[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
LINE-ITEM VETO: PERSPECTIVES ON APPLICATIONS AND EFFECTS
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, MAY 25, 2006
__________
Serial No. 109-18
__________
Printed for the use of the Committee on the Budget
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COMMITTEE ON THE BUDGET
JIM NUSSLE, Iowa, Chairman
JIM RYUN, Kansas JOHN M. SPRATT, Jr., South
ANDER CRENSHAW, Florida Carolina,
ADAM H. PUTNAM, Florida Ranking Minority Member
ROGER F. WICKER, Mississippi DENNIS MOORE, Kansas
KENNY C. HULSHOF, Missouri RICHARD E. NEAL, Massachusetts
JO BONNER, Alabama ROSA L. DeLAURO, Connecticut
SCOTT GARRETT, New Jersey CHET EDWARDS, Texas
J. GRESHAM BARRETT, South Carolina HAROLD E. FORD, Jr., Tennessee
THADDEUS G. McCOTTER, Michigan LOIS CAPPS, California
MARIO DIAZ-BALART, Florida BRIAN BAIRD, Washington
JEB HENSARLING, Texas JIM COOPER, Tennessee
DANIEL E. LUNGREN, California ARTUR DAVIS, Alabama
PETE SESSIONS, Texas WILLIAM J. JEFFERSON, Louisiana
PAUL RYAN, Wisconsin THOMAS H. ALLEN, Maine
MICHAEL K. SIMPSON, Idaho ED CASE, Hawaii
JEB BRADLEY, New Hampshire CYNTHIA McKINNEY, Georgia
PATRICK T. McHENRY, North Carolina HENRY CUELLAR, Texas
CONNIE MACK, Florida ALLYSON Y. SCHWARTZ, Pennsylvania
K. MICHAEL CONAWAY, Texas RON KIND, Wisconsin
CHRIS CHOCOLA, Indiana
JOHN CAMPBELL, California
Professional Staff
James T. Bates, Chief of Staff
Thomas S. Kahn, Minority Staff Director and Chief Counsel
C O N T E N T S
Page
Hearing held in Washington, DC, May 25, 2006..................... 1
Statement of:
Hon. Patrick J. Toomey, a former Representative in Congress
from the State of Pennsylvania............................. 8
Thomas A. Schatz, President, Citizens Against Government
Waste...................................................... 10
Ed Lorenzen, Policy Director, Concord Coalition.............. 14
James R. Horney, Senior Fellow, Center on Budget and Policy
Priorities................................................. 22
Prepared statements, additional submissions by:
Chairman Nussle.............................................. 2
Hon. Paul Ryan, a Representative in Congress From the State
of Wisconsin............................................... 4
Mr. Schatz................................................... 12
Mr. Lorenzen................................................. 17
Mr. Horney's submission of an article written by Mr. Richard
Kogan...................................................... 23
Mr. Horney's prepared statement.............................. 30
LINE-ITEM VETO: PERSPECTIVES ON APPLICATIONS AND EFFECTS
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THURSDAY, MAY 1, 2006
House of Representatives,
Committee on the Budget,
Washington, DC.
The committee met, pursuant to call, at 10:03 a.m., in room
210, Cannon House Office Building, Hon. Jim Nussle (chairman of
the committee) presiding.
Members present: Representatives Nussle, Ryun, Hensarling,
Ryan, Conaway, Campbell, Spratt, Moore, Neal, Ford, Capps,
Baird, Cooper, and Cuellar.
Chairman Nussle. Good morning, and welcome everyone.
Today's hearing is the first of two hearings that this
committee will hold on the issue regarding the line-item veto
prior to marking up the legislative line-item veto, which is a
bill which has been introduced by Paul Ryan of this committee.
The gentleman from Wisconsin is here, and I appreciate his
leadership on the issue.
Today's discussion--I will yield to the gentleman from
Wisconsin in a moment, because it is his legislation, but let
me just make a couple of observations.
Today's discussion will focus on perspectives,
applications, the effect of the practice, both past use of the
practice as well as the possible use of the practice in the
future.
I am pleased that we have several experts on the issue,
including and first our former--I was about to say our former
friend and colleague--our former colleague, current friend, Pat
Toomey, who was a member of this committee for a number of
years, and I am sure he--I hope he didn't break out into hives
when he walked back into the room. I know that can occur for
some Members who used to serve on this committee; I hope it
didn't happen in this case.
Pat Toomey is serving at the president of Club for Growth.
We welcome the gentleman from Pennsylvania back to the
committee.
We have many others who have been here before: Tom Schatz,
who is the president of Citizens against Government Waste. We
appreciate his leadership and testimony on behalf of this
committee and before this committee as well.
Ed Lorenzen, the policy director from the Concord
Coalition, we welcome you; as well as James Horney, who is from
the Center of Budget and Policy Priorities. Welcome back to the
committee. We look forward to hearing your testimony.
Just as a kind of a brief history, let me suggest that back
in 1994, as many of you may recall, the House Republicans
included in our contract with America a version of the line-
item veto, which, after much discussion between the House and
the Senate, and with the input of several State Governors,
Congress enacted in the spring of 1996 the Line Item Veto Act
authorizing the President to cancel discretionary
appropriations, any new item of direct spending, entitlements
or other mandatory programs, and certain limited tax benefits.
If Congress disagreed with the President's action, it could
pass a resolution of disapproval within 30 days, but the
President could then veto that resolution and force an override
vote in each House.
That is pretty much how it worked. But as most of you may
also recall, in 1998 the Supreme Court ruled that the Line Item
Veto Act was unconstitutional, noting that in the two
applications of the veto reviewed by the Court, the
cancellation authority provided by the President by the veto,
it violated the Constitution, and thus the law was stricken
from the books at that time.
The legislative Line Item Veto Act that we will hopefully
soon consider must not only provide the effective mechanism for
reducing unnecessary Federal spending, but it must also be able
to overcome the constitutional implementation concerns that all
of us share, and that we hope can be overcome so that it can be
used appropriately.
As I mentioned a moment ago, the committee hopes to hold
some hearings on this, as well as have an opportunity to
possibly mark this up. This goes in conjunction with other
works that we are having with regard to curbing earmark abuse,
all in a hope--and we are seeing it borne out in the numbers--
of actually reducing the deficit, which it is coming down. We
want it to come down as fast as possible and as responsibly as
possible, and we believe that these are some of the mechanisms
that can be used in order to accomplish that.
[The prepared statement of Chairman Nussle follows:]
Prepared Statement of Hon. Jim Nussle, a Representative in Congress
From the State of Iowa
Whenever Congress has faced rapid spending growth combined with
budget deficits, we've seen proposals to adopt a presidential ``line-
item veto'' emerge. In general, the intent of these proposals has been
to reduce unnecessary spending included in Congressionally-passed
legislation by allowing the president to strike out individual spending
items effectively removing them from a bill.
brief history
Back in 1994, as many of you recall, House Republicans included in
our ``Contract with America'' a version of the line-item veto which
after much discussion between the House and Senate, and with the input
of several State governors Congress enacted in the Spring of 1996.
The Line Item Veto Act authorized the president to cancel
discretionary appropriations, any new item of direct spending
(entitlements and other mandatory programs), and certain limited tax
benefits.
If Congress disagreed with the president's action, it could pass a
resolution of disapproval within 30 days. But the president could then
veto that resolution and force an override vote in each House.
problem
But as most of you will also recall, in 1998, the Supreme Court
ruled the Line Item Veto Act unconstitutional, noting that in the two
applications of the veto reviewed by the Court, the cancellation
authority provided to the president by the veto violated the
Constitution and thus, the law was stricken from the books.
the legislative line item veto act
The legislation we will soon consider The Legislative Line Item
Veto Act of 2006 must not only provide an effective mechanism for
reducing unnecessary Federal spending, it must also be able to overcome
constitutional and implementation concerns.
As I mentioned a moment ago, this Committee hopes to hold two
hearings prior to marking up the legislation. Today we'll hear from our
panel of experts on how the line-item veto might assist us in
addressing earmarks and curbing future laws that might increase the
deficit.
Then, following the Memorial Day Recess, we plan to look at
constitutional issues surrounding the legislation which I imagine will
be a both a very spirited and informative discussion.
And I look forward to hearing the thoughts of our witnesses and our
Members on all these issues.
Chairman Nussle. Let me yield briefly to the gentleman from
Wisconsin for any comments he would like to make, since this is
his bill.
Mr. Ryan. I thank the chairman for yielding, and I ask
unanimous consent that my full opening statement be included in
the record.
Chairman Nussle. And without objection, all Members'
opening statements will be put in the record as well.
Mr. Ryan. I will be fairly brief. No. 1, I want to thank
the witnesses for coming. Ed Lorenzen, it is nice to see you
here as well, because we have worked on this together over the
years when you worked with Charlie Stenholm.
This bill is not a new idea. This is virtually identical to
the Stenholm-Spratt bill that was introduced and, as Ed just
told me, passed the House in 1993 in the 103d Congress, very
similar to the Stenholm-Kasich-Penny bill, very much the same
exact bill that I had with Charlie Stenholm in 2004. In every
case these bills have been bipartisan.
I think most people acknowledge that the rescission system
we have today doesn't work. This bill fixes the rescission
system so the rescissions actually work. And I am extremely
sensitive to the constitutional issues. I actually agree with
the Supreme Court ruling of 1996. I do believe that that
version of the line-item veto, now having read the case, did
unnecessarily transfer too much power from the legislative to
the executive branch. This goes in a different direction.
We actually have been talking to a lot of different
constitutional scholars, including Chuck Cooper, who is the man
who argued against the Supreme Court case in 1996, who is a
strong supporter of this version of the line-item veto. This
makes sure that Congress has the final say-so, Congress is the
final arbiter of these things, but it makes sure that the
rescission requests by the President don't go ignored like they
all too often have ignored.
And I will finish with this last point which is what we are
trying to do is bring transparency and accountability to the
way we spend taxpayer dollars. And we have the beginning of the
system and the end of the system. What I mean when I say that
is the earmark reform legislation we are trying to pass, we are
trying to bring more transparency and accountability to the
front end of the spending process here in Congress, but we
don't have enough transparency and accountability at the back
end of the final stages of the spending process. The choices we
are given in Congress is one vote up or down on a conference
report, which is usually typically a massive spending bill or
tax bill. Then the President has the same kind of choice, sign
or veto this entirely large bill. There is no in-betweens, no
chances to revisit something that would have gotten snuck in in
a conference report or something like that.
So I think what this does is it brings a very good
complement to the process by bringing more transparency and
accountability at the back end of the spending process, and
this complements our earmark reforms that are working its way
through Congress to bring transparency and accountability at
the front of the process so the entire congressional spending
and taxing process has much more needed transparency and
accountability so our constituents can see how their tax
dollars are being spent, and that we, as Members of Congress,
have an opportunity to visit these issues on an individual
basis, and I think that is very important. We are airtight on
the Constitution, and I would be happy to answer questions that
people have, those things.
But I want to thank the witnesses for coming, and I want to
thank the chairman for having this hearing.
Chairman Nussle. I thank the gentleman from Wisconsin.
[The prepared statement of Mr. Ryan follows:]
Prepared Statement of Hon. Paul Ryan, a Representative in Congress From
the State of Wisconsin
Chairman Nussle, thank you for holding a hearing today on H.R.
4890, the Legislative Line-Item Veto Act of 2006. This legislation
would provide the President with the authority to single out wasteful
spending items and narrow special-interest tax breaks included in
legislation that he signs into law and send these specific items back
to Congress for a timely vote. Unlike the line-item veto authority
provided to President Clinton in 1996, H.R. 4890 passes constitutional
muster because it requires an up-or-down vote in both chambers of
Congress under an expedited process in order to effectuate the
President's proposed rescissions.
I appreciate the Budget Committee's interest in this issue and am
looking forward to this and other upcoming hearings on H.R. 4890. This
series of hearings will ensure that we produce effective and
constitutional legislation that will help the President and Congress
work together to reduce the federal budget deficit. Today, I am very
interested in the views of our distinguished witnesses as to the impact
that this bill would have on Congress' spending habits. It is my strong
belief that H.R. 4890 will take an important step toward bringing
greater transparency, accountability and a dose of common sense to the
federal budget process.
the problem
The amount of pork-barrel spending included in the federal budget
continues to increase every year. According to Citizens Against
Government Waste (CAGW), the federal government spent $29 billion on
9,963 pork-barrel projects in Fiscal Year 2006 (FY 2006), an increase
of 6.3% from 2005, and an increase of over 900% since 1991. Overall,
the federal government has spent $241 billion on pork-barrel projects
between 1991 and 2005, an amount greater than two-thirds of our entire
deficit in FY 2005. This includes irresponsible spending on items such
as the $50 million Rain Forest Museum in Iowa; $13.5 million to pay for
a program that helped finance the World Toilet Summit; and $1 million
for the Waterfree Urinal Conservation Initiative.
Many of these pork-barrel spending projects are quietly inserted
into the conference reports of appropriations bills where Congress is
unable to eliminate them using the amendment process. In fact, the only
time that Congress actually votes on these items is during an up-or-
down vote on the entire conference report, which includes spending for
many essential government programs in addition to the pork-barrel
earmarks. In this situation, it is very difficult for any Member to
vote against an appropriations bill that, as an overall package, may be
quite meritorious, despite the inclusion of wasteful spending items.
Unfortunately, the current tools at the President's disposal do not
enable him to easily combat these wasteful spending items either. Even
if the President identifies numerous pork-barrel projects in an
appropriations bill, he is unlikely to use his veto power because it
must be applied to the bill as a whole and cannot be used to target
individual items. This places the President in the same dilemma as
Members of Congress. Does he veto an entire spending bill because of a
few items of pork when this action may jeopardize funding for our
troops, for our homeland security or for the education of our children?
The President's ability to propose the rescission of wasteful
spending items under the Impoundment Control Act of 1974 has been
equally ineffective at eliminating wasteful spending items. The problem
with the current authority is that it does not include any mechanism to
guarantee congressional consideration of a rescission request and many
Presidential rescissions are ignored by the Congress. In fact, during
the 1980's, Congress routinely ignored President Reagan's rescission
requests, failing to act on over $25 billion in requests that were made
by the Administration. The historic ineffectiveness of this tool has
deterred Presidents from using it with any regularity.
summary of h.r. 4890, the legislative line-item veto act of 2006
I introduced H.R. 4890, the Legislative Line-Item Veto Act of 2006,
on March 7, 2006. This legislation, which currently has the support of
104 bipartisan cosponsors in the House, is based on the
Administration's proposal to provide line-item veto authority to the
President and is the product of discussions that I and my congressional
colleagues have had with the White House since the President announced
his intent to seek line-item veto authority in the State of the Union
Address on January 31, 2006.
The Legislative Line-Item Veto Act is very similar to an expedited
rescissions amendment that I offered during the consideration of H.R.
4663 on June 24, 2004, with my former colleague Representative Charlie
Stenholm, a Democrat from Texas. Like H.R. 4890, this amendment would
also have allowed the President to propose the elimination of wasteful
spending items subject to congressional approval under an expedited
process. Although this amendment failed to pass the House, it attracted
the support of 174 Members of Congress, including 45 Democrats. A
similar provision is also included in Section 311 of the Family Budget
Protection Act, legislation that I introduced along with Congressman
Jeb Hensarling of Texas, Congressman Chris Chocola of Indiana, and
former Congressman Christopher Cox of California during 2004 and again
in 2005.
If passed, H.R. 4890 would give the President the ability to put on
hold wasteful discretionary spending, wasteful new mandatory spending,
or new special-interest tax breaks (those that affect less than 100
beneficiaries) after signing a bill into law. The President could then
ask Congress to rescind these specific items. The requirement that both
the House and Senate approve all proposed rescissions means that
Congress will continue to control the power of the purse and will have
the final word when it comes to spending matters. However, unlike the
current rescission authority vested in the President under the
Impoundment Control Act of 1974, the bill also includes a mechanism
that would virtually guarantee congressional action in an expedited
time frame.
Using the Legislative Line-Item Veto, the President and Congress
will be able to work together to combat wasteful spending and add
transparency and accountability to the budget process. This tool will
shed light on the earmarking process and allow Congress to vote up or
down on the merits of specific projects added to legislation or to
conference reports. Not only will this allow the President and Congress
to eliminate wasteful pork-barrel projects, but it will also act as a
strong deterrent to the addition of questionable projects in the first
place. On the other hand, Members who make legitimate appropriations
requests should have no problem defending them in front of their
colleagues if they are targeted by the President. With H.R. 4890, we
can help protect the American taxpayer from being forced to finance
wasteful pork-barrel spending and ensure that taxpayer dollars are only
directed toward projects of the highest merit.
The process under H.R. 4890 would begin with the President
identifying an item of wasteful spending or a special-interest tax
break in legislation that is being signed into law. The President would
then submit a special message to Congress, asking for Congress to
rescind this wasteful item or items. House and Senate leadership would
have the opportunity to introduce the President's rescission requests
within two days following receipt of the President's message. After
that time period, any Member of Congress would be able to introduce the
President's rescission proposal, virtually guaranteeing congressional
action. Once the bill is introduced, it would be referred to the
appropriate committee, which would then have five days to report the
bill without substantive revision. If the committee fails to act within
that time period, the bill would be automatically discharged to the
floor. The bill would have to be voted on by the full House and Senate
within 10 legislative days of its introduction, with a simple majority
required for passage.
Since introducing H.R. 4890, I have received substantial feedback
from interested Members of Congress on ways to improve the legislation
to ensure that it best meets its intent of controlling federal spending
while keeping the power of the purse squarely in the legislative
branch. Among the changes that I think may improve the legislation are
the following: limiting the time period available to the President to
make a rescission request after signing a bill into law; limiting the
number of rescission requests that can be made for each piece of
legislation signed into law; allowing for the bundling of rescission
requests; explicitly prohibiting duplicative requests; ensuring that
the authority cannot be used to target policy provisions; and
tightening the language that allows the Administration to defer
spending while a rescission request is being considered by Congress.
