    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book II)]
    [August 11, 1997]
    [Pages 1082-1085]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on Signing Line Item Vetoes of the Balanced Budget Act of 1997
    and the Taxpayer Relief Act of 1997 and an Exchange With Reporters
    August 11, 1997

        The President. Last week we took historic action to put America's
    economic house in order when I signed into law the first balanced budget
    in a generation, one that honors our values, invests in our people,
    prepares our Nation for the 21st century.

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        It includes the largest increase in college aid since the GI bill,
    the largest increase in children's health since the creation of Medicaid
    over 30 years ago, tax cuts that are the equivalent of a $1,000 raise in
    take-home pay for the average family with two children, and much more
    that is good for America.
        The new balanced budget law also offers the first opportunity to use
    a powerful new tool to protect taxpayers, the line item veto, a tool
    designed to fight against waste and unjustifiable expenditures, to
    ensure Government works for the public interests, not the private
    interests.
        In the past, good legislation could be cluttered up with
    unjustifiable or wasteful spending or tax provisions, leaving the
    President no choice but to sign or veto the overall legislation. With
    the line item veto, the President can sign an overall bill into law, but
    cancel a particular spending project or a particular tax break that
    benefits only a handful of individuals or companies.
        Forty-three Governors throughout our Nation already have the line
    item veto power. Last year I signed the Federal line item veto into law.
    Last month the United States Supreme Court, on procedural grounds,
    rejected a challenge to this authority. Today, for the first time in the
    history of our country, the President will use the line item veto to
    protect taxpayers and to ensure that national interests prevail over
    narrow interests.
        In reaching agreement with Congress on how to balance the budget, we
    worked very hard to be fair to all Americans and to avoid wasting our
    citizens' tax dollars. For the same reason, I've asked the members of my
    administration to work carefully over the final legislation to identify
    any specific spending or tax provisions that I should consider
    canceling. Here's what I told the budget team.
        First, any provision I cancel must be one that was not included--and
    let me emphasize--not included--as a part of the balanced budget
    agreement process with Congress. Our agreement was entered into in good
    faith, and I will keep it. Second, any provision I cancel must be one
    that benefits just a few individuals, corporations, or States at the
    expense of the general interest. Finally, any provision I cancel must be
    one that is inconsistent with good public policy. Just because something
    benefits a small number of people doesn't necessarily mean that it hurts
    the public interest or the American people at large.
        After careful scrutiny and numerous meetings with my staff and
    Cabinet members, we have found three provisions that meet those
    criteria. In a few moments I will use the power of the line item veto to
    cancel a provision that would allow financial service companies to
    shelter income in foreign tax havens to avoid all U.S. taxation.
        I will also cancel a provision that singles out New York by allowing
    it to tap into the Federal Treasury to reduce its State expenditures
    through the use of health provider tax to match Federal Medicaid dollars
    that are impermissible in every other State in the country and actually
    in existence now in several other States. No other State in the Nation
    would be given this provision, and it is unfair to the rest of our
    Nation's taxpayers to ask them to subsidize it.
        Finally, I will cancel a provision that, though well-intended, is
    poorly designed. This provision would have allowed a very limited number
    of agribusinesses to avoid paying capital gains taxes, possibly forever,
    on the sales of certain assets to farmers' cooperatives. And it could
    have benefited not only traditional farm co-ops but giant organizations
    which do not need and should not trigger the law's benefits. Because I
    strongly support family farmers, farm cooperatives, and the acquisition
    of production facilities by co-ops, this was a very difficult decision
    for me. And I intend to work with Congressmen Stenholm and Hulshof and
    Senators Daschle, Dorgan, and Conrad and other interested Members of the
    Congress to redesign this effort so that it is better targeted and not
    susceptible to abuse.
        The actions I take today will save the American people hundreds of
    millions of dollars over the next 10 years and send a signal that the
    Washington rules have changed for good and for the good of the American
    people. From now on, Presidents will be able to say no to wasteful
    spending or tax loopholes, even as they say yes to vital legislation.
    Special interests will not be able to play the old game of slipping a
    provision into a massive bill in the hope that no one will notice. For
    the first time, the President is exercising the power to prevent that
    from happening. The first balanced budget in a generation is now also
    the first budget in American history to be strengthened by the line item
    veto. And that will strengthen our country.

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        And now I want to go and sign these provisions.

    [The President signed the cancellation letters.]

