieberman. The following Senators were recorded as voting NO: 
Glenn, Nunn, Levin, Pryor, Akaka and Dorgan. A voice vote then 
occurred on the Glenn motion as amended by Senator Stevens to 
report S. 4 from the Governmental Affairs Committee without 
recommendation.

                       VII. Committee Amendments

    No amendments were adopted to S. 4 in the March 2, 1995, 
markup of the Senate Governmental Affairs Committee.

                   VIII. Section-by-Section Analysis

    Section 1 provides the short title of the ``Legislative 
Line Item Veto Act of 1995'' for S. 4.
    Section 2 enhances the President's spending control by 
amending the Impoundment Control Act of 1974 to add at the end 
thereof the following new title: ``Title XI--Legislative Line 
Item Veto Rescission Authority.'' Section 2 consists of two 
parts: Part A, defining the legislative line item veto 
rescission authority, and Part B, providing for congressional 
consideration of legislative line item veto rescissions.
    Part A--Legislative Line Item Veto Rescission Authority.--
Part A grants the President enhanced rescission authority and 
establishes conditions for its use. Notwithstanding the 
provisions of Part B of Title X and subject to the provisions 
of Part B of the new title, Title XI, the President may rescind 
``all or part'' of any budget authority if the President 
determines that the rescissions (1) would help balance the 
Federal budget, reduce the Federal budget deficit, or reduce 
the public debt, (2) will not impair any essential Governmental 
functions, and (3) will not harm the national interest. In 
satisfying these conditions, the President must notify the 
Congress of proposed rescissions in one of two occasions: (1) 
by means of a special message not later than twenty calendar 
days (not including Saturdays, Sundays, or holidays) after the 
date of enactment of a regular or supplemental appropriations 
Act or a joint resolution making continuing appropriations 
providing such budget authority, or (2) notifies the Congress 
of proposed rescissions by special message accompanying the 
submission of the President's budget to Congress provided that 
such rescissions have not been proposed previously for the 
fiscal year. The President shall submit a separate rescission 
message for each appropriations bill defined above.
    The President's proposed rescission becomes effective 
unless disapproved by Congress. Any amount of budget authority 
rescinded under Title XI as set forth in a President's special 
message shall be deemed canceled unless during a congressional 
review period a rescission disapproval bill is enacted into 
law.
    The congressional review period consists of twenty calendar 
days of session, during which Congress must complete action on 
the rescission disapproval bill, with that bill presented to 
the President for signature or veto. If Congress passes a 
rescission disapproval bill, the President has an additional 
ten days (not including Sundays) to exercise his authority to 
sign or veto the bill. If the President vetoes the rescission 
disapproval bill, an additional five calendar days of session 
is available for Congress to consider an override of the veto.
    If a President's special message is transmitted under this 
section during any Congress and the last session of such 
Congress adjourns sine die before the expiration of the period 
described above (twenty days for congressional consideration of 
a rescission disapproval bill, ten days for presidential 
review, and five days for a congressional override), the 
rescission shall not take effect. The message shall be deemed 
to have been retransmitted on the first day of the succeeding 
Congress and the review period, with respect to the message, 
shall run beginning after such first day.
    For example, if Congress considers an override at the end 
of the second session and adjourns sine die before the 
expiration of the five days set aside for that consideration, 
at the start of the next Congress the entire period of thirty-
five days begins anew. On the other hand, if Congress 
considered an override at the end of the first session and 
adjourned before the expiration of the five-day period, the 
calculation is different. Whatever time Congress consumed would 
be deleted from the period of thirty-five days. If Congress 
used thirty-three of the thirty-five days, when the second 
session began Congress would have two days remaining to 
consider the override.
    Section 1102 of Title XI defines the term ``rescission 
disapproval bill'' to mean a bill or joint resolution that only 
disapproves a rescission of budget authority, in whole, 
proposed to be rescinded in a President's special message.
    Section 1103 of Title XI provides for a ``lock-box'' to 
ensure deficit reduction. If Congress fails to disapprove a 
President's rescission within the period provided for 
legislative review, the President shall, on the day after the 
period has expired, reduce the discretionary spending limits 
under section 601 of the Congressional Budget Act of 1974 for 
the budget year and any outyear affected by the rescissions to 
reflect the amount of the rescission. If Congress fails to 
disapprove a President's rescission within the period provided 
for legislative review, the chairs of the House and Senate 
Committees on the Budget shall, on the day after the period has 
expired, revise levels under section 311(a) and adjust the 
committee allocations under section 602(a) to reflect the 
amount of the rescissions. If Congress fails to disapprove a 
rescission of direct spending within the period provided for 
legislative review, the President shall, on the day after the 
period has expired, adjust the balances for the budget year and 
each outyear under section 252(b) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 to reflect the amount of 
the rescission.
    Part B--Congressional Consideration of Legislative Line 
Item Veto Rescissions.--Part B establishes the procedures to be 
followed by Congress when acting on a rescission disapproval 
bill. Whenever the President rescinds any budget authority 
under Title XI, the President shall transmit to both Houses of 
Congress a special message specifying (1) the amount of budget 
authority rescinded; (2) any account, department, or 
establishment of the Government to which such budget authority 
is available for obligation, and the specific project or 
governmental functions involved; (3) the reasons and 
justifications for the determination to rescind budget 
authority pursuant to section 1101(a)(1); (4) to the maximum 
extent practicable, the estimated fiscal, economic, and 
budgetary effect of the rescission; and (5) all facts, 
circumstances, and considerations relating to or bearing upon 
the rescission and the decision to effect the rescission, and 
to the maximum extent practicable, the estimated effect of the 
rescission upon the objects, purposes, and programs for which 
the budget authority is provided.
    Section 1112 provides for the transmission of special 
messages and their publication in the Federal Register. Each 
special message under Title XI shall be transmitted to the 
House of Representatives and the Senate on the same day, and 
shall be delivered to the Clerk of the House of Representatives 
if the House is not in session, and to the Secretary of the 
Senate if the Senate is not in session. Each special message so 
transmitted shall be referred to the appropriate committees of 
each chamber and printed as a document of each House. Any 
special message transmitted under Title XI shall be printed in 
the first issue of the Federal Register published after such 
transmittal.
    Section 1113 explains the procedures in the Senate. Any 
rescission disapproval bill introduced with respect to a 
special message shall be referred to the appropriate committees 
of the House of Representatives and the Senate. Senate debate 
on any rescission disapproval bill and debatable motions and 
appeals shall be limited to not more than ten hours. The time 
shall be equally divided between, and controlled by, the 
majority leader and the minority leader or their designees. 
Senate debate on any debatable motion or appeal shall be 
limited to one hour, to be equally divided between, and 
controlled by, the mover and the manager of the bill, except 
that in the event the manager of the bill is in favor of any 
such motion or appeal. The time in opposition shall be 
controlled by the minority leader or his designee. Such 
leaders, or either of them, may, from the time under their 
control on the passage of the bill, allot additional time to 
any Senator during the consideration of any debatable motion or 
appeal. A motion to further limit debate is not debatable. A 
motion to recommit (except a motion to recommit with 
instructions to report back within a specified number of days, 
not to exceed one, not counting any day on which the Senate is 
not in session) is not in order.
    Provisions are established for points of order. It shall 
not be in order in the Senate or the House of Representatives 
to consider any rescission disapproval bill that relates to any 
matter other than the rescission of budget authority 
transmitted in the President's special message. It shall not be 
in order in either chamber to consider any amendment to a 
rescission disapproval bill. The above two provisions on points 
of order may be waived or suspended in the Senate only by a 
vote of three-fifths of the members duly chosen and sworn.
    Section 1114 establishes a sunset for the President's 
rescission authority under Title XI, which shall cease to be 
effective on September 30, 2002.