These changes will strengthen the bill and better ensure that the
legislative branch retains all of the powers delegated to it by our
founding fathers. I am committed to continuing to work with my
colleagues in Congress throughout the legislative process to make sure
that H.R. 4890 is narrowly drafted in order to best achieve its goals.
conclusion
In 2006, the federal government will once again rack up an annual
budget deficit of over $300 billion, and our debt is expected to
surpass $9 trillion. Meanwhile, the retirement of the baby boom
generation looms on the horizon, threatening to severely exacerbate
this problem. Given these dire circumstances, it is essential that we
act now to give the President all of the necessary tools to help us get
our fiscal house in order. By providing the President with the scalpel
he needs to pinpoint and propose the elimination of wasteful spending,
H.R. 4890 takes an important first step toward achieving this goal.
Chairman Nussle. Mr. Spratt. I yield to my friend from
South Carolina for any comments he would like to make.
Mr. Spratt. Thank you, Mr. Chairman. Thank you for calling
this hearing.
Mr. Chairman, anything that can help bring the budget back
to balance is worthy of discussion.
In March of this year, the administration sent up a bill
which has been introduced now in the House and the Senate
granting the President expedited and, one would say, enhanced
rescission authority. This bill would vest the President with
the power to propose to Congress the rescission of new
discretionary spending and new mandatory spending, and the
rescission of targeted tax benefits as well. For its part,
Congress would guarantee the administration a vote on a fast
track.
This bill is a cession of power from Congress to the
President, and as such it behooves us to take care. Jim Wright
used to say that you needed to have served under LBJ to fully
appreciate what a President with an item veto can do. For
example, a President with this power, pushing a big spending
bill, could call Members of Congress when a vote was coming up,
solicit their support, and if it was not forthcoming, back up
his request with a veiled threat of rescission of something
that Member dearly wanted.
Charlie Stenholm and I were conscious of this potential for
abuse and perverse results 15 years ago when we wrote and
brought to the floor what we call expedited and enhanced
rescission. We made the President act swiftly, soon after a
bill's passage, if he wanted to wield his item veto. In one
version we gave Members the right to present a petition of 50
votes so that items could be broken out, considered
individually. We gave the President one bite at the apple. If
he didn't win the first time, there were no second chances. We
limited the veto to discretionary spending so that we didn't
open up Social Security, Medicare to some other Member on the
House floor. We widened the scope by including targeted tax
benefits, tax benefits that go to a limited number of
beneficiaries. And just in case these limitations were not
enough to abort abuse, we inserted a 2-year sunset in the bill.
If you respect this whole institution of the public and
status as a coequal branch, indeed the first among equals
because it is Article I of the Constitution--that is how the
Framers viewed us when it was originally written, and 200 years
of history have borne them out. If you regard this whole
institution as a coequal branch, these limits seem to me to be
the least we should be doing to make certain that we do not
cede too much power.
This bill before us goes far beyond the balanced bill that
Charlie Stenholm and I brought to the floor in 1990. First of
all, it effectively resurrects empowerment. It allows the
President to suspend spending for 180 days on any item he
proposed for rescission, even if Congress promptly rejects the
rescission. In effect, this provision allows the President to
cancel legislative spending without congressional approval.
This bill omits any time frame for the President to
exercise his item veto. As written, it would allow the
President to propose rescission months after the passage of a
bill and repeatedly thereafter, even in the face of continual
rejection by Congress.
Despite this broad grant of authority, the bill contains no
sunset. It is permanent law until you can muster two-thirds of
the votes in each House to override the likely veto of any bill
appealing or reining in the powers this bill would grant.
Supporters will admit that this might be a broad cession of
power, but argue that it is necessary with intractable deficits
running over $300 billion for as far as the eye can see.
In truth, most of the earmarks, which are the prime targets
of this kind of veto, don't enlarge the total spending pie,
they simply divide the pie into smaller pieces. In the end,
total spending indeed may not be reduced at all if the
President has these powers for reasons that I just mentioned.
The Congressional Budget Office reports that under the more
powerful line-item veto which the President enjoyed in 1997 and
1998, only $600 million was actually cancelled out. As noted
earlier, the two being proposed now would very easily give the
President the leverage to win passage of legislation that
increases rather than decreases the deficit.
If we want budget process changed--and I think we need
budget process changed--and improvements for us to get our grip
on the deficit, a hand around this enormous problem, then why
don't we start with the PAYGO rule, the one rule that really
proved its worth during the 1990s, the one rule that Alan
Greenspan, sitting where these four witnesses sit, three times
testified should be reviewed and reenacted? If we want to
increase the scrutiny, if we want to increase the review that
earmarks are given or special provisions are given or targeted
tax benefits are given, let us realistically have and
rigorously enforce the requirements that bills lay over so we
have an opportunity, after they come out of conference or out
of committee, to truly scrub them down and find what is in them
and address those issues on the floor or elsewhere.
There are lots of budget changes we can make in this
institution that would make us more responsible, it would go
directly to the problem at hand, without ceding enormous
authority to the President, which could be manipulative, which
could be used to our detriment.
I would hope that those who support this bill will
recognize that some of its features are extremely problematic.
For example, as I said, the bill would allow the President to
withhold funding that he proposes for rescission for 180 days
even if we promptly reject that proposal, and then to withhold
funds for an additional 180-day period simply by submitting the
same proposal all over again. This could allow the President to
thwart previously approved funding unilaterally, and in clear
conflict with congressional intent.
To bring the budget back to balance, in all sincerity, we
need to return to the kind of process that worked in the 1990s,
the PAYGO rule, realistic discretionary spending caps, and
budget negotiations, bipartisan negotiations, in which everyone
comes to the table, and everything is on the table. Defense
spending and nondefense spending, tax cuts, entitlements;
everything is on the table, and everybody is at the table.
If passage of this bill causes people to think that we are
making headway on the deficit, I fear we will only defer
realistic confrontation with the issues we have got to grapple
with.
Thank you, and I look forward to your testimony.
Chairman Nussle. Thank you, Mr. Spratt.
Let me turn now to our witnesses. All of your statements
will be made part of the record, as presented, and we would
enjoy having you summarize your testimony as you see fit in the
time allotted.
Welcome back to the committee, Pat. Mr. Toomey, it is good
to see you, and we are pleased to receive your testimony.
STATEMENT OF THE HON. PATRICK J. TOOMEY, A FORMER
REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. Toomey. Well, it is great to be back.
And, Chairman Nussle, Ranking Member Spratt, members of the
committee, thank you very much for giving me the opportunity to
testify today on the topic of H.R. 4890, the Legislative Line
Item Veto Act of 2006. And I would like to ask permission to
have included with my testimony an op-ed that I recently wrote
for the Philadelphia Inquirer addressing this very legislation.
Chairman Nussle. Without objection.
Mr. Toomey. Thank you.
At the Club for Growth, we believe that Federal Government
spending has long been excessive both in the total level of
expending and in the kinds of spending that have occurred. The
Heritage Foundation observes that between 2001 and 2006,
Federal spending has grown by 45 percent, and the spending
increase is across the board. Spending on education is up 137
percent, spending on Medicare is up 58 percent; defense
spending, 76 percent.
In addition to the total level of spending, the kind of
pork barrel earmark spending has exploded. Since 1991, Federal
earmarks have grown by 900 percent. And in 2006 alone, earmarks
on appropriation bills totaled nearly 10,000 in number, adding
up to $29 billion in costs for taxpayers.
Now, we oppose that spending, and for many reasons, but the
main reason, Mr. Chairman, is that we believe excessive
government spending over time diminishes the rate of growth of
our economy. The Government allocates money through a political
process, which is necessarily heavily influenced by the
perception of political gain of the officeholders. That is the
nature of the process. Alternatively, nongovernment actors, be
they individuals or businesses engaged in private enterprise,
they tend to allocate capital based on the supply and demand
signals they perceive in the marketplace. It is this latter
free-market method of capital allocation that tends to allow
for maximum economic growth and prosperity; therefore, growth
in jobs and wages and opportunity. The former political
allocation of capital simply doesn't match up. So because
excessive government spending such as we have costs our society
jobs, wages and opportunity, we support legislative measures
likely to reduce the excesses.
We believe that H.R. 4890 is likely to reduce some of the
excesses. We acknowledge this is no panacea; in fact, it is no
guarantee that we will have less Federal spending, but we think
most likely if this were enacted, there would be fewer
earmarks, there would be less total spending, and we think it
would be good for taxpayers and good for our economy.
Now, I understand that some opponents have suggested that
this legislation may not have constitutional authority granted
to Congress to control Federal spending, or that it
inappropriately grants to the President lawmaking power. We
think that is demonstrably false for several reasons. One,
first of all, the Constitution, of course, grants to the
President the authority to sign or veto spending bills like
other bills, and as such, he has a shared responsibility for
establishing both the total level of spending and the specific
items of spending.
But furthermore, the 1998 Supreme Court decision regarding
the 1996 line-item veto legislation stated the Court's
opposition to that legislation very clearly, and I will quote.
They say that the act gave the President the unilateral power
to change the text of duly enacted statutes, end quote.
This bill under consideration today, or being discussed
today, clearly gives the President no such unilateral power.
Furthermore, as Justice Scalia observed in his dissent of that
1996 decision, he made the point that insofar as the degree of
political lawmaking power conferred upon the executive is
concerned, there is not a dime's worth of difference between
Congress authorizing the President to cancel a spending item
and Congress' authorizing money to be spent on a particular
item at the President's discretion. And the latter has been
done since the founding of the Nation.
Finally, and, I think, positively, this bill is simply not
a true line-item veto; it is much more akin to an enhanced
rescission bill. Under H.R. 4890, it is Congress and not the
President that would have final say on these spending matters.
So in our view this bill clearly would not violate the
Constitution. What it would do is it would grant the President
the power to force Congress to scrutinize a little more
closely, and in some cases to specifically reaffirm Congress'
own spending decisions.
So the question raised by H.R. 4890 seems to be is Congress
willing to subject itself to a little more openness and a
little more scrutiny of its own spending, and we believe it
should.
We observed that the Republican-controlled Congress granted
to a Democratic President a considerably greater line-item veto
power not long ago. Furthermore, if individual items as
specified by the President under this bill have merit, they
ought to be able to withstand the scrutinyand simply pass the
test of the vote when returned to Congress.
I would like to observe that at least 11 Presidents from
both parties have called for this authority. Of the 50 States,
43 grant similar authority to their Governors, and if adopted
at the Federal level, it just might help to reduce some of the
spending excesses that have accelerated in recent years.
So I thank you for giving me the opportunity to testify on
behalf of the 35,000 members of the Club for Growth, and I
would like to urge this committee and your colleagues
throughout the House to pass H.R. 4890. Thank you.
Mr. Ryan [presiding]. Thank you, Pat.
Next we will hear from Tom Schatz, president of Citizens
against Government Waste. Mr. Schatz.
STATEMENT OF THOMAS A. SCHATZ, PRESIDENT, CITIZENS AGAINST
GOVERNMENT WASTE
Mr. Schatz. Thank you very much, Mr. Chairman, and also Mr.
Spratt and the committee, for inviting us here this morning.
This is an issue that has been around for quite some time,
as I am sure all of you are aware, and brought up in the Senate
many years ago, brought up in the House, of course. We did have
passage of one piece of legislation that was found to be
unconstitutional. So the question today really is how do we get
legislation through that is constitutional, that can be
bipartisan, because it will affect future Congresses, future
Presidents of both parties? And I think it is important that
there be a consensus on how to move this legislation forward
because it is not only popular around the country, it needs to
be something that sustains future objections from future
Congresses.
We have looked at the bill, and, of course, read the
testimony of Charles Cooper, who testified before the Senate
Budget Committee earlier in May, and he was assistant attorney
general under President Reagan, and also argued against the
previous version of the line-item veto. His view is this
particular version is constitutional, and I think that other
than his expertise, there are many others who agree that this
is the appropriate way to move forward in this legislative
line-item veto or enhanced rescission process.
Looking at the actual numbers, the dollars that could be
saved, it depends on how one looks at $29 billion in pork, as a
small number or big number. We released our Congressional Pig
Book earlier this year. This is where the $29 billion that Pat
Toomey just spoke of comes from, almost 10,000 items. And while
that is about 1 percent of the budget, it is still a list of
items that people outside the Beltway recognize as wasteful
spending.
This is only part of what needs to be done in terms of
budget reform, but certainly it would be nice if the President
had the power to eliminate $500,000 for the Sparta Teapot
Museum in North Carolina, a power which he currently doesn't
have; or several years ago the $50 million for the indoor rain
forest in Iowa, where the money is still sitting out there, and
that project hasn't been built.
There are a lot of ways to look at this and a lot of ways
to move it forward, but it addresses what I think the American
people say are the excesses here in Washington. Addressing
entitlements, addressing larger areas of spending; even
defense, of course, does need to move forward as well. But
there is a lot of time that is spent on fighting for and
protecting earmarks. While it is not a lot of money, it takes
up an awful lot of time. A request to the Appropriations
Committee, it affects their oversight, it affects the other
activities that they may undertake, and therefore, in our view,
it is critical to getting at least some of the spending under
control in Washington.
And I agree with what Mr. Ryan said about the fact that we
are trying to get earmark reform up front. This is looking at
the end of the process, allowing the President to be involved.
It works in the 43 States. There doesn't seem to be any kind of
constitutional crisis in those States with a permanent line-
item veto authority.
So, in our view, the point is to get it right the first
time. We think it should be permanent; it does work at that
level. It did work a little bit when President Clinton had that
authority. Whether it is $600 million or $30 million, or
whatever it might be, it is still something that the American
people want to be done. They are looking for reform, they know
there has been too much spending. Pat gave you all the
statistics, and they are all there. And at this point, with
earmark reform moving forward, with other budget reforms being
considered, with votes in the Senate to almost eliminate the
$700 million Railroad to Nowhere, the line-item veto is a
proposal--or the enhanced rescission in this case--a proposal
whose time really has come.
So in our view, we will be mobilizing, through our grass-
roots activities or our lobbying group, our members to support
this legislation. We hope that it does get to the floor, and we
hope that there are additional actions taken by Congress to get
spending under control.
I would be happy to answer any questions, and I ask that my
full statement be entered into the record.
I also--I don't want to take up the taxpayers' money and
print this, but we do have a report called All About Pork,
which gives an interesting history about pork. And I just want
to mention one quote from President Monroe in 1822, who argued
that Federal money ought to be limited to ``great national
works only, since if it were unlimited, it would be liable to
abuse and might be productive of evil.'' So maybe we can get
rid of some of that evil, as President Monroe identified it,
and pass this legislation. Thank you.
Mr. Ryan. Thank you, Mr. Schatz.
[The prepared statement of Mr. Schatz follows:]
Prepared Statement of Thomas A. Schatz, President, Citizens Against
Government Waste
Mr. Chairman, members of the subcommittee, thank you for the
opportunity to testify today. My name is Thomas A. Schatz. I am
president of Citizens Against Government Waste (CAGW), a nonprofit
organization made up of 1.2 million members and supporters, dedicated
to eliminating waste, fraud and abuse in government. Citizens Against
Government Waste has not received at any time any federal grant and we
do not wish to receive any in the future.
CAGW was created 22 years ago after Peter Grace presented to
President Ronald Reagan 2,478 findings and recommendations of the Grace
Commission (formally known as the President's Private Sector Survey on
Cost Control). These recommendations provided a blueprint for a more
efficient, effective and smaller government. The line-item veto was one
of those proposals.
Since 1984, the implementation of Grace Commission and other waste-
cutting recommendations supported by CAGW has helped save taxpayers
more than $825 billion. CAGW has been working tirelessly to carry out
the Grace Commission's mission to eliminate government waste.
H.R. 4890, the Legislative Line Item Veto Act of 2006, was
introduced by Rep. Paul Ryan (R-Wisc.), and would grant the power of a
line-item veto to the president. This legislation would help restore
fiscal discipline in Washington.
The bill provides the authority for the President to identify a
specific spending provision or tax break in legislation that is to be
signed into law, and to presents a communication to Congress asking for
the removal of the item. House and Senate leadership have two days to
introduce the rescission request. After three days, any member of
Congress is free to introduce the President's proposal.
Next, the rescission bill is submitted to the appropriate
committee, which has five days to report the bill without substantive
modification. The request is automatically discharged to the floor if
the committee fails to act within five days. The full House and Senate
must vote on the bill within ten days of its introduction, with a
simple majority required to pass. Lastly, if the House and Senate
approve of the rescission, it goes to the President and becomes law; if
either fails, the proposal is not ratified.
There is a public perception that earmarks, or pork-barrel
spending, have been around ``since we were a country,'' as Senate
Minority Leader Harry Reid (D-Nev.) said. Nothing could be further from
the truth. While Congress is granted the power under Article I, Section
9, Clause 7, which says ``No money shall be drawn from the Treasury but
by consequence of Appropriations made by Law,'' the Founding Fathers
expressed strong views on the limits of that authority.
Responding to a proposition by James Madison to improve a system of
roads used in national mail delivery, Thomas Jefferson wrote the
following on March 6, 1796:
Have you considered all the consequences of your proposition
respecting post roads? I view it as a source of boundless patronage to
the executive, jobbing to members of Congress & their friends, and a
bottomless abyss of public money. You will begin by only appropriating
the surplus of the post office revenues; but the other revenues will
soon be called into their aid, and it will be a scene of eternal
scramble among the members, who can get the most money wasted in their
State; and they will always get most who are meanest.
President James Monroe argued in 1822 that federal money ought to
be limited to ``great national works only, since if it were unlimited
it would be liable to abuse and might be productive of evil.''
President Grover Cleveland was labeled ``king of the veto'' in the
late 1800s for refusing to sign numerous congressional spending bills.