        Q. Mr. President, is that the only pork you can find in that budget?
        The President. I think that my staff is going to brief you about it,
    but let me say that they have--the relevant Cabinet and staff members
    have gone over this quite extensively. Keep in mind, the primary use of
    the line item veto overwhelmingly was meant to be in the appropriations
    process, which is not even started yet. I don't have the first
    appropriations bill.
        There are only a few spending items in this balanced budget that are
    part of the so-called entitlements process, so that--for example, you
    had the New York Medicaid provision there on provider taxes. With regard
    to the taxes, there were some 79 items certified to me, but that was
    only because of their size, that is, the number of people affected by
    it. Of those 79, 30 or more were actually recommendations by the
    Treasury Department to fix flaws in the present laws or to ease the
    transitions in the tax laws. And another dozen or more were put in by
    Congress by agreement with the Treasury Department to fix procedural
    problems in the law. Then there were a number of others that I agreed
    were good policy. So these are the ones that I think--and then there
    were several others that I might have line-item-vetoed, but they were
    plainly part of the understandings reached with Congress as a part of
    the budget process. So these seemed to me to be the ones, after being
    briefed by my staff, that both involved significant amounts of money and
    met the three criteria that I mentioned. And I believe it was the
    appropriate thing to do.
        Q. May I ask another way, sir, the last question another way? Were
    these the most glaring examples of why you were given this power and,
    therefore, they might hold up better in a court challenge?
        The President. Well, I wouldn't say that. I expect the most glaring
    examples to come up in the appropriations process, at least if the past
    is any prolog. Now, it may be that the use of the line item veto here
    will mean that it won't have to be used as much in the appropriations
    process, and that would please me greatly. But I think it's important
    that the American people understand that when the line item veto was
    given to the President, the primary assumption was that it would take
    out special projects that were typically funded in big bills, and those
    are those big appropriations bills, none of which have come to me yet.
        But I do believe that this should withstand court challenge because
    the process by which the matters were reviewed at least was a very
    careful, exhaustive process, and I received input from people all over
    the country that had interests in it, through my Cabinet and staff
    members. But we worked very hard on this, and--well, since I told you
    after my press conference on Thursday that I would be meeting with my
    staff. And I had meetings and conversations each day since then before
    finally making these decisions.
        Claire [Claire Shipman, CNN].
        Q. Mr. President, it sounds as though, given the deliberations among
    your staff and the talk about the court challenge and the difficulty
    finding items in this particular tax and spending legislation, that you
    decided to act now largely for symbolic reasons instead of----
        The President. No, I wouldn't say that. I think these three things
    are appropriate. But I just want to point out that I think that when the
    Congress certified, for example, 79 tax items to me, people said,
    ``Well, maybe you ought to veto 76 of them.'' And I think it's important
    to recognize that there really never were 79 candidates for a line item
    veto there. The Congress is required--the Joint Tax Committee is
    required by law to certify to the President all the tax items that
    benefit fewer than 100 people, and there were--the vast majority of
    those were either put in by the Treasury Department or by the
    congressional committees with the support of the Treasury Department to
    actually clean up procedural problems in the law so that the numbers
    were smaller.
        Then there were a number of things that, as I said, I might well
    have line-item-vetoed, but they were part of the overall budget process
    and that did a lot of good for the American people. And I have to honor
    the agreements that were made and the process of it.
        So these things I hope will be both real and symbolic in the sense
    that I'm hopeful that this will work out pretty much the way it did when
    I was Governor; that is, when you know the President is prepared to use
    the line item veto, that tends to operate as a deterrent against the
    most egregious kinds of projects that would otherwise not be funded. So
    it would suit me if,

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    after a while, the use of the veto became quite rare because there was a
    disciplined agreement not to have projects that ought not be funded in
    the first place.
        Q. Sir, can you tell me where in the Constitution the President is
    given this kind of power that hasn't been exerted until now?
        The President. Well, the power is given by legislation. The real
    question is, does the Constitution permit or forbid the Congress to give
    the President this kind of power. I believe that since--if you look at
    the fact that 43 States have this power for the Governor, and it has
    been upheld in State after State after State, the provisions of most
    State constitutions are similar to the provisions of the Federal
    Constitution in the general allocation of executive authority and
    legislative authority.
        So I think it is an implicit thing. As long as the legislature has
    the right to override the executive, then for the legislature to allow
    the executive to make reasoned judgments about particular items in these
    omnibus bills, I do not believe is an unconstitutional delegation of the
    legislature's authority to the President.
        So keep in mind, they can override this. If they decide that they
    think I'm wrong and two-thirds of them agree, they can override this.
        Q. Do you welcome a challenge?
        Q. Mr. President, Senator McCain sent you a note last week saying
    you ought to consider putting off a line item veto until you get the
    appropriations bills, on the grounds that it might be a blow to the
    spirit of cooperation that produced the tax cut and the balanced budget
    bills in the first place. Did you give that any consideration?
        The President. Absolutely. And when Senator McCain came to see me
    about the campaign finance issue and our common support for his
    legislation, we talked about it a little bit. As I've already said to
    you, that one of the reasons that we have decided on a relatively small
    number is I didn't want to touch anything that I thought where there was
    even a question that it might have been part of the negotiating process
    and a cooperative spirit with Congress.
        If you look at these three things, they present three entirely
    different problems, but I think all three are outside the scope of the
    budget negotiating process and all three are the kinds of things that
    the line item veto was meant for: the first, the avoidance of Federal
    taxation in an inappropriate way; the second, giving a break to one
    State in a way that would immediately disadvantage several others and
    potentially disadvantage all the other States; and the third, as I said,
    I believe a very worthy goal, having incentives for farmers' co-ops to
    integrate with production facilities in a way that is overbroad and
    could lead to the total avoidance of taxation under circumstances which
    are inappropriate, which would require a more disciplined fix. I think
    those are the kinds of things that the line item veto was meant to deal
    with in these contexts.
        Now, when you get to the appropriations process it will be somewhat
    more straightforward: Should this project be built or not; should this
    road be built or not; should this money be given to this agency or not
    for this program? And I think that those are the things where typically
    it's in use at the State level. But in the context of taxes and the
    entitlements, I thought each of these three things presented a
    representative case where the veto was intended to be used.
        Q. Are you running out of travel money, sir? [Laughter]
        The President. I hope not; I'm trying to go on holiday. [Laughter]

    Note: The President spoke at 12:30 p.m. in the Oval Office at the White
    House. The cancellations affected Public Law 105-33, the Balanced Budget
    Act of 1997, and Public Law 105-34, the Taxpayer Relief Act of 1997,
    both approved August 5. The reports detailing the cancellations were
    published in the Federal Register on August 12.