                 IX. Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 2, 1995.
Hon. William V. Roth, Jr.,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 4, the Legislative Line Item Veto Act of 1995, as 
ordered reported without recommendation by the Senate Committee 
on Governmental Affairs on March 2, 1995.
    S. 4 would grant the President the authority to rescind all 
or part of any budget authority. To exercise this authority, 
the President must transmit a special message to both houses of 
Congress specifying each amount rescinded from appropriations 
within a particular bill that has just been enacted. 
Furthermore, the message must include the governmental 
functions involved, the reasons for the veto, and--to the 
extent practicable--the estimated fiscal, economic, and 
budgetary effect of the action. This message must be 
transmitted within 20 calendar days (excluding Saturdays, 
Sundays, and holidays) of enactment of the legislation 
containing the rescinded appropriations. All budget authority 
rescinded would be cancelled unless Congress, within 20 working 
days, passes a rescission disapproval bill to restore the 
appropriations. Those disapproval bills would themselves to 
subject to veto, with the usual two-thirds vote in each house 
required to override. In addition, if Congress does not 
disapprove the President's message, the President shall reduce 
the discretionary spending caps for all affected years to 
reflect the rescissions. The provisions of this bill would be 
effective through September 30, 2002.
    The budgetary impact of this bill is uncertain, because it 
would depend on the manner in which the line item veto is used 
by the President and the success of the Congress in overriding 
vetoes; however, potential savings or costs are likely to be 
relatively small. Discretionary spending currently accounts for 
only one-third of total outlays and is already tightly 
controlled. While the bill, as reported, also allows the 
President to rescind an appropriation for a mandatory program, 
such a rescission would have no effect on the underlying laws 
that govern the operations and determine the costs of the 
program.
    By itself, this bill would not affect direct spending or 
receipts. Therefore, there would be no pay-as-you-go scoring 
under section 252 of the Balanced Budget and Emergency Deficit 
Control Act of 1985.
    Enactment of this legislation would not directly affect the 
budgets of state and local governments. However, the exercise 
of line item veto authority could affect federal grants to 
states, federal contributions toward shared programs or 
projects, and the demand for state and local programs to 
compensate for increases or reductions in federal programs.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contract on this issue 
is Jeffrey Holland.
            Sincerely,
                                              James L. Blum
                                    (For June E. O'Neil, Director).