He explained this practice by stating, ``I can find no warrant for such
an appropriation in the Constitution.''
While the term pork-barrel spending was first used in the late
1800s comparing the rush toward tax dollars to the way slaves would
crowd around barrels of salted pork at meal time, the practice was not
widespread until the late 1980s. In particular, pork-barrel spending
has exploded since the mid-1990s. Since 1991, CAGW's annual Pig Book
has identified 76,420 examples of egregious pork-barrel spending, which
has cost taxpayers $241 billion. Examples from the 2006 Congressional
Pig Book include:
$13.5 million for the International Fund for Ireland,
which helped finance the World Toilet Summit;
$8.3 million for the Department of Defense for breath
alcohol testing equipment;
$6.4 million for wood utilization research;
$5 million for the Capitol Visitor Center;
$4.2 million for shrimp aquaculture research;
$2.3 million for the International Fertilizer Development
Center in Alabama;
$2.2 million for the MountainMade Foundation;
$1 million for the Waterfree Urinal Conservation
Initiative;
$550,000 for the Museum of Glass in Tacoma, Washington;
$500,000 for the Sparta Teapot Museum in Sparta, North
Carolina.;
$450,000 for plantings on the eastern front of the
Capitol;
$250,000 for the National Cattle Congress in Waterloo,
Iowa;
$234,000 for the National Wild Turkey Federation in
Edgefield, South Carolina;
$150,000 for the Bulgarian-Macedonian National Education
and Cultural Center in Pittsburgh, Pennsylvania;
$150,000 for the Actors Theater in Louisville, Kentucky;
and
$100,000 for the Richard Steele Boxing Club in Henderson,
Nevada.
For a brief period, the American people had hope that reform would
reduce the assault on their wallets. In 1995, Congress passed the line-
item veto by a voice vote in the House and a 69-31 vote in the Senate.
This law was enacted after several previous failed efforts to pass such
legislation.
Unfortunately, this new veto privilege was used sparingly by
President Bill Clinton to cancel a mere $355 million in fiscal year
1998 pork-barrel spending, less than .002 percent of that year's
budget. Although the amount of waste that was removed was miniscule,
members of Congress who had previously lauded the passage of the line-
item veto began to question its legitimacy. This was clear evidence
that even though the overall amount of money saved was relatively
small, eliminating more waste would have had a substantial effect on
the spending culture.
However, the Supreme Court took the line-item veto power away from
the president in mid-1998, ruling the law unconstitutional.
The need still exists for a constitutional presidential line-item
veto because Congress has confronted the president repeatedly with
hastily-crafted, 11th-hour omnibus
bills that cover all or substantial portions of federal spending
for the year. This practice inhibits the exercise of the veto, which
under such circumstances would have the effect of closing down the
federal government. A line-item veto would enhance the president's role
in the budget process. It would not tilt the power over the nation's
purse strings in favor of the president, but restore the balance that
has been eroded by Congress' budget rules that favor spending and pork.
As it does in 43 states, it would make both the legislative and
executive branches more accountable for our tax dollars. While some
have questioned whether a line-item veto at the federal level would
threaten the separation of powers, experience with such authority at
the state level indicates that would not be the outcome.
A line-item veto is necessary because under current law, the
president's rescission proposals can easily be ignored. This luxury
afforded Congress by the Budget and Impoundment Control Act of 1974
shifted the balance of power over spending, and that balance needs to
be restored. It is an affront to common sense that while the president
now can propose to rescind any portion of an appropriations bill,
Congress is not required to vote on his rescission package. If Congress
chooses to ignore the president's request, it expires after 45 days.
The spending proposals stand as law.
Under H.R. 4890, the President would be authorized to defer or
suspend signing an appropriations bill for up to 180 days, enough time
to allow Congress to consider the President's rescission suggestions
and to vote them up or down. By giving the president a bigger presence
in spending decisions, fiscally sound legislation and not special
interests would be the order of the day.
Concern that the line-item veto would give the president unlimited
power is unfounded. The fear that the president could use the veto
authority to expand his power exponentially and upset the checks and
balances between the branches is addressed by restricting the
president's veto power to disapproving specific line-items in
appropriations bills. In this way, the line-item veto would not give
authority to the president to alter the budget priorities set by
Congress in its spending decisions, since the veto can only be used to
withhold funds for an item.
As for the constitutionality of H.R. 4890, it is the opinion of
former Assistant Attorney General Charles J. Cooper, that the proposal
by the president passes that test. Mr. Cooper testified before the
Senate Budget Committee on May 2, 2006, that the Legislative Line Item
Veto Act of 2006 has been designed in a way that avoids what was
previously deemed unconstitutional by the Supreme Court--specifically
that a president cannot reject outright portions of a bill. If he
disagrees with it, he must ``reject it in toto.'' Consequently, it was
stated in the court's opinion that President Clinton's cancellation
``prevent[ed] one section of the Balanced Budget Act of 1997 * * *
`from having legal force or effect,' '' while allowing the remaining
portions of the Act ``to have the same force and effect as they had
when signed into law.''
Mr. Cooper's testimony is especially significant because in 1997,
he was on the opposite side of the line-item veto issue, when he
represented the City of New York and healthcare associations and
providers who were affected by President Clinton's use of the line-item
veto on the Balanced Budget Act of 1997. That veto resulted in a
reduction of almost $1 billion in Medicaid subsidies for the State of
New York. In Clinton v. City of New York, 524 U.S. 417, 448 (1998) the
Supreme Court struck down the Line Item Veto Act, stating ``the Act's
cancellation provisions violate Article I, & 7, of the Constitution.''
As Mr. Cooper stated in his Senate testimony:
The Legislative Line Item Veto Act of 2006, in contrast, is framed
in careful obedience to Article I, Section 7 and to the Supreme Court's
teaching in Clinton. The President is not authorized by the bill to
'cancel' any spending or tax provision, or otherwise to prevent such a
provision 'from having legal force or effect.' To the contrary, the
purpose of S. 2381, as President Bush put it in proposing the
legislation, is simply to 'provide a fast-track procedure to require
the Congress to vote up-or-down on rescissions proposed by the
President.' Thus, any spending or tax provision duly enacted into law
remains in full force and effect under the bill unless and until it is
repealed in accordance with the Article I, Section 7 process--bicameral
passage and presentment to the President.
For decades, the opportunities for purging wasteful government
programs and reducing the size of government have been scarce. A line-
item veto can provide opportunities for Congress and the president to
work closely for a smaller, more efficient and less costly government.
The Government Accountability Office, Congress' own investigative
agency, estimated in 1992 that a presidential line-item veto could have
cut $70.7 billion in pork-barrel spending from fiscal years 1984
through 1989. That's $70.7 billion in unnecessary spending taken out of
the hands of the private sector.
The line-item veto would help restore control over the budget
process. This, in turn, would promote fiscal soundness, efficient
government, and policies favorable to continued economic growth. A
line-item veto, over time, would reduce the inclusion of unauthorized,
non-competitive projects in appropriations bills and require increased
cooperation between Congress and the executive branch in determining
which programs truly need to be funded with the taxpayers' money.
CAGW realizes that while pork-barrel spending is a serious problem,
it affects a relatively small portion of the budget, and more needs to
be done to limit the growth of entitlements and other government
expenditures in order to bring the budget back into balance. However,
that does not mean that a line-item veto, which receives a great deal
of attention because it is tied to some of the most egregious examples
of wasteful spending, should be delayed until other budget problems are
addressed or solved.
Mr. Chairman, the line-item veto would allow the president to weigh
parochial expenditures which benefit the few against the common good
and the priorities of the many. The American people know the way
business is done in Washington, and they are seeking changes. A recent
Wall Street Journal/NBC News poll reported that ``among all Americans,
a 39 percent plurality say the single most important thing for Congress
to accomplish this year is curtailing budgetary 'earmarks' benefiting
only certain constituents.''
Successive presidents have asked Congress to provide them with the
line-item veto. Congress must show that it is serious about controlling
spending by passing legislation giving the president the line-item
veto. The time is now to pass a constitutional version of that
legislation.
This concludes my testimony. I will be glad to answer any
questions.
Mr. Ryan. Next we are going to hear from Ed Lorenzen, the
policy director of the Concord Coalition. Mr. Lorenzen.
STATEMENT OF EDWARD LORENZEN, POLICY DIRECTOR, CONCORD
COALITION
Mr. Lorenzen. Good morning, Mr. Chairman, Mr. Spratt and
members of the committee; it is good to be before you.
I am Ed Lorenzen, the national policy director of the
Concord Coalition. Before going to work at the Concord
Coalition, I spent nearly 15 years working on Capitol Hill,
primarily as an aide to former Congressman Charlie Stenholm. In
that capacity I had the privilege of working with several
members of the committee as well as the Democratic and
Republican staff of the committee.
The Concord Coalition has worked for 14 years to help build
a political climate that encourages elected officials to make
the tough choices required to balance the Federal budget, keep
it balanced on a sustainable basis, and prepare for the fiscal
and economic challenges that will occur as the Nation's
population become sharply older in the coming decades.
Most recently, the Concord Coalition has organized the
Fiscal Wake-Up Tour, a series of public forums around the
country designed to focus attention on our Nation's fiscal
challenges. We are taking this message across the country
because better public awareness of the problem is the first
step in finding solutions that are both acceptable and
meaningful.
The Concord Coalition believes that the proposed modified
line-item veto could have a positive impact on the budget
process. Strengthening the rescission process, as this proposal
would do, brings greater accountability to the budget process.
Now, let me say the enactment of the modified line-item
veto authority will take a step toward reducing public cynicism
about the public political process and send a signal to the
public that politicians are serious about addressing the
deficit, and we are willing to set aside narrow parochial
interests to make hard choices for the common good.
Restoring public confidence in the budget process is an
important first step in dealing with the deficit. One of the
things that we found throughout the Fiscal Wake-Up Tour is that
even after explaining to the public the tough challenges we are
facing with entitlements and tax policy, that they are willing
to make those tough choices, but they first want to be
reassured that those sacrifices will go toward the greater goal
of deficit reduction and will not be diverted toward special-
interest spending or taxes.
Under realistic estimates, deficits will remain near or
above $300 billion the rest of the decade. Fiscal policy is not
sustainable over the long term.
Now, proposals to grant the President modified line-item
veto authority are not likely to have a significant impact on
budgetary outcomes. The spending and tax items that will be
affected by this provision represent a relatively small portion
of the budget. Simply cracking down on everyone's favorite
target of waste, fraud and abuse is simply not enough to get
the job done.
Modified line-item veto authority would do nothing to
address the underlying structural deficit problems resulting
from existing tax and entitlement laws, and the legislative
actions which have the greatest impact on a deficit are
expansions of entitlement programs or tax cuts that go well
beyond the scope of this legislation. That is one of the
reasons that the Concord Coalition strongly supports
reinstatement of PAYGO budget enforcement rules for all tax and
spending legislation that would increase the deficit, as well
as mechanisms which would force Congress to address existing
structural fiscal problems.
The modified line-item veto proposal put forward by
President Bush embodies the approach of legislation passed by
the House of Representatives in the early 1990s, as Congressman
Ryan mentioned. This approach, an expedited rescission, has
received support from Members of both sides of the aisle over
the years.
Having been involved in several previous legislative
efforts to enact expedited rescission authority, I thought it
might be useful to briefly discuss some of the differences
between this proposal and previous proposals, as well as other
issues that the committee may wish to consider. I will focus on
six key areas: the ability to withhold funds, when and how
often the President may propose rescissions, allowing separate
votes on individual items, sunsetting the authority, applying
the authority to targeted tax revisions, and ensuring that
savings goes to deficit reduction.
On withholding funds, that is perhaps the most significant
difference between H.R. 4890 and previous expedited rescission
proposals. As Congressman Spratt and others have noticed, that
language will allow the President to withhold funds even if
Congress has already voted to reject a proposed rescission,
which could be viewed as an unconstitutional grant of
Presidential authority to cancel provisions of law.
Previous expedited rescission proposals included language
making it clear that the President could not withhold funds or
delay implementation of a tax provision after Congress has
rejected the proposal. I would strongly encourage the committee
to replace this provision allowing the President to withhold
funds for 180 days with language requiring that the funds be
made available for obligation on the day after rescission
package is adopted.
There was some question in the past whether the President
would be allowed to withhold funds if Congress ignored or
waived the requirements of this legislation and failed to act
on a proposed rescission package. Based on conversations I have
had with legal scholars in the past, I believe the President
would have the authority to defer spending until Congress acts
in rescission; however, the committee may wish to clarify this
point in legislative language.
On the issue of the timing and composition of the
rescission message, most of the previous expedited rescission
proposals allow the President to submit one rescission package
per bill for expedited consideration. This limitation was
included to prevent the President from tying up the legislative
schedule with dozens of rescission proposals. By contrast, H.R.
4890 gives the President the authority to submit rescissions
throughout the year with no limit on the number of rescissions
he can submit.
On the issue of separate votes on individual items, as
Congressman Spratt mentioned, several previous versions contain
a mechanism for obtaining a vote to strike an individual action
or item in a package. If the President proposed to rescind an
item with strong congressional support in the package with
dozens of other lower-priority items, Congress would have the
option of striking the politically popular provision from the
package and approving the rest of the package.
On the sunset authority, as Congressman Spratt mentioned,
concerns have been raised that the President could abuse this
authority granted in the legislation. Some previous versions
address this concern by including provisions sunsetting
authority after 2 years. If a President were to abuse the
authority, Congress almost certainly would not approve an
extension.
H.R. 4890 would allow the President topropose rescissions
of targeted tax benefits as well. The Concord Coalition
believes budget enforcement rules should apply equally to taxes
and spending. Special-interest provisions in tax bills have as
much, if not more, of an impact on the Federal budget of
earmarks and appropriation bills. And I would note that the
concept of allowing the President to single out targeted tax
rates and tax bills as well as spending earmarks was originally
introduced into the debate by then-House Republican Leader Bob
Michel.
The Concord Coalition strongly supports the requirement
that all savings through modified line-item veto would go to
deficit reduction. This requirement ensures that the authority
would be used to improve the overall fiscal condition instead
of simply reducing the priorities of Congress in order to fund
the President's priorities. I would encourage the committee to
strengthen this language to clarify that any savings from
rescinding tax or entitlement provisions would not be credited
to the PAYGO scorecard for purposes of congressional rules or
statutory budget enforcement rules.
In conclusion, the proposed modified line-item veto and
similar proposals would not remotely begin to address the
magnitude of our fiscal problems. However, granting the
President modified line-item veto authority could be a useful
tool to improving the accountability of the budget process and
achieving greater public confidence in the budget process that
will be necessary to make the tough choices on much larger
fiscal issues.
Mr. Ryan. Thank you, Ed; and it is nice to see you again.
[The prepared statement of Mr. Lorenzen follows:]
Prepared Statement of Edward Lorenzen, Policy Director, the Concord
Coalition
background
Chairman Nussle, Congressman Spratt, and members of the Committee,
thank you for inviting me to discuss the President's modified line-item
veto proposal. I am the National Policy Director for The Concord
Coalition, a nonpartisan organization with approximately 200,000
members who hail from every state who have consistently urged
Washington policymakers to strengthen the nation's long-term economic
prospects through sound and sustainable fiscal policy. The Concord
Coalition receives no grants, contracts, or other funding from the
government. Before going to work at Concord, I spent nearly fifteen
years working on Capitol Hill, primarily as an aide to former
Congressman Charlie Stenholm. In that capacity I had the privilige of
working with several members of the Committee as well as both the
Democratic and Republican staff of the committee.
Concord's co-chairs are former senators, Warren B. Rudman (R-NH)
and Bob Kerrey (D-NE). The Concord Coalition has worked for fourteen
years since the organization's founding by Paul Tsongas, Warren Rudman,
and Peter G. Peterson in 1992 to help build a political climate that
encourages elected officials to make the tough choices required to:
Balance the federal budget
Keep it balanced on a sustainable basis, and
Prepare for the fiscal and economic challenges that will
occur as the nation's population becomes sharply older in coming
decades.
Given these objectives, The Concord Coalition is encouraged by
encouraged by the growth in the awareness of our fiscal challenges on
the part of the public and policymakers. The Concord Coalition has
organized The Fiscal Wake Up Tour, a series of public forums around the
country designed to focus attention on our nation's daunting long-term
fiscal challenges. The purpose of this new issue-oriented grassroots
project is to draw attention to the simple fact that, according to
analysts of diverse political views, current fiscal policy is
unsustainable and hard choices must be made to set things right. To
that end, we have joined forces with speakers from the Brookings
Institution, the Heritage Foundation, the Committee for Economic
Development the Committee for a Responsible Federal Budget and other
organizations who may differ on proposed solutions but who all agree on
the magnitude of the problem and the need for serious action. Our
purpose is not to cast blame but to give the public a better idea of
how serious the long-term fiscal problem is; why there is no free
lunch, and what the realistic trade-offs are.
We are taking this message across the country because better public
awareness of the problem is the first step in finding solutions that
are both acceptable and meaningful. Without greater understanding of
the problem among the public, community leaders, business leaders and
home state media, elected leaders are unlikely to break out of their
comfortable partisan talking points. In our Wake Up Tour events we
explain the greater context for today's fiscal policy debates,
including: changing demographics; inadequate national savings;
intractable health care costs; the crowding out of discretionary
spending on everything from defense to education; and ultimately
growing deficits and debt that is simply unsustainable.
Under realistic estimates, deficits will remain near or above $300
billion for the rest of the decade. Analysts of diverse ideological
perspectives and nonpartisan officials at the Congressional Budget
Office (CBO) and the Government Accountability Office (GAO) have all
warned that current fiscal policy is unsustainable over the long-term.
Dealing with these fiscal challenges will require a comprehensive
look at all parts of the budget. As the Concord Coalition board said in
a recent New York Times Ad:
``If everyone insists on only cutting someone else's priorities,
talk about deficit reduction will remain just that. The best way to end
this standoff is to agree on the common goal of deficit reduction, put
everything on the table-including entitlement cuts and tax increases-
and negotiate the necessary trade-offs * * * Unfortunately, actions
have been wanting. Leaders must put the national interests ahead of
partisan or parochial interests and develop a specific and realistic
plan to put the country on a sustainable long-term fiscal path.''
the role of the line item veto in addressing fiscal problems
One of the cornerstones of the administration's effort to restore
fiscal discipline is the proposal for a line-item veto ``that would
withstand constitutional challenge.'' The proposal would give the
President the authority to defer new spending whenever he ``determines
the spending is not an essential Government priority.''
The Concord Coalition believes that the proposed modified line-item
veto could have a positive impact on the budget process. Strengthening
the rescission process as this proposal does would bring greater
accountability to the budget process so that individual appropriations
and tax items may be considered on their individual merits. The current
rescission process does not make the President or Congress accountable.
Congress can ignore the President's rescissions, and the President can
blame Congress for ignoring his rescissions.
This reform will not make a significant dent in our deficit. But it
will have a very real cleansing effect on the legislative process and
will take a step toward reducing the public cynicism about the
political process. Granting the President modified line-item veto
authority would send a signal to the public that politicians in
Washington are willing to set aside narrow parochial interests and make
hard choices for the common good.
Restoring public confidence in the budget process is an important
step in gaining the support that will be necessary to make the
difficult choices required to address our fiscal challenges. On the
Fiscal Wake Up Tour we have found that even after we present
information regarding the magnitude of our fiscal challenges and point
out that pork barrell spending pales in comparison to the rapid growth
in entitlement spending, audience members still feel strongly about the
need to cut out wasteful spending. It is not that they believe that the
budget can be balanced by eliminating waste, fraud and abuse. The
audiences at Wake Up Tour events understand that addressing our fiscal
problems will require tough choices restraining entitlement spending or
increase revenues and are willing to accept the necessary sacrifices.
But before they accept sacrifices in terms of lower entitlement
benefits, reduced services or higher taxes they want to be assured that
those savings will go toward the greater good of balancing the budget
and not diverted to special interest spending or tax items.
Although Concord supports granting the President additional
authority to root out low-priority spending, we do not believe this
proposal by itself will have a significant impact on budgetary
outcomes. The spending and tax items that would be affected by these
provisions represents a relatively small piece of the budget. Moreover,
President Bush has never used his authority under current law to submit
rescissions of earmarks or other spending he considers low priority, so
it is unclear whether granting him this additional authority would have
much of an impact at all.
According to the House Appropriations Committee, appropriations
earmarks totaled $17 billion last year. Other studies have produced
somewhat higher numbers, perhaps as high as $30 billion. The cost of
earmarks in authorizing measures such as the highway bill and special
interest tax provisions in tax legislation undoubtably add to this
cost. But even under the most optimistic of estimates the potential
savings from reducing or even eliminating so-called ``pork barrell
spending'' would not remotely begin to address the magnitude of our
fiscal problems.
In 2005, the government spent $2.47 trillion and ran a deficit of
$318 billion. If Congress had been required to balance the budget
without raising taxes, it would have had to enact a 14 percent cut in
all federal programs ? not an easy task. But if Social Security,
Medicare and Medicaid were exempted, the cut would have to be 25
percent. Nobody would suggest such a thing, but these numbers
demonstrate that exempting popular programs from fiscal scrutiny is not
a viable strategy for balancing the budget and that simply cracking
down on everyone's favorite target of ``waste, fraud and abuse,'' is
not enough to get the job done.
Modified line-item veto authority would do nothing to address the
underlying structural deficit problems resulting from existing tax and
entitlement laws. Moreover, the legislative actions which have the
greatest impact on the deficit are expansions of entitlement programs
or tax cuts that go well beyond the special interest provisions that
this legislation would address. The Concord Coalition strongly supports
reinstatement of budget enforcement rules for all tax and spending
legislation that would increase the deficit as well as mechanisms which
would force Congress to address existing structural fiscal problems.
brief history of modified line item veto proposals
Under Title X of the Budget Control and Impoundment Act , the
President may propose to rescind all or part of any item at any time
during the fiscal year. If Congress does not take action on the
proposed rescission within 45 days of continuous session, the funds
must be released for obligation. Congress routinely ignores
Presidential rescissions. The discharge procedure for forcing a floor
vote on Presidential rescissions is cumbersome and has never been used.
Most Presidential rescission messages have died without a floor vote.
The modified line-item veto proposal proposed by President Bush
embodies the approach of legislation passed by the House of
Representatives in 1993 and 1994 requiring Congress to vote up or down
by majority vote on rescissions submitted by the President. This
approach, known as ``expedited rescission authority'' or ``modified
line-item veto,'' has received support from members on both sides of
the aisle over the years. In the early 1990's, then Congressman Tom
Carper worked with former Congressmen Dick Armey, Tim Johnson and
others to find a bipartisan agreement on consensus legislation
establishing expedited rescission authority. The House of
Representatives overwhelmingly approved this consensus language in
October of 1992.
The legislation was introduced in the 103rd Congress by former
Congressman Charlie Stenholm, for whom I had the honor of working from
1990 through 2004. The House of Representatives passed a version of
this legislation in April of 2003 with several modifications and
improvements made in cooperation with Congressman Spratt based on
consultations with leaders of the Appropriations Committee, the Clinton
administration and other Members. The House again passed an expedited
rescission proposal authored by Congressman Stenholm and former
Congressmen Tim Penny and John Kasich in July of 1994.
Enactment of the Line Item Veto in 1996 made expedited rescission a
moot issue in Congress. Congress rejected proposals to provide
expedited rescission authority as a fallback option if full line-item
veto authority was struck down. There was little interest in the issue
immediately following the Supreme Court decision striking down the Line
Item Veto law, perhaps because the budget was in surplus. However, the
proposal resurfaced last year when Congressman Paul Ryan offered an
amendment granting the President expedited rescission authority. This
approach has now been embraced by President Bush.
Having been involved with most of these previous legislative
efforts to enact expedited rescission authority similar to the
President's proposal, I thought it might be useful to discuss some of
the differences between these previous proposals and the legislation
currently before the committee as well as other issues the Committee
may want to consider in marking-up the legislation.
Previous expedited rescission bills were carefully crafted to
comply with the Constitutional requirements established by the courts
in I.N.S. v. Chada, 462, U.S. 919 (1983), the case that declared
legislative veto provisions unconstitutional. Legislative vetoes allow
one or both Houses of Congress (or a Congressional committee) to stop
executive actions by passing a resolution that is not presented to the
President. The Chada case held that legislative vetoes are
unconstitutional because they allow Congress to exercise legislative
power without complying with Constitutional requirements for bicameral
passage of legislation and presentment of legislation to the President
for signature or veto. Unlike the line-item veto law struck down by the
Supreme Court, the expedited rescission approach meets the Chada tests
of bicameralism and presentment by requiring that both chambers of
Congress pass a motion enacting the rescission and send it to the
President for signature or veto, before the funds are rescinded.
Expedited rescission does not provide for legislative review of a
preceding executive action, but expedited consideration of an executive
proposal. Thus, it represents a so-called `report and wait' provision
that the Court approved in Sibbach v. Wilson and Co., 312 U.S. 1 (1941)
and reaffirmed in Chada.
the ability to withold funds for proposed rescissions
The most significant difference between H.R. 4890 and previous
expedited rescission proposals is the provision in H.R. 4890 allowing
the President to withold funds for items in a rescission package for
180 days. The language appears to allow the President to withold funds
even if Congress has already voted to reject the proposed rescission.
This could be viewed as an effective grant of presidential authority to
cancel provisions of law that was proscribed by the Supreme Court in
Clinton v. City of New York, 524 U.S. 417 (1998), the decision striking
down the Line Item Veto Act.
Previous expedited rescission proposals included language making it
clear that the President could not withold funds or delay
implementation of a tax provision after Congress has rejected the
proposal. I would strongly encourage the Committee to replace the
provision in H.R. 4890 allowing the President to withold funds for 180
days with the following language that was included in all previous
expedited rescission proposals:
requirement to make available for obligation
1. Any amount of budget authority proposed to be rescinded in a
special message transmitted to Congress under subsection (b) shall be
made available for obligation on the day after the date on which either
House rejects the bill transmitted with that special message.
2. Any targeted tax benefit proposed to be repealed under this
section as set forth in a special message transmitted by the President
shall not be deemed repealed unless the bill transmitted with that
special message is enacted into law.
There was some question in the past about whether the President
would be allowed to withold funds if Congress ignored or waived the
requirements of the legislation and failed to act on a proposed
rescission package. Based on conversations I had at the time with legal
experts I believe that the language above gives the President implicit
authority to defer spending until Congress acts on the rescission and
that OMB would be allowed to utilize the practice it has followed under
Title X of the Impoundment Control Act of withholding funds from
apportionment until Congress acts on the rescission message. However,
if the Committee decides to adopt the language mentioned above, you may
want to clarify that point in the legislative language or committee
report.
limitations on when and how often the president may propose rescissions
Most of the previous expedited rescission proposals granted the
President the authority to submit one rescission package per bill for
expeditied consideration within ten days after enactment. All of the
proposed rescissions for each bill would be bundled into one package
for Congressional consideration. This limitation was included to
prevent the President from tying up the legislative schedule with
dozens of rescission proposals that would receive priority
consideration. The President would be free to submit additional
rescissions throughout the year as under current law, but they would
not be eligible for expedited consideration. By contrast, H.R. 4890
gives the President the ability to submit rescissions throughout the
year with no limits on the number of rescission proposals he can
submit. This gives the President greater flexibility to rescind items
that are discovered or found to be of low priority well after a bill
has been signed into law, but also presents opportunity for abuse.
separate votes on individual rescission items
The requirement that all rescissions in each bill be bundled
together led to concerns that individual items would not get an up or
down vote on its merits but could be eliminated because it was packaged
with other less meritorious items. This led to the inclusion of a
process to divide up a package of rescissions. The Stenholm-Spratt
legislation passed by the House in 1993 allowed 10 Senators or 45
Members of the House of Representatives to demand a separate vote to
strike an item from the package. That way if the President proposed to
rescind an item with strong Congressional support in a package with a
dozen other lower priority items, Congress would have the option of
striking the popular provision from the package and approving the rest
of the package instead of being forced to choose between rejecting the
entire package or approving the rescission of an item with strong
support.
H.R. 4890 does not include language providing the ability to get a
separate vote on individual items in the package. This is obviously
much less of an issue without the requirement that all rescissions for
each bill be bundled together. However, even under H.R. 4890 the
President potentially could try to thwart the will of Congress by
packaging a rescission that does not have Congressional support with
other rescissions that are difficult to reject.
sunset
Concerns have been raised that the President could abuse the
authority granted under this legislation. Specifically, it has been
suggested that a President could use this authority not to reduce the
deficit but to punish his opponents and increase his leverage with
Members of Congress. In fact, some have argued that granting the
President this authority could just as easily increase spending if the
President threatens to veto items unless programs he favors are
increased. I believe that these dangers are mitigated by the fact that
the President must get a majority of the House and Senate to support
his rescissions for them to take effect. Moreover, a President who
blatantly abused the authority for political purposes would risk
political reprecussions with the public as well as Congress.
Nonetheless, these are very serious and legitimate concerns and it
is impossible to determine whether or not these fears are founded until
the President has the authority. Some previous expedited rescission
proposals have addressed the concern by including a provision
sunsetting the authority after two years. Advocates of this approach
referred to it as a ``two year test drive'' to see how it operates. If
a President abused the authority, Congress almost certainly would not
approve an extension. This is similar to the approach that Congress
took when it granted the executive branch additional authority in the
Patriot Act.
applying rescission authority to targeted tax provisions
H.R. 4890 would allow the President to propose rescission of
targeted tax benefits for expedited consideration in Congress. As a
general principle, The Concord Coalition believes that budget
enforcement rules should apply equally to taxes and spending. Since
spending and tax decisions both have consequences for the budget, there
is no good reason to exempt either from budget discipline. It it
therefore very appropriate to extend expedited rescission authority to
special interest tax breaks. Special interest provisions in tax bills
have as much if not more of an impact on the federal budget than
earmarks in appropriations bills. The vast number of special interest
fiscal giveaways in the corporate tax bill passed in 2004 and the tax
incentives in the energy bill approved last year are just the latest
examples of tax bills becoming the vehicle for Congressional pork-
barreling at its worst.
Applying this authority to tax legislation has encountered
resistance among some Republicans in the past. However, it is worth
noting that the concept of allowing the President to single out
targeted tax breaks in the same way as spending earmarks was originally
introduced into the debate by then House Republican leader Bob Michel.
Exempting tax cuts from modified line-item veto authority would also
encourage an expansion of so-called 'tax entitlements' where benefits
are funneled through the tax code rather than by direct spending, a far
less efficient approach.
ensuring the savings go to deficit reduction
The President proposed that the modified line-item veto be linked
to deficit reduction and that any savings achieved would not be
available to offset increases in other programs. The Concord Coalition
strongly supports the requirement that all savings from modified line
item would go to deficit reduction. This requirement ensures that the
authority will be used to improve the overall fiscal condition instead
of simply reducing the priorities of Congress in order to fund the
President's priorities.
H.R. 4890 seeks to impliment this mandate by providing for an
adjustment of spending allocations to reflect enacted rescissions and
requiring the Director of the Office of Management and Budget
Committees to adjust any statutory spending limits. Without these
provisions the enactment of a rescission package would simply free up
additional room within budget allocations and spending limits for other
spending.
This language is very useful as far as it goes. However, I would
encourage the Committee to take it a step further and clarify that any
savings from rescinding a tax or entitlement provision would not be
credited to the paygo scorecard for purposes of Congressional rules or
statutory budget enforcement rules. The principal that the purpose of
the modified line-item veto should be to improve the budget's bottom
line and not rearrange budgetary priorities should apply to tax and
entitlement legislation as well.
Although statutory pay-as-you-go rules expired in 2002, the Senate
still has a ``post-policy'' paygo rule for tax and entitlement
legislation which increases the deficit beyond the amount provided in
the budget resolution. Approval of a Presidential proposal to rescind a
tax benefit should result in a corresponding reduction in the amount
available on the Senate paygo scorecard for tax cuts. More importantly,
as I stated earlier The Concord Coalition continues to urge Congress to
reinstate paygo rules for all tax and entitlement legislation which
would reduce the deficit. We would therefore encourage the Committee to
adopt language ensuring that any savings from rescinding a tax or
entitlement spending provision would truly go to deficit reduction and
could not be used to offset other tax cuts or entitlement spending
increases.
conclusion
The proposed modified line-item veto and similar proposals would
not remotely begin to address the magnitude of our fiscal challenges.
Budget enforcement tools such as pay-as-you-go rules for all tax and
spending legislation which would increase the deficit would have a much
greater impact on fiscal policy. Balancing the budget nd establishing a
fiscally sustainable course for the future will require Congress and
the President to confront tough choices regarding tax and entitlement
policy. However, granting the President modified line-item veto
authority could be a useful tool in improving the accountability of the
budget process and achieving greater public confidence in the budget
process that will be necessary to make the tough choices on much larger
fiscal issues.
Mr. Ryan. Next we will hear from James Horney, from the
Center on Budget and Policy Priorities. Mr. Horney.
STATEMENT OF JAMES R. HORNEY, SENIOR FELLOW, CENTER ON BUDGET
AND POLICY PRIORITIES
Mr. Horney. Thank you, Mr. Chairman. Congressman Spratt,
members of the committee. I appreciate the opportunity to
appear here today to talk about the line-item veto proposal. I
am Jim Horney. I am a senior fellow at the Center on Budget and
Policy Priorities, a nonpartisan, nonprofit research and policy
institute which receives no government funds.
Before going to the center, though, I did work for 20 years
for the legislative branch; I worked for the House Budget
Committee, the House Rules Committee, the Senate Budget
Committee, the Government Accountability Office and the
Congressional Budget Office. While Ed was staying put working
for Mr. Stenholm, I was moving around.
I would also, with the approval of the committee, like to
submit for the record a paper authored by my colleague at the
Center on Budget , Richard Kogan----
Mr. Ryan. Without objection.
Mr. Horney [continuing]. Which goes into more detail about
the things I want to talk about today.
[The information referred to follows:]
Proposed Line-Item Veto Legislation
Would Invite Abuse By Executive Branch
president could continue withholding funds
after congress voted to release them
By Richard Kogan
The Administration has proposed the Legislative Line Item Veto Act
of 2006, which was recently introduced in Congress by Senate Majority
Leader Bill Frist (R-Tenn.) as S. 2381 and by Representative Paul Ryan
(R-Wis.) as H.R. 4890.\1\ Both the House and the Senate are expected to
consider the proposal in coming months.
The proposal would allow the President to sign appropriations acts
and tax and entitlement legislation, and then strike specific
provisions from them. He would be allowed to strike far more than
``earmarks.'' For example, the President could, if he chose, leave all
earmarks in place while eliminating all funding for the 91 programs he
proposed to eliminate in his February 2006 budget.
Under the proposal, when the President chose to strike amounts from
appropriations acts, he could withhold the funds in question for 180
days. During that time, Congress would be required to vote on whether
to pass legislation eliminating the funding as the President had
requested, without any amendments being allowed. If Congress turned
down the President's request to eliminate the funds the President could
continue to withhold them for months after Congress had voted to reject
his request to eliminate the funding. Some of the funds could expire in
the meantime if the 180-day period extended beyond the end of the
fiscal year for which the funds had been appropriated.