                    X. Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 4. The bill is not a regulatory measure in the 
sense of imposing Government-established standards of 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 4, as ordered reported. Paperwork is now 
generated by presidential compliance with the Impoundment 
Control Act. Additional paperwork beyond the current level 
would be modest.
                   XI. ADDITIONAL AND MINORITY VIEWS

                              ----------                              


  S. 4, ADDITIONAL VIEWS OF SENATORS GLENN, NUNN, LEVIN, PRYOR, AKAKA

    The enactment of S. 4 would result in a massive shift of 
power to the Executive Branch from the Legislative. When Dr. 
Robert D. Reischauer, Director of the Congressional Budget 
Office (CBO) testified on January 12, 1995, at a joint hearing 
between our Committee and the House Committee on Government 
Reform and Oversight, he said S. 4 would ``provide the 
President with greater power than a constitutionally approved 
item veto.''
    Clearly, S. 4's impact on the fundamental balance of powers 
laid out in the Constitution should be carefully considered. 
Clearly, it should be the subject of thoughtful recommendations 
to the full Senate.
    However, on March 2, 1995, the Governmental Affairs 
Committee, against objections from our side, voted to report S. 
4 without recommendation because there were not enough votes in 
Committee to favorably report the bill. In addition, amendments 
to correct technical problems in the bill--which would have had 
bipartisan support--were ruled out under a ``no-amendment-in-
committee'' strategy.
    While S. 4 is called a line-item veto bill, S. 4's 
rescission authority does not require the president to pick a 
specific budget item or line item. S. 4 provides that ``the 
President may rescind all or part of any budget authority.'' S. 
4's enhanced rescission authority allows the President to reach 
into dollar amounts, not just lump sum items. Such ``reduction 
authority'' has been given to Governors in less than a dozen 
States.
    S. 4 would allow Presidential proposals to become law 
unless the Congress passes a ``rescission disapproval bill'' 
within 20 days. S. 4 contains no requirement for Committees to 
report the disapproval bill. The motion to proceed to this bill 
is fully debatable--potential filibuster--as are conference 
motions on any disapproval bills.
    If a ``disapproval bill'' managed to reach the President's 
desk, he presumably would veto it. In that event, S. 4 is a 
prescription for gridlock if you have a President from one 
party, and one body of Congress from the other. Under these 
circumstances, a President would only need \1/3\rd of either 
body to rescind spending determined by a majority of the 
Congress.
    S. 4 proposes to fundamentally change the balance of powers 
between the Executive and Legislative Branches; and alters the 
budget process. At present, both the President and the Congress 
have opportunities to affect budget priorities. The President 
formulates a budget and the Congress amends this budget. The 
President can veto a budget reconciliation bill. When the 
Congress passes appropriations bills based on the budget, the 
President has a choice of signing or vetoing them.
    S. 4 would add additional steps. After going through the 
regular budget process, the President could propose an enhanced 
rescission. Then, Congress could pass a rescission disapproval 
bill within twenty days, which the President could then veto. 
After all these steps, spending items adopted by a majority 
vote in the Congress could only be reinstated by 67 votes in 
the Senate and 290 votes in the House.
    In his January 12th testimony before our Committee, Dr. 
Reischauer, Director of CBO, testified about the experience of 
the sates with line-item veto. He said:

          Evidence from the states suggests that the item veto 
        has not been used to hold down state spending or 
        deficits, but rather has been used by states governors 
        to pursue their own priorities. * * * For example, a 
        study in the use of the item veto in Wisconsin over a 
        12-year period found that governors were likely to use 
        the authority to pursue their own policies or political 
        goals but not to reduce spending. Similarly, a 
        comprehensive survey of state legislative budget 
        officers found that governors were likely to use the 
        item veto for partisan purposes, but unlikely to use 
        the veto as an instrument of fiscal restraint.

    S. 4 proposes to change the way a bill becomes a law and we 
ask the question: ``For what purpose?''
    The Committee report reads: ``The purpose of enhanced 
rescissions is to confront the serious problem of pork-barrel 
spending. Each year wasteful and parochial projects--unlikely 
to pass on their own merits--are tucked into omnibus bills.''
    An amendment was offered at our mark-up that would have 
limited S. 4's enhanced rescission authority to items that have 
not been previously authorized. It was offered on the grounds 
that if there is to be a significant transfer of the 
Legislature's spending authority to the Executive, it should be 
transferred as a penalty for legislative abuse. In other words, 
the Committee had an opportunity to limit S. 4's purpose 
directly to the serious problem of pork-barrel spending. This 
amendment was withdrawn after the Chairman stated that he would 
report S. 4 out without amendment and, further, he had the 
votes to defeat any amendment to S. 4.
    The Minority staff on the Governmental Affairs Committee 
expressed interest, prior to mark-up, in working with the 
Majority staff of the Committee to develop technical 
amendments--to be offered at mark-up--to at least make S. 4 
workable. The Minority had met with the Majority staff on this 
issue. One amendment to correct the problems of filibustering 
the appointment of conferees on a disapproval bill had already 
been drafted. However, the Majority staff then indicted that 
the Chairman had decided not to have any amendments adopted at 
mark-up. We have to ask the question: ``Why go through the 
charade of a Committee mark-up?''
    Another problem we had wanted to correct was the issue of 
budget authority. S. 4 does not define ``budget authority.'' 
Budget authority is defined in the Budget Act as both 
appropriations and entitlement spending. We had testimony 
before this Committee on February 23, 1995 that, as currently 
drafted, a President could line-item veto a Social Security 
cost-of-living adjustment. As currently drafted, S. 4 threatens 
other appropriated entitlement and non-appropriated entitlement 
spending. We had wanted to work with the Majority staff to 
rectify this problem before the bill was sent to the Senate 
floor.
    There were other issues which Members on our side of the 
aisle would have liked to address at the Committee mark-up, 
but--for the reasons outlined above--we did not.
    In closing, we would like to include an excerpt from the 
Committee's mark-up transcript:

          Senator Glenn. ``Mr. Chairman, if I might ask, you 
        announced a no-amendment policy, as I understood your 
        opening statement. Are we to assume that no matter what 
        the merits of the amendments are, that on the 
        Republican side they will be voted down, regardless of 
        whether there is merit to them or not?''
          Chairman Roth. ``That's correct.''

                                   David Pryor.
                                   John Glenn.
                                   Sam Nunn.
                                   Daniel K. Akaka.
                                   Carl Levin.
                      XII. Changes in Existing Law

    This bill represents a new title, Title XI, to be added at 
the end of the Impoundment Control Act of 1974.