As acting Congressional Budget Office director Donald Marron
explained in recent testimony on the proposal, the withholding of funds
``would not end upon the Congress's rejection of the rescission
proposals * * *,'' giving the President the ``power to unilaterally
defer spending for 6 months, thereby effectively canceling some budget
authority and some programs altogether (for which the funding would
lapse at the end of the fiscal year * * *'' \2\
The President also could use the new ``line-item veto'' procedure
to strike provisions of new entitlement legislation and certain new
``targeted tax benefits'' contained in recently enacted tax bills. This
authority would be far broader with respect to entitlement expansions
than with respect to tax cuts. In fact, it appears Congressional tax-
writers could draft new tax breaks in a way that made them exempt from
the new procedure.
how would the new proposal differ from the president's existing
authority to propose rescissions?
The new proposal would significantly expand the President's
authority. Currently, the President can request that Congress rescind
(or cancel) enacted appropriations, and he can temporarily withhold the
money in question while Congress considers the rescission request. The
new procedure the Administration is proposing would be in addition to
these existing procedures. (If the President wished Congress to rescind
funding, he would be free to submit his rescission proposals to
Congress under either set of procedures.)
The new procedure would differ from the existing rescission
procedure in a number of important ways:
The new procedure would give the President a ``fast
track'' to force an up-or-down congressional vote on his package of
terminations in its entirety. The package of cancellations could not be
divided into separate parts, amended, or filibustered. The vote would
occur within 10 days of the package's introduction in Congress as a
piece of legislation, and within 13 days of the President's submitting
the package. (The package would have to be introduced in Congress
within 3 days after the President submitted it.)
The President could package his proposed cancellations in
any way he wanted. He could split his proposed cancellations of items
from a single piece of legislation into a number of packages, sending
Congress a separate ``package'' for each proposed cancellation and
compelling Congress to take dozens of individual votes. Or, he could
combine cancellations from different bills--both appropriations bills
and bills affecting mandatory programs--into a single package. Congress
would have to cast an up-or-down vote on each package exactly as the
President had constructed it. In sharp contrast, the existing
rescission procedure allows Congress to package the President's
rescission requests in ways that are most convenient for congressional
consideration, amend the President's rescission requests, or decline to
vote on them.
The new procedures would allow the President to withhold
funding for 180 days after he proposed a package of terminations, even
if Congress voted quickly to reject the terminations. If the President
submitted a package of cancellations in the spring of a year, he could
effectively kill various items simply by withholding funding until the
end of the fiscal year on September 30, even if Congress had acted
swiftly to reject his proposed cancellations.\3\
This lengthy period of withholding obviously is not necessary,
since the fast-track mechanism in the proposal would require a vote in
Congress within 13 days of Congress' receiving the President's package
of proposed cancellations. The existing rescission procedure allows the
President to withhold funds requested for rescission for 45 days, not
180 days. (In recent Congressional testimony, Rep. Paul Ryan stated
that the bill's 180-day withholding provision ``is required to make
sure that Congress has the opportunity to act if the President's
rescission proposal is made directly before an extended recess.'' \4\
This argument does not withstand scrutiny. The bill could have followed
the current rescission procedures, under which the clock on the
withholding period does not run during Congressional recesses of more
than 3 days. The Administration evidently made a decision not to follow
that approach and instead to allow the President to continue
withholding funds regardless of Congressional action.)
Exacerbating this problem, it appears that if the
President proposed the rescission of funds under either the existing
rescission procedure or the new procedure and Congress did not accede
to his request, the President could then re-propose the same
rescissions under the other procedure, withholding the funds for an
additional period of time and thereby increasing the chances that the
funding would effectively be cancelled despite congressional opposition
to the cancellation. (The funding would effectively be cancelled if the
fiscal year ended before the withholding period did.)
Another difference between the proposed procedure and the
President's current rescission authority is that under the new
procedure, the President could propose the elimination of
appropriations for discretionary programs but not a reduction in
funding for such programs. If the President wanted to reduce but not
eliminate a program or line item, however, he could continue to use the
existing rescission procedures.
Another significant point is that under the new procedure,
if Congress enacted a package of cancellations that the President had
submitted, the Budget Committee Chairmen would reduce accordingly the
amount allocated to the Appropriations Committees for the fiscal year
in question. The effect would be to dedicate all savings from the
cancellations to deficit reduction.
This rigid approach is problematic, however, and could well prove
self-defeating. A legitimate purpose of eliminating certain unworthy
projects may be to direct scarce funds to higher priority programs, but
that would not be permitted under the new procedure. And without the
opportunity to redirect at least some of the savings to better uses,
Congress is likely to be less willing to approve the President's
package of cancellations in the first place.
The new procedure could be applied not only to
appropriations for discretionary programs but also to new entitlement
legislation and to new ``targeted tax benefits'' contained in recently
enacted tax bills. The President could propose to cancel or scale back
an increase in benefits or eligibility in a provision of an entitlement
bill if he submitted his request after enactment of the bill but before
his next annual budget was issued.
Since many entitlement increases work by making additional
categories of people eligible for benefits or increasing benefits by
changing the formulas for calculating them, the authority to scale back
a new entitlement increase appears to give the President the authority
to change entitlement laws in unexpected ways. For instance, if
Congress created a Medicare ``buy in'' option for uninsured people
between the ages of 62 and 65, the President might be able to use the
new procedure to scale back this entitlement increase by raising the
buy-in age to 63 for some types of people and to 64 for others, even if
Congress had not created any such distinction between eligible
individuals.
The story is quite different with regard to ``targeted tax
benefits,'' which the President could propose to cancel but not to
scale back. Of particular note, under the Administration's proposal,
the term ``targeted tax benefit'' would be defined so narrowly that it
appears Congress could design special-interest tax breaks so they would
be exempt from any possible presidential rescission.
Targeted tax benefits would be defined as measures that provide a
tax break to 100 or fewer beneficiaries. The definition of targeted tax
break used in the proposal is identical to the definition used in the
Line Item Veto Act of 1996. At the time the earlier legislation was
enacted, the Joint Committee on Taxation indicated that tax benefits
generally could be drafted in ways that would make them exempt from
this presidential authority, even if they were targeted to 100 or fewer
people.
Note that the proposal would establish unequal treatment of
entitlement increases and tax breaks. The President could use the
proposed fast-track procedure to force a vote on the cancellation of an
entitlement improvement that would benefit millions of people, but he
would not be able to force a vote on a tax break if it benefited as few
as 101 people. This is despite the finding by Congress's Joint
Committee on Taxation, the Government Accountability Office, and former
Federal Reserve Chairman Alan Greenspan that many tax breaks are
analogous to entitlement programs and are properly thought of as ``tax
expenditures'' or ``tax entitlements.'' \5\
In addition, the President could modify and rewrite entitlement
improvements and create new entitlement categories and program
distinctions that Congress never intended, but he could make no such
modifications even in targeted tax cuts affecting fewer than 100 tax
payers; he could only accept these targeted tax breaks or propose to
cancel them.
Finally, the new procedure would place the savings achieved by
vetoing an entitlement increase into a ``lockbox,'' as with vetoed
items from appropriations bills. But the savings from vetoing a
targeted tax benefit would appear not to be placed in a lockbox and
thus would remain available for another tax cut (although the drafting
of the bill is murky on this point).
would the proposal reduce the deficit?
The Congressional Budget Office has suggested that the consequences
of this proposal might be to increase total spending rather than reduce
it, because ``Congress might accommodate some of the President's
priorities in exchange for a pledge not to propose rescission of
certain provisions, thereby increasing total spending.'' CBO says that
studies of states with line-item vetoes have ``documented similar
devices employed by state legislatures.'' \6\
The columnist George Will makes the same point: \7\
Arming presidents with a line-item veto might increase Federal
spending, for two reasons. First, Josh Bolten, director of the Office
of Management and Budget, may be exactly wrong when he says the veto
would be a ``deterrent'' because legislators would be reluctant to
sponsor spending that was then singled out for a veto. It is at least
as likely that, knowing the president can veto line items, legislators
might feel even freer to pack them into legislation, thereby earning
constituents' gratitude for at least trying to deliver. Second,
presidents would buy legislators' support on other large matters in
exchange for not vetoing the legislators' favorite small items.
Congressional Research Service senior specialist Louis Fisher also
came to the conclusion that presidents would more likely use line-item
veto authority to pressure lawmakers to support White House spending
policies by threatening to cut Members' pet projects, than to reduce
total spending or the deficit. In a 2005 report, Fisher warned that
``experience with the item veto, both conceptually and in actual
practice, suggests that the amounts that might be saved by a
presidential item veto could be relatively small, in the range of
perhaps one to two billion dollars a year. Under some circumstances,
the availability of an item veto could increase spending. The
Administration might agree to withhold the use of an item veto for a
particular program if Members of Congress agreed to support a spending
program initiated by the President. Aside from modest savings, the
impact of an item veto may well be felt in preferring the President's
spending priorities over those enacted by Congress.'' \8\
Finally, Douglas Holtz-Eakin, director of the Congressional Budget
Office from February 2003 to December 2005 and now a fellow at the
Council on Foreign Relations, recently observed that, ``I don't think
there's any evidence that this, in itself, is a powerful enough weapon
to alter the path of spending.'' Holtz-Eakin noted that in studying the
effect of line-item vetoes at the state level, he found they produced
mixed results. He found no major differences in spending between states
where governors had this power and states where they did not.\9\
Similarly, in his recent testimony on this proposal, the current acting
CBO director noted that in the absence of a political consensus to
establish fiscal discipline, ``the proposed changes to the rescission
process included in H.R. 4890 are unlikely to greatly affect the
budget's bottom line.'' \10\
would the proposal improve the quality of legislation and the political
process?
Mr. Will's second point, cited above, is not just about the size of
the Federal budget but also about the political power of the President.
The current division of powers gives the President the power to veto
legislation, but balances this presidential power by giving Congress
the power to package legislation. The new proposal would further weaken
Congress in relation to the President by enabling the President to
propose cancellations that could divide the congressional coalition
that had negotiated the legislation in the first place. Mr. Will
concludes that ``The line-item veto's primary effect might be
political, and inimical to a core conservative value. It would
aggravate an imbalance in our constitutional system that has been
growing for seven decades: the expansion of executive power at the
expense of the legislature.''
As Will makes clear, the proposal would enhance the President's
ability to engage in political ``horse-trading'' with Members of
Congress. The President also would gain enhanced ability to engage in
political horse-trading with outside groups. Whether dealing with
legislators or outside groups, the President could threaten to propose
the cancellation of their favored items--or pledge not to cancel their
favored items--in return for their support on other, unrelated matters.
The President's threat to cancel, or promise not to cancel, items of
importance to legislators or to outside groups could be used to
increase his leverage to advance policies unrelated to the budget, such
as support for his nominees, for regulatory legislation, or even for
foreign treaties.
These effects were recently discussed by a former staff director of
the House Appropriations Committee, who testified--
There is no question that a nexus has developed between campaign
fund-raising and the community that advocates on behalf of earmarks.
The more earmarks a Senator or Congressman is able to win for a local
university, hospital, city government or art museum, the more lobbyists
he may expect to find in attendance at his fund-raisers. * * * Earmarks
are increasingly used to persuade members to support legislation that
they might otherwise oppose or oppose legislation that they might
support. In the House this practice is now being extended to the
granting of earmarks in one piece of legislation in return for a
member's vote on unrelated legislation. Chairman Thomas joked openly
about the delay in consideration of the highway bill last summer so
that the leadership could gain more support for the Central America
Free Trade Agreement.\11\
Some would maintain that H.R. 4890 is intended to be a partial cure
for these diseases. But it could just as easily aggravate the diseases
by giving the President an easier and more direct way to play the game.
The premise of the proposal seems to be that the President will be less
political, less interested in rounding up votes for policy issues,
nomination, and other proposals, and less interested than Members of
Congress in securing the financial and political support of outside
groups for such purposes. Would that really be the case? Norman
Ornstein, of the American Enterprise Institute, thinks not.
[T]he Republicans have rejected the one device that has been proved
in the past to bring fiscal discipline, the pay-as-you-go provisions
that governed fiscal policy through the golden years in the 1990's.
Instead, they are pushing a sham version of the line-item veto,
basically just a sharply enhanced rescission authority for the
president. Congress would pass its spending bills, the president would
pluck out items he did not like and send them back to Congress to vote
on them again.
Leave aside the simple abdication of responsibility by Congress
here--the refusal to set up a provision to have separate votes on
earmarks or related items before any bill gets to the president, and
the basic message of ``stop us before we spend again.'' The larger
reality is that this gives the president a great additional mischief-
making capability, to pluck out items to punish lawmakers he doesn't
like, or to threaten individual lawmakers to get votes on other things,
without having any noticeable impact on budget growth or restraint.\12\
key findings
The line-item veto legislation would expand Presidential
power to a greater degree than has been understood.
If the President proposed to cancel funds appropriated for
a program, Congress would have to vote on his proposal within 10 days
from the bill's introduction in Congress. But even if Congress turned
down his request, he could continue withholding the funds until 180
days had passed.
If the fiscal year ended before the 180-day period did,
the funds could expire. This could enable the President to kill some
types of programs even if Congress had rejected his proposals to cancel
funding for the programs.
The Congressional Budget Office, the Congressional
Research Service, columnist George Will, and other analysts have
concluded the legislation is as likely to increase expenditures as to
reduce them, because a President could use this new authority to
pressure Members of Congress to support some of his spending and tax-
cut priorities in return for a promise not to propose canceling
appropriation items they favored.
The legislation supposedly applies to both increases in
entitlements and new ``targeted tax benefits.'' In fact, its
application to special-interest tax breaks may be more apparent then
real, as Congress would be able to draft new tax breaks in ways that
exempted them from the line-item veto procedure.
how does this proposal differ from the line item veto act of 1996?
Unlike H.R. 4890, the Line Item Veto Act of 1996 granted the
President the unilateral authority to cancel enacted appropriations.
The Supreme Court ruled in 1998 that such authority was
unconstitutional, since it allowed the President to change a law by
himself, thus violating the constitutional rules for creating or
amending laws. The new proposal is presumed to be constitutional
because it does not grant the President the authority to change an
appropriations act unilaterally; rather, he would request that Congress
enact a change in the appropriations law.
There are three ways in which the new proposal could grant the
President more power than under the 1996 act. First, that act gave the
President 5 days from the enactment of appropriations, entitlement, or
tax legislation to decide whether to cancel some of its provisions,
while H.R. 4890 gives the President up to a year. In addition, under
the 1996 act, if Congress overturned a presidential rescission by
statute, the withheld funds would have to be released; under H.R. 4890,
if Congress overturns a presidential veto by defeating the President's
proposal to cancel the funds, the President can continue to withhold
the funds for the 180-day period--long enough, in some cases, to
effectively cancel them.
Second, the 1996 act allowed the President to cancel entitlement
increases but not to scale them back. As noted in this analysis, the
authority to scale back entitlement increases may permit the President
to rewrite entitlement benefits in unexpected ways. (The drafting of
the new proposal also suggests that the President could propose to
cancel or modify provisions of new legislation that would reduce
entitlement benefits. In short, it appears that he could veto or modify
both entitlement increases and entitlement decreases.)
Finally, the 1996 act included a sunset provision; the act would
expire after 8 years if not reauthorized. This provision apparently was
included due to the uncertainty about the effects that the line-item
veto legislation would have. The new proposal, by contrast, has no
expiration date. It would become permanent law.
endnotes
\1\ The text of the proposal is available at http://
www.whitehouse.gov/omb/pubpress/2006/line--item--veto.pdf.
\2\ Statement of Donald B. Marron, Acting Director, Congressional
Budget Office, before the Subcommittee on the Legislative and Budget
Process, House Rules Committee, March 15, 2006, available at http://
www.cbo.gov/ftpdocs/70xx/doc7079/03-15-LineItemVeto.pdf.
\3\ The appropriations provided for most programs expire at the end
of the fiscal year in question. In such cases, any funds that have not
been obligated by September 30 revert to the Treasury. (If the line-
item veto legislation were enacted, it is possible that Congress would
respond by lengthening the period of time for which appropriations for
various programs would remain available, but it is unclear whether
Congress would do so.)
\4\ Statement of Rep. Paul Ryan before the Subcommittee on the
Legislative and Budget Process, House Rules Committee, March 15, 2006.
\5\ According to the Joint Committee on Taxation, ``special income
tax provisions are referred to as tax expenditures because they may be
considered analogous to direct outlay programs, and the two can be
considered as alternative means of accomplishing similar budget
policies. Tax expenditures are similar to those direct spending
programs that are available as entitlements to those who meet the
statutory criteria established for the programs.'' See Joint Committee
on Taxation, ``Estimates of Federal Tax Expenditures for Fiscal Years
2005-2009,'' January 12, 2005, p. 2. This equivalence is why former
Federal Reserve Chairman Alan Greenspan has referred to these tax
breaks as ``tax entitlements.''
\6\ Testimony of Donald B. Marron, op.cit.
\7\ George Will, ``The Vexing Qualities of a Veto,'' in the
Washington Post, March 16, 2006, page A23.
\8\ Louis Fisher, ``Item Veto: Budgetary Savings,'' Congressional
Research Service, May 26, 2005.
\9\ Jonathan Nicholson, ``Precursor to Line-Item 'Veto' Failed to
Restrain Prior Spending, GAO Says,'' Bureau of National Affairs, Daily
Tax Report, March 13, 2006, p. G-6.
\10\ Testimony of Donald B. Marron, op.cit.
\11\ The highway bill was a cornucopia of earmarked projects. The
testimony was by Scott Lilly before the Subcommittee on Federal
Financial Management, Government Information, and International
Security, Committee on Homeland Security and Governmental Affairs,
United States Senate, March 16, 2006.
\12\ Norm Ornstein, Three Embarrassments in an All-Around Shameful
Congress, American Enterprise Institute, April 5, 2006, at http://
www.aei.org/publications/filter.social,pubID.24163/pub--detail.asp.
Mr. Horney. I want to divide the testimony into two parts.
The first part would talk about what I view as some of the
fundamental problems with granting line-item veto authority to
the President, and that is any President, not just to this
President. And then second, I do want to talk about some of the
problems or issues raised by the particular legislation
proposed by the President and introduced in the House by
Congressman Ryan. Some of those were already addressed by Ed
Lorenzen, but I would like to talk a little bit more about
them.
The most fundamental aspect of any line-item veto proposal
is a shift of power from the legislative branch to the
executive branch. Whether it is because I spent most of my
career working in the legislative branch or because I have a
high regard for the wisdom of the Founding Fathers in balancing
the powers between the branches of government, I have a great
reluctance to see a further grant of power from the legislative
branch to the executive branch.
In this I agree with the columnist George Will, who has
written: ``The line-item veto's primary effect might be
political, and inimical to a core conservative value. It would
aggravate an imbalance in our constitutional system that has
been growing for seven decades: the expansion of executive
power at the expense of the legislature.''
I can understand how people who might even share the
concern about that transfer of power would still say this might
be worthwhile if giving this grant of power to the President
had a real likelihood of doing anything to help bring our
serious long-term budget problem under control. But I think, as
other witnesses have testified, that is pretty unlikely, given
the limited nature of the line-item veto.
In particular, the long-term problem we face is posed
primarily by the anticipated growth of three entitlement
programs--Social Security and, more importantly, Medicare and
Medicaid--that are anticipated to grow in coming decades much
faster than the economy will grow and than revenues will grow.
The line-item veto, of course, is not well designed to get
at the problems either with those entitlement programs or with
taxes because it deals only with new legislation, and the
entitlement programs and revenues are generally controlled,
governed by permanent law. So you can't use line-item veto to
get the underlying policies governing those programs. What that
means is you are left with the primary effect of the line-item
veto potentially on about one-third to two-fifths of the budget
represented by programs that are controlled by annual
appropriations. That obviously is still a lot of money.
And again, if the line-item veto offered a high likelihood
of getting rid of wasteful spending in the discretionary area,
again, I can see how people might say they are willing to
chance this transfer of power. But, again, I think the
likelihood of that happening, that the actual result of giving
the President line-item veto authority will be to get rid of
wasteful spending, is probably not very high.
The assumption that we will get rid of wasteful spending,
that that will be the primary effect of the line-item veto, is
on the basis that the President will use the power primarily
for that purpose and not to try to forward and advance other
priorities that he has. But I know of no reason why we would
expect we could give an additional grant of authority to the
President and then the President would not use that to try to
advance whatever policy he is focusing on at the moment. So I
think again it is likely that you would end up with a President
talking and at least hinting to a legislator that if the
legislator would support him on a trade pact, on an immigration
bill, on a judicial nominee, then he is likely not to propose a
veto of some particular program that the legislator supports.
Again, I am not the only person who thinks this. Norman
Ornstein, the noted congressional scholar at the American
Enterprise Institute, has written that the line-item veto
``gives the President mischief-making capability, to pluck out
items to punish lawmakers he doesn't like, or to threaten
individual lawmakers to get votes on other things without
having any noticeable impact on budget growth or restraint.''
And again, even if you look only at the budget aspects of
what the President might do with line-item veto, it is far from
clear that the effect would be to reduce spending. Again, the
President could use the promise not to veto a particular item
that legislators are interested in in order to get support for
tax cuts or entitlement increases that the President supports
that cost far more than all of the items the President might
consider vetoing.
Again, not the only ones who think that. Acting
Congressional Budget Director Donald Marron, in testimony to
the Senate Budget Committee earlier this month, said that ``the
Congress might accommodate some of the President's priorities
in exchange for a pledge not to oppose the rescission of
certain provisions, thereby increasing total spending.''
Mr. Ryan. Sir, I am wondering if you could wrap it up.
Mr. Horney. Okay. So the idea, it is entirely possible the
effect of this would be to actually increase spending. As
Congressman Spratt suggested that while many people could have
a reasonable disagreement about how President George W. Bush
might use the authority, it is hard to imagine anybody
seriously arguing that a President like Lyndon Johnson would
use it to reduce spending.
Ed Lorenzen pointed out the various problems about the
President's flexibility in packaging and sending up
legislation. I think that is a real concern Congress needs to
address and try to limit that. I think there is a particular
concern--and I think many people share this--about the 180-day
period the President can withhold the money, because, in fact,
if he simply waits until the early part of April to submit a
proposal, then the money, if it is 1-year money, expires at the
end of the year. I think there are ways to get around that, for
instance, the suggestion by Ed Lorenzen that once either House
has voted down the resolution, then you release the funds. I
think there may be a constitutional question with that. I think
scholars differ on that.
There is another way to do it, which is to reduce the
period of withholding to--probably wouldn't need any more than
15 days--but do the calculation of the withholding period on
the same basis that you do the period when Congress has to act.
In other words, under the requirement, Congress acts within 13
days. If they go out on recess, the clock stops. Calculate the
withholding period on the same basis; if Congress goes out on
recess, the clock stops. So you can set it that some few days
after Congress is required to act, then at that point the
President has to release the funds unless they have enacted a
rescission bill.
One final thing, and then I will wrap up, is concern about
the direct spending under the proposal. This proposal allows
the President not only to strike----
Mr. Ryan. We can get into these in questions. It is just
that we are well beyond the 5 minutes, and I want to give
Members a chance because we are going to have a vote relatively
soon.
Thank you very much, and I appreciate your comments, Mr.
Horney.
[The prepared statement of Mr. Horney follows:]
Prepared Statement of James R. Horney, Senior Fellow, Center on Budget
and Policy Priorities
Mr. Chairman, Congressman Spratt, and Members of the Committee, I
appreciate the opportunity to appear before the Committee on the Budget
today to discuss the line-item veto legislation proposed by the
president and various members of Congress. I am currently a Senior
Fellow at the Center on Budget and Policy Priorities, a nonpartisan
policy and research institute, which receives no grants, contracts, or
other funding from the government. Before going to work at the Center,
I spent more than twenty years working in the Legislative Branch, as a
staffer at the House Budget and House Rules Committees, the Senate
Budget Committee, the Government Accountability Office, and the
Congressional Budget Office.
I want to divide my testimony today into two parts. First, I want
to discuss what I consider the fundamental problems with granting the
president--any president--line-item veto or expedited rescission
powers. Then I would like to discuss some of the issues raised by the
particular legislation proposed by the president and introduced in the
House as H.R. 4890 by Congressman Ryan. With the permission of the
Committee, I would also like to submit for the record a paper written
by my colleague at the Center on Budget, Richard Kogan, entitled
``Proposed Line-Item Veto Legislation Would Invite Abuse by Executive
Branch.'' That paper goes into more detail about the matters I will
discuss in my testimony.
The most fundamental aspect of any line-item veto proposal is to
shift power from the legislative branch to the executive branch.
Whether because of a career spent primarily working for the legislative
branch (although that ensures I know the shortcomings of Congress all
too well) or my basic regard for the wisdom of the founding fathers in
balancing powers in our government, I am troubled by the idea of
further enhancing the power of the executive branch. I agree with
columnist George Will, who has written that ``The line-item veto's
primary effect might be political, and inimical to a core conservative
value. It would aggravate an imbalance in our constitutional system
that has been growing for seven decades: the expansion of executive
power at the expense of the legislature.''
I could understand, however, how even some who share my concern
about shifting power to the executive branch in general might believe
that giving the president line-item veto authority would still be
worthwhile if it were likely to significantly help in bringing our
long-term deficit problem under control. But I do not believe that
giving the president line-item veto authority is likely to produce that
result.
First of all, a line-item veto is not well-suited to getting at the
biggest cause of our real, long-term budget problem. That long-term
problem is posed primarily by the fact that under current policies the
cost of three big entitlement programs--Social Security, Medicare, and
Medicaid--are projected to grow at a rate that will exceed the growth
of the economy and revenues, leading to ever higher deficits,
borrowing, and debt unless the policies guiding those programs and
taxes are changed. Because those entitlement programs and revenues are
generally governed by permanent law, the line-item veto--which provides
only the opportunity to modify new legislation--is not a tool that can
be used to make changes in the underlying laws governing entitlements
and taxes (and, as I will discuss shortly, the ability to use the
proposed line-item veto even to make changes in new tax legislation is
very limited).
As a result, the potential effect of the line-item veto is to a
large extent limited to the one-third to two-fifths of the budget
determined through annual appropriation legislation. That is, of
course, still a large enough portion of the budget to be concerned
about, and if the line-item veto offered a realistic chance of limiting
unwise spending in that area, it might still be worth trying. But I
think that the line-item veto is unlikely to have that effect.
The success of the line-item veto in limiting unwise discretionary
appropriations depends on the president using the authority solely or
primarily to eliminate such unwise spending, as opposed to using the
authority as leverage to gain support in Congress for any number of
policies he is pursuing. But why should we expect that a president
would not use this power to help him achieve a variety of goals; for
instance, to promise a legislator that he will not veto an item favored
by that legislator in return for a vote on a judicial nominee or a
trade pact supported by the president. Norman Ornstein, the noted
Congressional scholar at the American Enterprise Institute, concludes
that the line-item veto ``gives the president a great additional
mischief-making capability, to pluck out items to punish lawmakers he
doesn't like, or to threaten individual lawmakers to get votes on other
things, without having any noticeable impact on budget growth or
restraint.''
And, it is far from certain that any effect that the line-item
authority might have on the budget would be to restrain spending. For
instance, a president could promise not to veto a particular item in
return for the sponsor of that item agreeing to support new spending or
tax cuts proposed by the president that far exceed the cost of items
the president might consider vetoing. It is not unlikely that giving
the president line-item veto authority would actually increase spending
and deficits compared to what would occur without the line-item veto.
We at the Center on Budget are not the only ones who think this is
a possibility. Acting Congressional Budget Office Director Donald
Marron, for instance, told the Senate Budget Committee earlier this
month that ``the Congress might accommodate some of the president's
priorities in exchange for a pledge not to propose rescission of
certain provisions, thereby increasing total spending. As CBO has
previously testified, studies of the line-item veto at the state level
have documented similar devices employed by state legislatures over the
years * * *.''
Columnist George Will also concluded that the line-item veto might
not have the desired effect of reducing spending, explaining: ``Arming
presidents with a line-item veto might increase federal spending, for
two reasons. First, Josh Bolten, director of the Office of Management
and Budget, may be exactly wrong when he says the veto would be a
'deterrent' because legislators would be reluctant to sponsor spending
that was then singled out for a veto. It is at least as likely that,
knowing the president can veto line items, legislators might feel even
freer to pack them into legislation, thereby earning constituents'
gratitude for trying to deliver. Second, presidents would buy
legislators' support on other large matters in exchange for not vetoing
the legislators' favorite small items.''
I would imagine that reasonable people could have different views
about how president George W. Bush might use the line-item veto, but I
wonder how many people would be willing to argue that giving line-item
veto authority to a president like Lyndon Johnson would reduce
spending.
Let me turn now to a few of the problems that are presented by the
particular version of the line-item veto proposed by the president.
First are issues related to the submission of the president's
proposed rescissions. Under the administration's proposal, the
president would have enormous flexibility as to when he can submit
proposed rescissions and how he could package his rescissions. For
instance, the president would be able to propose to rescind a
discretionary appropriation at any time as long as the funds
appropriated remain available for obligation. For multi- or no-year
appropriations that remain available for obligation for more than one
fiscal year, the president could even wait several years after an
appropriation is enacted before proposing the rescission. For
entitlement program increases or targeted tax provisions, the president
could submit a veto proposal any time after legislation is enacted and
before his next budget is submitted. Furthermore, the president would
be able to submit multiple rescission bills for any single
appropriation, entitlement, or tax bill, or to submit a proposed
rescission bill that includes rescissions of items from any number of
different bills (combining, for instance, rescissions of discretionary
appropriations, entitlement increases, and tax provisions in the same
rescission bill). The Congress would then have to consider, but would
not be able to amend or modify in any way, each of the bills the
president submits. This gives the president the ability to affect the
Congressional legislative agenda to a far greater degree than he
currently can.
Second, and perhaps more importantly, the administration's proposal
would effectively allow the president to permanently rescind
discretionary funding even if the Congress votes down his proposed
rescission legislation. Under the administration's proposal,
discretionary funds the president proposes to rescind can be withheld
for up to 180 days after the president submits his rescission to the
Congress, even if the bill proposing to rescind the funds is defeated
by the Congress within days of being submitted. In the case of
appropriations that are only available for one fiscal year, the
president could wait until April 1 to submit rescission legislation and
then withhold funds proposed for rescission in that bill until the end
of the fiscal year, at which time the funds expire. Thus, whatever
action the Congress takes on the proposed rescission legislation, the
funds would be cancelled.
It is not necessary to have this180-day withholding period in order
to ensure that Congress could not put off voting on the rescission
package and still secure release of funds proposed for rescission by
taking an extended recess until the withholding period has passed. The
simplest way to achieve this without allowing the president to withhold
funds long after the Congress has voted against his proposed
legislation would be to require the president to release the funds as
soon as either House votes against the rescission package, but that
approach might run afoul of the Supreme Court's decision that a one-
House veto is unconstitutional. But it is also possible to achieve the
desired result by calculating the period for which the president can
withhold funds on the same basis as the period during which Congress
has to consider the proposed rescission package, with the withholding
period extending a few days beyond the Congressional deadline. The
administration's proposal requires the House and the Senate to vote on
the rescission package within 13 days of session after receiving the
president's proposed rescission package. If the president were allowed
to withhold funds proposed to be rescinded for 15 days of session of
the House or 15 days of session of the Senate, whichever is longer,
then Congressional action would have to be completed before the
president would be required to release the funds (assuming Congress did
not pass the rescission bill). If Congress delayed acting on the
rescission bill by taking an extended recess, the withholding period
would be extended by the length of that recess.
Finally, I want to briefly address concerns about the way the
administration's proposed line-item veto procedures would apply to new
entitlement legislation and to ``targeted tax benefits'' included in
new tax legislation. The president would be allowed to propose to
cancel or scale back proposed increases in entitlement spending
contained in new legislation. Since many entitlement increases occur as
a result of making additional categories of people eligible for
benefits or increasing benefits by changing formulas that determine
them, the authority to scale back a new entitlement increase appears to
give the president the ability to change entitlement laws in ways the
Congress never anticipated in drafting the legislation. For instance,
if Congress created a Medicare ``buy in'' option for uninsured people
between the ages of 62 and 65, the president might be able to use the
authority granted by the line-item veto proposal to scale back the
entitlement increase by raising the buy-in age to 63 for some types of
people and to 64 for others, even if Congress had not created any such
distinction between eligible individuals.
In contrast, the administration's proposal would only allow the
president to cancel, but not scale back, targeted tax benefits. More
troubling is the fact that targeted tax benefits are defined--as they
were in the 1996 line-item veto legislation--so narrowly that it
appears Congress could design special-interest tax breaks so that they
would be exempt from any possible presidential rescission. Only
measures providing tax breaks to 100 or fewer beneficiaries can be
considered as targeted tax breaks, and further restrictions on the
definition led the Joint Committee on Taxation to conclude in 1996 that
tax benefits could generally be drafted in ways that would make them
exempt from the presidential line-item veto, even if they were targeted
to 100 or fewer people.
Note that the proposed line-item veto procedure would establish
unequal treatment of entitlement increases and tax breaks. The
president could use the proposed line-item procedure to force a vote on
the cancellation of an entitlement improvement that would benefit
millions of people, but would not be able to force a vote on a tax
break if it benefited as few as 101 people. This is despite the finding
by the Joint Committee on Taxation, the Government Accountability
Office, and former Federal Reserve Chairman Alan Greenspan that many
tax breaks are analogous to entitlement programs and are properly
thought of as ``tax expenditures'' or ``tax entitlements.''
In conclusion, there are a number of troubling aspects of the
particular line-item veto plan proposed by the administration, but even
if such flaws as the 180-day withholding period were corrected, I
believe the fundamental problem with any line-item veto proposal--the
shift in power from the Congress to the president without any real
likelihood that the shift will improve budget outcomes--should deter
Congress from enacting a such a plan.
Mr. Ryan. I will start off. No. 1, Mr. Spratt, you raised a
number of concerns--all very important and valid concerns, I
might add--as to the issue of whether or not this line-item
veto is the panacea that is going to balance the budget. No one
is pretending that it is. Mr. Hensarling, Chocola, and I have
introduced comprehensive budget process reform, as have many
other Members. This is 1 of 16 ideas we are proposing on
getting our hands around our fiscal house and reforming the
budget process. So this was never meant to be the end of the
system to change the way we spend money; this is one of the
important components of doing it. That is point No. 1.
Mr. Spratt, I would like to address some of the points you
made, which I think are extremely important. When we introduced
this bill a number of months ago, we introduced it with the
sole intention of putting it out there to get feedback and
responses from people as to how it can be improved. Let us go
through a couple of these issues.
Duplicative submissions. It was never the intention when I
drafted this bill that the President could just keep redoing
the same request over and over to run out the clock. I think
that is something we can clearly address in the amendment
process hopefully here in a markup.
A sunset date, I think that is something we should also
discuss.
Bundling proposals. Can the President submit 115 proposals
and tie Congress up in knots? That is not the intention either.
And that is something we can also address, hopefully, in the
amendment process.
Limiting the number of requests. That as well I think is
something we can address.
Deferral. This is the big issue that I think Mr. Horney
brought up and Mr. Spratt brought up, very important issue, a
180-day deferral is long. Here is the reason why it is in this
bill in its current form, which I am looking at ways of
changing it. My original idea was to have a legislative day,
say 10 to 20 legislative days, because then you can incorporate
a recess. A legislative day calendar incorporates those
recesses. My fear is that if we do an omnibus appropriation at
the end of the legislative process--I am not a big fan of
omnibuses, but we have done them--let's say we do one at the
end of October, go into recess, we don't come back until
January 20 for the State of the Union, Congress could set this
up so that the President couldn't defer beyond that window and
then run up the clock and not be prone to this tool.
So that is why I thought legislative days would have been
the answer. Constitutionally it doesn't work. You can't really
find many lawyers that tell you that works, so we have a
constitutional problem with that approach.
The other approach, having it conditioned upon the recess
date, we have constitutional issues there, I believe. So I am
convinced that we would have a court problem if we did it that
way. So it is difficult to find an airtight constitutional way
of limiting this time, and that is something that we are still
looking for.
And, Mr. Spratt, I would really enjoy some suggestions from
you on how best to improve that. One of the things that I think
we can do to improve this so that this can't be a tool of abuse
by any President with deferral authority is to limit the
upfront time, limit the time in which he can submit this
request after a bill is signed into law. That helps tighten the
schedule at the front end, and then on the back end we have to
work on making sure that the deferral isn't excessively long.
Hinging it on whether Congress acts or not is something that I
would like to do; again, I think we have some legal problems
with that as well.
So these all get into sticky constitutional issues. If we
are not worried about that, we could make this easy, 10
legislative days or something like that, done, case closed. I
don't think you would have an abuse of power on deferral, and
Congress would have an airtight system. There are some
constitutional issues, and that is something we are going to
have in a hearing here, I think, in 2 weeks with some
constitutional scholars.
Mr. Toomey, let me just ask you a quick question. You
served here for 6 years, and you witnessed the process, you
witnessed the process at the end of the stage of the process at
the conference reports where a lot of things get stuck in a
conference report. As a member of the Ways and Means Committee,
I see it happen on tax policy all the time; as a member of the
Budget Committee, watching the appropriation bills go through,
you see a lot of stuff get put in at the end of the stage,
provisions that never had hearings, provisions that never
received scrutiny.
Do you think this is a good tool that can help bring some
kind of accountability at the end of the process? And the rest
of the three of you witnesses, if you would like to comment on
that point as well.
Mr. Toomey. Well, I think it would. I think the tendency
would be--first of all, I support a number of the other budget
process reform measures that you and others have promoted. And
I think the main common element in these things is more
transparency, more openness, more scrutiny, allowing Members
and the public to be more aware and give more consideration to
some of these proposed spending measures, especially those that
haven't gone through a normal hearing process. And it strikes
me that if these provisions are subject to the review of the
President and the possibility of a separate up-or-down vote,
then it influences the beginning of the process as well.
Just the awareness of that, I think, would suggest that
Members might take a more cautious approach to what they will
suggest. And while we all necessarily--we will have to
speculate about what the net effect of this bill would be if it
were signed into law, I have to disagree with some of the other
panelists. I think the tendency would be to reduce the number
of these earmarks and this kind of spending rather than to
increase it. Ultimately we won't know unless and until it
actually becomes law.
Mr. Ryan. Thank you. And I apologize to the other
witnesses. I spent too much time talking, but I want to stick
to the 5-minute rule so Members get a chance to ask the
questions. So if later on if you want to make those comments, I
would encourage it.
At this time I would like to recognize Mr. Spratt.
Mr. Spratt. Thank you all for your testimony because we
have pretty well the spectrum here.
Ed, you will remember over the years this bill went through
an evolutionary process, and I think Charlie Stenholm was one
of the first to promote it, along with Tom Carper, and it went
through a number of different committees, Government
Operations, this committee and Rules Committee, and as it did,
it got fine-tuned more and more.
When we had the constitutional line-item bill on the House
floor, I got up and offered as an addendum to it expedited and
enhanced rescission. And I said this bill is unconstitutional--
excuse me, it was not unconstitutional, it was a statutory
line-item veto based on the presumption that the President had
this authority under the Constitution. As Bob Bork once said,
if the President had that power, how come nobody has noticed
for the last 210 years?
In any event, what I said on the House floor to my
Republican colleagues across the aisle was, add this to it as
an addendum to it, and when the first section gets held
unconstitutional, as it almost certainly will, you have some
standing law as a fallback. They wouldn't vote for it. I am not
even sure, Paul, that they allowed it to be made in order. I
got up and made some kind of protestations about it, but it
never became law.
But the ostensible concern there was that the Senate would
buy off on expedited rescission and not give passage to the
tougher part of the bill. That was an opportunity to put this
in law on a trial basis.
One of the things that came out of our study of the bill
and our consideration of the bill was this idea to have a
petition of, say, 50 Members who would be able to break out an
individual item, an individual cluster of items, and have a
separate vote on it. You recall the pros and cons of that, Ed?
Mr. Lorenzen. Yes. The pros of that approach is that it
allows Members to get an individual vote on their item; that if
a military construction appropriations bill was passed, and the
President submitted 25 rescissions of that package, that there
may be an individual Member may feel like his or her individual
project is defensible, but would not want to be dragged down by
the other proposals that are in there. So allowing the
individual Member to get a vote on his or her individual
projects, if they could convince enough of the Members, would
allow them to separate that out. And also, absent this type of
process, the President could intentionally--potentially thwart
the will of Congress by packaging one or two rescissions that
Congress wouldn't support in a package of many other provisions
that Congress would never--would be reluctant to reject.
So again, the ability to strike out these more
controversial ones would prevent the President from abusing it.
And furthermore, it may make it more likely that you not have
one or two controversial items sink down the savings in the
rest of the package.
Mr. Ryan. Can I ask a clarifying question; was it 15 or 50?
Mr. Lorenzen. It was 15 in the House and 15 in the Senate.
Now, the two arguments against it are, No. 1, the President
submitting an entire package, and the view that the President
should get a vote on his package as a whole. The other concern,
as it comes to the procedural matter, is under the expedited
rescission, without a separate vote, the House and Senate would
either pass or reject the identical versions, there would be no
conference. There is the issue that if the House were to strike
out two package provisions, and the Senate were to strike out
two separate provisions, you have to go to a conference. And
there would be serious constitutional problems with trying to
maintain an expedited process at that point.
Mr. Spratt. Let me switch over to a couple other things.
That is one idea for modifying it so that the President has to
choose selectively, or at least we get the opportunity--now,
some people say that means the committee chairmen would get all
their stuff approved, and the back benchers would never be able
to carry a vote. There are all kinds of political
considerations at stake here.
Mr. Schatz, did I understand your testimony to be that you
thought the President could defer signing an appropriation bill
for up to 6 months?
Mr. Schatz. I did not speak to that provision, Mr. Spratt.
It is something that I think should be examined by the
committee. It is certainly different than the prior enhanced
rescission procedures that we have supported. So I would like
to certainly encourage the committee to think about that. I
understand what Mr. Ryan said and is trying to do. There has to
be some time limit; 6 months is probably too long.
Mr. Spratt. Mr. Toomey, you have served here before.
Wouldn't you agree there has to be some sort of pretty narrow
window within which the President has to act or forego the
option?
Mr. Toomey. There probably ought to be some constraint on
the time. And I think, as Congressman Ryan mentioned, there are
probably a number of areas where this proposal could be tweaked
and improved.
Mr. Spratt. Thank you. My 5 minutes is up.
Mr. Ryan. Mr. Ryun is gone.
Mr. Hensarling.
Mr. Hensarling. Thank you, Mr. Chairman.
Personally I find it difficult to believe that any work of
yours would need improving or tweaking, but I can at least
admit to the possibility.
Mr. Schatz, in your testimony you mention that--and I think
we all agree--that relative to the size of the Federal budget
and relative to the size of the Federal deficit, that line-item
veto geared toward earmarks is a relatively small portion of
the budget--huge compared to the salaries of the American
people. But you mention that even though the money saved is
relatively small and limiting waste, it could have a
substantial effect on the spending culture. Can you elaborate
on that statement in your testimony?
Mr. Schatz. Yes, Mr. Hensarling. The appropriations
process, as you are all certainly aware, consumes an enormous
amount of time. And given the number of requests that go to the
subcommittees, those in turn also take a tremendous amount of
time. And I think the consequences of those activities have
been seen, the Jack Abramoff scandal, the Duke Cunningham
sentencing, that it can literally get out of control. Some say
it borders on legalized bribery, and in some cases obviously it
has been illegal.
We are not trying to stop that or address it. If somebody
is going to be bribed, they are going to be bribed, but the
point is that it would--in terms of the time that these
appropriations subcommittee should be spending, it would take
up less of their time.
One of the reforms that we have suggested is that nothing
should be appropriated if it has not been the subject of a
hearing. Now, there were thousands of requests last year; we
understand they are down this year because of the earmark
reforms being proposed, and the fact that the committee might
be recognizing it takes a lot of their time, but we have
hearings on everything else, and it would take up even more
time if hearings were held on these various proposals. So that
is our point that it is not a lot of money, but it takes up a
lot of time and energy.
There is a whole business out there of people going out
recruiting municipalities--the Montgomery, Alabama, YMCA has
its own--to go get earmarks lobbyists. It is just extraordinary
where we have come over the years in terms of what people are
looking for from Congress. If there is a lack of oversight
generally, it makes it even harder to do that job.
Mr. Hensarling. Thank you.
Mr. Toomey, I think that Mr. Horney had made the point that
he could envision a scenario where if we passed some version of
Mr. Ryan's legislation, it could actually lead to more
spending. I believe in your testimony you mentioned that I
think 43 or 50 Governors have something similar to the Ryan
idea. So what do we observe in the real world in these other
States? Have you looked at the actual case histories in our so-
called laboratories of democracy? Are they spending more money
or less money than they otherwise would because of this tool?
Mr. Toomey. I don't have with me a systemic analysis of
those States that have versus those States that have not, but I
think that is certainly a very worthwhile exercise to
undertake. But I would like to make an observation, something
that we understand about our political system, both at the
State level and the Federal level, and that is by its very
design, every elected member of the legislative bodies
necessarily have a somewhat narrow and parochial obligation to
represent this fraction of the overall geographical area they
represent, be that a State or the entire country. And it is
only the executive that is elected to represent the entire--in
the case of the Federal level, the entire country. So it is
only the President that has no narrow geographical, limited
parochial interest in mind, and has necessarily the entire
country's interest, and so there is a fundamental dynamic here.
And we have seen that that dynamic has led to an explosion in
these earmark requests here at the Federal level, and we think
that it is time for a counterweight to that, some measure that
would shift a little bit of--and power is almost too strong a
word. It is an opportunity to focus a spotlight. It is really
little more than that. To give that opportunity to the person
who is elected to represent the entire Nation just seems to
make a lot of sense to us.
Mr. Hensarling. If I could interrupt my friend--I know the
chairman is running a pretty mean gavel. I would like to slip
in another question in 24 seconds.
Mr. Lorenzen, in your testimony you talk about your Fiscal
Wake-Up Tour, and I think you made a fascinating point there,
that the individuals who were involved in this know that tough
choices have to be made in entitlement spending, but they are
not willing to make them if they think that earmark pork barrel
spending will continue.
So what is the nexus that you see between some version of
enhanced rescission and changing the attitude of the American
public and their willingness to open their minds to entitlement
spending reform?
Mr. Lorenzen. Well, as I said in my testimony, I believe
that having a greater confidence that the tax dollars are being
spent wisely--and Congress has already gone after the waste and
abuse--will make a greater willingness to make greater
sacrifices. I think that it will send a signal that elected
leaders are willing to give up what is perceived as sort of
their special-interest spending, and therefore--and they are
willing to make sacrifices, and the public is willing to do
that.
As I said, at every one of these Fiscal Wake-Up Tour
events, we go through in great detail talking about the long-
term problems and dealing with entitlements, and people
recognize that and agree with that, yet the questions still
come back to let us get rid of waste.
So I think it was a very clear message that we have seen
that they want to first see the sacrifice being shared by
everyone, and bringing out waste is a way to ensure that
Members of Congress are contributing to some of the sacrifices.
Mr. Hensarling. Thank you. My time is expired.
Mr. Ryan. At this time I would like to ask unanimous
consent to allow Mr. Spratt to ask a quick follow-up question.
Mr. Spratt. I just want to make an observation in response
to your question about what did we learn about the actual
results.
A number of Members who had served in State legislatures
when we were processing these bills in the past recalled and
observed that where there Governors had very strong veto
authorities, the tendency of the legislature was to lob on a
lot of these special projects, knowing that the Governor would
have to exercise his veto and prune and purge the bill, and it
tended to give them an incentive, actually, to add this stuff
in, knowing it would eventually be filtered out. Whether you
can document that or political scientists could make the case
for that, I am not sure, but it certainly came up anecdotally
in a lot of testimony we received in years past.
Mr. Ryan. Well, if I knew you were going to make that
point, I am not sure I would have yielded to you.
At this time, I want to yield to Mr. Neal.
Mr. Neal. Thank you very much, Mr. Chairman.
For the members of the committee panel, just ask you a
question--I think this can be done with a yes or no--in our
constitutional system, do Members of the Congress serve under
the President?
Mr. Toomey. No.
Mr. Schatz. No.
Mr. Lorenzen. No.
Mr. Neal. So we serve with the President.
Is it the position of the members of the committee, Mr.
Toomey, you were a pretty capable guy when you were here. Does
Congress currently have the tools that are necessary to balance
the budget?
Mr. Toomey. Together with the President. The President has
to sign anything that Congress----
Mr. Neal. But are the tools available to us?
Mr. Toomey. Theoretically, sure.
Mr. Neal. It is more than theory, because we did it.
Mr. Toomey. More often than not, we have not done it.
Mr. Neal. That is not the point. The point is why embrace
an artificial solution when Congress already has the ability to
do this.
I liked your suggestion about transparency. That would go a
long way toward curtailing some of these suggestions about
spending.
Now let me ask you another question here. Why would Members
of the Congress, given what we have witnessed for the last few
years--and I have been consistent on this because I opposed the
line-item veto when Clinton was President, and I want to remind
Members of the body here how chilling that effect was when it
was in place for a brief period of time--to call down to the
White House to ask them if they would look favorably upon your
proposal.
I think we are going down this term limits argument--and,
by the way, they are all still here, the ones that were for it,
a lot of them are. Then we embraced the issue of, remember, the
balanced budget amendment to the Constitution. We are here
because of what the majority has done. Everybody is familiar
with the K Street Project and what happened. That is why we are
here today with another artificial solution. I thought these
issues in some part were settled at Runnymeade in 1215.
The argument that we don't want to arm Lyndon Johnson
during Vietnam with more tools than were necessary--and, you
know, Lyndon Johnson said to Richard Russell in 1965 that
Vietnam is a mistake and that things look very glum. McNamara
on those tapes is saying the same thing in 1965 and 1966.
So I would remind our colleagues they acknowledge in 1965
that it is a mistake and that it is not going anywhere, and the
war went on until 1974. How many kids were killed? You can come
up with a pretty good number. We went from 20,000 to 58,000
when, in the privacy of the White House, there was an
acknowledgment that it wasn't going to be won on the terms that
were being offered.
What I am arguing with you today about is why would Members
of Congress cede their authority to the White House, to any
President? Transparency, as Mr. Toomey suggested, is the
answer. Put it out there. Let people see what is being
requested.
You and I know, Mr. Toomey, based upon your experience
here, that some of the Members of the House that did the most
screaming and hollering about spending sent the most letters to
the appropriators. Just kick the letters out there, and there
will be far fewer of those people in the well. And this is not
an attempt to gain any upper hand.
Did you ever request an earmark when you were here?
Mr. Toomey. Probably two or three.
Mr. Neal. Okay.
Mr. Ryan, have you requested any earmarks?
Mr. Ryan. Probably two or three.
Mr. Neal. Two or three.
Mr. Ryan. None this year.
Mr. Neal. We all know the reason why they are not being
requested this year. But I have requested them this year
because I am pleased to defend the ones I have requested.
Back to another point here that I think is essential. One
of the reasons we find ourselves in the position that we are in
today is because Congress for the last few years, probably 5 or
6, has forfeited oversight responsibility. All you do with the
line-item veto proposal is shift spending priorities to the
White House. Then the President will determine what the
priorities are for the country, rather than the ability to
share that responsibility, as Mr. Toomey has accurately
suggested.
Mr. Toomey. May I respond briefly?
First of all, I share your preference for greater
transparency, as I pointed out before. I share your view there
should be greater oversight and that has been a shortcoming of
Congress for a number of years.
But I would simply suggest that there is an infinite
possible array of rules by which Congress could conceivably go
about the spending process. There is a long number of proposed
reforms, including PAYGO in various forms, sunsetting
provisions, requiring hearings, requiring authorization
legislation, any number of these things. They are all
reasonable for a topic of discussion, and I think that this is
one.
Mr. Neal. How about a 3-day layover on conference reports?
Mr. Toomey. There is a very long list of very reasonable
ideas. We happen to think this is one very such reasonable idea
that could help us do a better job getting spending under
control, not the only one. Frankly, we support all of the
proposals that Congressman Ryan and some of his colleagues have
proposed by way of budget process reform. This is not a
panacea, but we think it is a very constructive step in the
right direction.
Mr. Neal. But there is general agreement that the Congress
currently possesses the tools to balance the budget.
Mr. Toomey. Sure.
Mr. Neal. Thank you.
Mr. Ryan. The gentleman's time has expired.
At this time, we will recognize Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman. Thank the panel for
being here.
Certainly we have got the tools, but I don't know whether
we have got the will to do it. Anybody that can read or
actually stay within lines--this is a chart David Walker gave
us this morning. We have all seen it. Growth in this Federal
Government over the next 40, 50 years, which is the single
biggest threat to our life, our grandchildren's way of life. I
have got an 8-year-old that will be in this position in 2050.
When left unchecked, this Federal Government will soak up about
50 percent of GDP, and he will have to figure out how to live
and prosper on the other half.
It is also kind of like the fellow that fell off the 10-
story building. As he passed the fifth floor, he said, wow, so
far, so good. So far, so good.
Last year, or, actually, earlier this year, we passed the
Deficit Reduction Act, which trimmed mandatory spending by some
$37 billion, I guess. We proposed a much bigger number in the
House. The Senate whittled it down. The rhetoric on both sides
was overdone. Our side bragged way too much; the other side
cried disaster way too much.
The truth of the matter is that modest attempt to changing
mandatory spending would have less than a half a percent affect
on these numbers. Maybe $29 billion this year doesn't have an
effect, but given how hard it is to make even modest changes to
spending in this Federal Government, where is the biggest bang
for our buck in terms of--there is going to be screaming and
hollering from both sides about trying to get it done and
trying to create this political will to use those tools to rein
all this stuff in. Where is our biggest bang for our buck?
We can't go through the rhetoric we went through last year
for only $36 billion and keep the thing working and have a
meaningful impact on these numbers. Anybody, where would be the
biggest bang for our buck in terms of relooking at how the
Federal Government spends money?
Mr. Schatz. If I may, one of the proposals that has been
used at the State level--and I don't want to get into a long
discussion of tax and expenditure limitations, but that is one
concept, to strictly limit overall the amount of increase in
the growth of the Federal Government.
Any organization that needs to look at its bottom line
picks a number somewhere that makes sense and says we will
spend 3 percent more than the current year, we will spend at
the rate of inflation, we will increase salaries by 2 percent
or 3 percent or whatever it is. And it is interesting, because
Congress increases the salaries of Federal workers at a certain
rate, but then everything else goes up far more than that.
Well, tie wage increases to spending increases.
So if you set--this would go across the board--a limit of
some kind, that would help address this growth that we see in
all of these programs; and it would force Congress to make more
of the choices that we think they should be making now.
Mr. Toomey. If I could briefly respond, I think you have
observed yourself in the long run if we don't address the big
entitlement programs, then the rest is fiddling around the
edges. However, from my 6 years in the House, I learned one
thing early on which is sometimes we have to settle for very,
very modest victories and you make very incremental progress.
So if we can make this incremental improvement, what I see
is an improvement in the budget process, spending process, and
maybe change the culture of spending a little bit by putting
greater scrutiny behind some of these projects, maybe we are
taking a small step in a long journey to get this budget under
control.
Mr. Horney. If I may, I think the key thing is what I have
learned about budget process over the years, and I think it is
very important, the process is not good at forcing the Congress
and the President to do things they haven't decided are worth
doing. So what you really want to do is work on getting the
will; and then, once you do that, budget procedures can be very
useful in enforcing the decisions.
I think that is the lesson from 1990 where the President,
the Congress, Republicans, and Democrats got together. The
first thing they did was make changes in policy. They increased
revenues, cut spending. They did it together; and then they put
in place the PAYGO rules and the statutory caps on
discretionary spending that helped enforce that agreement. It
wasn't the other way around. They didn't change the rules and
then go and come to the policy decisions.
I think trying to achieve the results through process rules
like overall spending limitations can be difficult; and I think
the experience of the one State that has really tried that,
Colorado, after several years of doing it, as a result of
things that happened, what happened in the State, they have
suspended it.
So I think there are some real questions about whether
things like that work; and what you really need to do is what
David Walker is trying to do, the Concord Coalition and others,
is get the public and lawmakers to realize what needs to be
done.
Mr. Lorenzen. I would concur for the most part with what
Jim said about budget enforcement, trying to enforce policy
decisions.
The one additional place for the budget process is to bring
greater transparency and at least force accountability. So if
spending were to go above certain levels or revenues above
certain levels, I don't think the process could dictate the
outcome, but it could potentially at least require an
acknowledgment and a discussion of that. And the policy outcome
may be the one that the Concord Coalition might like, may not,
but at least that debate and recognition of an issue and
consideration of it.
Mr. Ryan. At this time, I would like to recognize Mr.
Baird.
Mr. Baird. Thank you, Mr. Chairman; and thanks to the
witnesses. This is a very important and fascinating topic, and
I appreciate you raising the issue.
A word about transparency. I think Mr. Neal mentioned the
3-day layover. That is already in the House rules, but we waive
it with alacrity. I have introduced a bill, 72-hour rule, which
would require 72-hour barring two-thirds majority vote and with
exceptions for emergencies, et cetera.
By the way, it also provides not only that we have 72 hours
to look at bills, but so would you. Bills would have to be made
available on the Internet. I think that would actually go a
fairly long way toward shining the light of day on frivolous or
egregious abuses of the earmark system.
I also want to commend you. Because one of the problems we
face, one of the reasons people don't seem to read bills is
what we do, as we all know, is go down on an appropriation bill
that we have had 6 hours to read and we don't say what is the
broad sweep of this bill. Instead, we say, is my project in it?
It is a little bit like asking Santa, did I get what I asked
for? And if Santa says yes, then you love Santa, regardless of
who else gets what in the bag. It is not a very good way to run
a government.
Having said that, I am not sure the alternative is good,
and I want to play around with this. So if we don't put the
earmarks, we who represent the districts--and I would warrant
that I know my district a good bit better than the President of
the United States who has never been there. If we don't put
them in, how is the money spent? Is it not going to be spent by
a bureaucrat and are they not then subject to their own
political agendas?
I sincerely would be interested in answers to that.
Mr. Schatz. If I may, and this is part of our All About
Pork Report, and among other pieces I have read about this. I
find it interesting that Members of Congress talk about these
nameless, faceless bureaucrats that make these decisions,
where, in fact, they give that authority through legislation.
So it seems to me that you, in some cases, have it both
ways in some particular project and programs. For example, the
Save America's Treasures Program under the National Park
Service got $15 million, totally competitive, Department of
Interior, went into the appropriations bill. The Appropriations
Committee added $16,750,000, all earmarked.
So, clearly, someone thought that this project should have
more money, this program should have more money but somehow
didn't trust the same people they had already entrusted to make
the initial decisions with all of the decisions. So I don't see
how it can be done both ways.
In terms of what the decisions are and how the decisions
are made, if Congress doesn't like how they are being made,
they can change the law, they can change how these grants are
made, and they can change the process. But I don't think it is
fair to say you want to have it both ways.
Mr. Baird. Let me ask this question, and I appreciate the
point you just made. That would seem to argue for me
legitimately to make a case against earmarks per se. But I am
not sure that then is an argument in favor of the rescission
authority for the President.
Mr. Schatz. If you have earmarks and they are being added
on in ways that are noncompetitive and without hearings, then
someone has to at least point that out and force Congress to
vote separately on those items. Because in the appropriations
bills you don't have that opportunity, at least not right now.
Now if the earmark reforms were done in a way that there
would be a greater opportunity for amendments to be offered on
the floor, and certainly a lot of Members, including some who
are here, are trying to do that, that might make it a little
bit less important for a line-item veto. But I still think at
the back end there is always going to be something we would
like to see being brought back to the floor for consideration.
Mr. Toomey. I would like to add one thought.
Mr. Baird. I want to get an alternative view.
Mr. Toomey. Sure. I would suggest that the alternative to
having fewer earmarks on the part of Members of Congress is not
necessarily that bureaucrats would do them instead. It is
possible that they could be discontinued.
Mr. Baird. No.
Mr. Toomey. I think in some cases it is pretty clear that
earmarks are used to get funding for something that really
wouldn't be able to withstand the scrutiny of a normal process
of hearings, consideration, authorization, a vote on the floor
on a free-standing measure. It wouldn't pass the giggle test
sometimes.
Mr. Baird. If I may, I appreciate the point.
Mr. Horney. I think, in earmarks, it is hard. I think there
is nothing evil about earmarks. A lot of the ones--for
instance, look at the foreign operations bill. It is filled
with earmarks. But that is because Congress thinks it is
appropriate for Congress to decide how much money goes to
Israel, how much to Egypt, and so on.
There is a balance. What I think is really key is to
realize the line-item veto is not even close to being limited
to earmarks. We are talking about much broader power than that.
The President could ignore every earmark in an appropriation
bill and instead to propose to eliminate the 91 programs that
the President proposed to eliminate in his budget this last
year.
So if you want to get at earmarks, and I think you need to
be careful about how you do that, the line-item veto is much
broader and sort of a blunt tool to do that.
Mr. Baird. I appreciate the response on both sides of this.
Thank you, Mr. Chairman.
Mr. Ryan. Mr. Cuellar.
Mr. Cuellar. Thank you very much, Mr. Ryan. Thank you for
taking the leadership on this particular issue. I know this is
an issue that Mr. Spratt and some of the folks who have been
here before have been working on; and I do appreciate--to the
witnesses, I appreciate your comments.
I think we all understand the great magnitude of facing the
fiscal challenges that we have. Of course, all of us are
looking at the different tools that are available to improve
accountability in the budgetary process; and, of course, I
think the end result is to get greater public confidence in the
work that we do here in the budgetary process.
I think if you look at the different budgetary tools, there
is a lot of them out there on the table, some of them already
in law, some of them have been debated already and been ruled
unconstitutional, and some of them are still going to be
considered, like we are today. But I think we all have an
obligation to consider and debate the different tools,
budgetary tools that are out there.
No. 1, PAYGO, the 1974 Empowerment Control Act, Sunset
Commission, Performance-based Budget Team, that is legislative
oversight, a modified line-item veto, these are different tools
out there.
In my State, for example, in Texas, we have the following
budget tools, and I support tools like this: PAYGO, I support
that; Sunset Commission, I support that; Performance-based
Budget Team; Legislative Oversight, I definitely support that;
line-item veto, I support that, and in fact I am a cosponsor
with Mr. Ryan here.
What I ask is the witnesses to work with us so we can fine-
tune this particular tool; and today, of course, we are talking
about the line-item veto. I do understand--I think Mr. Spratt
is correct on this--any time you propose something, you will
have little challenges. New challenges will arise where--I call
it sparring between the executive branch and the legislative
branch.
For example, if you are talking about line-item veto what
is going to happen is Congress will find a way to try to design
a bill so it doesn't become line-item veto; and you will have
conversations between individual Members and the President.
Look, we will work with you on this one if you don't line-item
veto our thing. But I think that is part of the process.
The only thing I do ask is that you work with us to fine-
tune the legislation. Because, again, we didn't invent this.
There has been--43 other States have gone through this, other
Members of Congress went through this, and what we ask you is
to just help us fine-tune this legislation to make it as best a
product as possible. Nothing is perfect.
I am a big believer of putting the tools out there,
consider them, debate them, and then see what we can do to
work, and understanding that there will be sparring between the
legislative and oversight.
I am a cosponsor of this legislation. I do want to fine-
tune it, but I still believe that the will is so important, the
legislative will is so important and legislative oversight. I
think that is the most basic things that I think we always talk
about, but we need to do more to provide oversight.
Pat, any of you, if you have any thought on this, I would
be happy to work with you, along with the other members.
Mr. Toomey. I would just very briefly say that we agree
there is a very wide range of tools that are available for the
budget process. We support many, many of the reforms. We think
this is a great start, a great idea; and we look forward to
working with you and other members of the committee in the
hopes of refining it so that it can pass and be effective.
Mr. Schatz. We are happy to contribute as well.
Again, I think there are plenty of individuals--and my
understanding is with the next hearing you will be listening to
some of them--with the constitutional background to also
address some of the issues related to this legislation.
Mr. Lorenzen. In my testimony, I raise several issues for
consideration. A couple I would bring to your attention is
ensuring that all the savings go to deficit reduction,
including savings from rescinding a tax cut or entitlements,
and, obviously, the issue that has been discussed about the
release of funds and how long the President can defer funds and
striking the balance between ensuring the funds are spent with
the will of Congress while ensuring that the money isn't spent
until Congress has acted.
Mr. Horney. While our preference would be that no bill is
enacted, we have made suggestions about the way it can be
improved, and we have talked with House and Senate staffs about
those things, and we will continue to do that.
Mr. Cuellar. Mr. Ryan, again, as one of your cosponsors, I
hope you work with us on fine-tuning this legislation. There is
no Republican way, there is no Democratic way, but if you can
work with Mr. Spratt and some of the other Members, I think
this is a good piece of legislation, and if we can tinker
this--fine-tune, not tinker--fine-tune it, I would appreciate
your consideration.
Mr. Ryan. I couldn't agree more.
We were sitting here talking about ways of fine-tuning it
back here. The deferral issue is an important one, and my
intention is not to give the President any more undue power. At
the same time, we have got Chada issues, constitutional issues
that we have to make sure we accommodate; and we also have to
make sure that Congress can't run out the clock with the recess
beyond the deferral.
So it is not as easy as it seems at first, but, absolutely,
my full intention is to fine-tune this legislation to address
these very valid concerns, some of which Mr. Horney brought up,
I think each witness brought up, and Mr. Spratt brought up. So
I look forward to doing that.
At this time, I recognize Mr. Cooper.
Mr. Cooper. Thank you, Mr. Chairman.
I, too, am a cosponsor of your legislation but a reluctant
cosponsor. I think the record should show that I believe you
are the only Republican on the committee who is in the room
right now, and that has been true for some time, so I wish you
could muster more interest in this hearing on your side of the
aisle.
I think what we have here--as was said in the movie Cool
Hand Luke, what we have here is a failure to communicate, not
necessarily among so-called experts but with the American
people. So, with your indulgence, let me put the cookies on a
real low shelf.
The President already has tremendous power to cut spending
and yet, as the Cato Institute and the Heritage Foundation have
demonstrated, government has grown more dramatically than at
any time since Lyndon Johnson and probably exceeding LBJ
himself and the Great Society.
So what has the President done with his cutting tools?
He has got the chain saw of a real constitutional veto. He
has never used it, the longest-serving President since Thomas
Jefferson never to use it.
He has also got a smaller tool, something like scissors,
that every President since Richard Nixon has had. He has really
never used that either, even though every President back to
Nixon has used it hundreds of times.
Now this whole hearing is about hedge clippers, some sort
of intermediate tool that he probably should have, and we are
debating the fine point of hedge clippers. Meanwhile, he has
never used the chain saw or the scissors.
And you and I both know, while an intermediate tool might
be helpful, if you have never tried the bigger tools or smaller
tool, he hasn't even approached the intermediate problem that
we are addressing here today.
So I would suggest what we have here today is not a tool
problem, it is a timidity problem. So probably we shouldn't be
having a hearing about line-item veto, it should be more on the
subject of Levitra. Probably shouldn't talk about
constitutionality, maybe more Cialis. We probably need Viagra
to stop the Niagara of spending and promises that are being
made. Because it is a willpower problem. It is something more
than a chain saw or scissors or hedge clipper problem.
Mr. Spratt. Mrs. Capps is blushing.
Mr. Cooper. I told you it would be a real low shelf.
As the Comptroller General has testified to us, the cost of
delay in addressing these problems is extraordinary. It is far
more than even Members of Congress can imagine. It approaches
$3 trillion a year. Now we will work less this year than any
Congress since 1948, and the problem will be $3 trillion worse
when people regain their resolve next January.
I am worried that, as convenient as it is for some of these
groups to raise money off of this new issue, this recycled
issue, this bang the drum slowly issue of line-item veto, we
should be focusing on more immediate action because it is a
dangerous debate that diverts attention from our real problems
and why we aren't using the chain saw or the scissors.
Now let me remind you I am for the hedge clippers, but it
is a lot like asking us in Congress, stop us before we spend
again. Look at the appropriations bills we have just gone
through. Look at how few votes the Flake amendments have
received. All they would do is ask us to live up to the
transparency and disclosure requirements that most all of us
voted for in the earlier lobbying reform bill.
We are not taking action, nor is the White House taking
action. That is why I am a reluctant cosponsor. Because we are
debating the fine points and the niceties. Meanwhile, the
problem is getting worse every day, every week, every month to
the tune of $3 trillion a year; and we are jawboning about
intermediate tools. It is a willpower problem; and, hopefully,
with clearer communication, folks back home can understand how
to give us more backbone. Because that is what it boils down
to.
Forgive me, Mr. Chairman, for the statement and for my
reluctance in cosponsoring your fine measure, but that is where
I think the communication needs to go on.
If any witness would like to make a comment, I would be
happy to hear you.
Mr. Schatz. Certainly the idea of the President not using
his veto has been prominently used by our organization and I
know by Mr. Toomey's as well. We are not reluctant critics of
the lack of fiscal discipline on both sides of the aisle. So I
would like to just make that point. In fact, we have been
disappointed by the fact that spending has grown so much; and
it wouldn't have mattered under whom that occurred.
One quick comment totally off what you had said but what
Mr. Horney said about foreign aid. I don't think that the line-
item veto will be looking at the Israeli or Egyptian
appropriations. I think they are looking at the $13-1/2 million
for the International Fund for Ireland which this year included
plans to fund the World Toilet Summit.
Mr. Neal. Might I respond?
Mr. Ryan. It is Mrs. Capps' turn next. Maybe she can yield
to you. I want to keep it clean on time. Let me recognize Mrs.
Capps. It is her turn.
Mrs. Capps. I would like my time, but I would also want to
yield to Mr. Neal.
Mr. Neal. Thank you.
Mr. Schatz, you do a disservice to the Ireland Fund when
you don't point out the success that it has had by singling out
one part of the Ireland Fund that you disagree with. The border
counties of Ireland, beginning in Dundalk and moving all
through the north, have had an experience that is unparalleled
with the help of American foreign policy. In fact, if every
achievement in American foreign policy came close to what has
happened in Ireland over the last decade, we would all be
standing here with a round of applause.
The Ireland Fund has worked quite well, despite the single
issue that you raise. It has been an extraordinary success in
those border counties. Members of the Protestant community,
members of the Catholic community herald it, as well as the
European Union and Australia. They all participate.
Mr. Ryan. This is when you get someone who is Irish up--as
an Irishman.
Mrs. Capps. Is it time for me to reclaim my time?
I also just have to say to Mr. Spratt, the mention of chain
saws always makes me blush. I know all the quotable quotes have
been said, and I am kind of doing cleanup.
Mr. Conaway left, but he sort of yielded the fact that
there is tremendous lack of will both in the leadership in the
administration and also in the House now to--which is quite a
statement--to do anything about balancing the budget.
Another quote comes from ``USA Today'' editorializing that
the line-item veto is a convenient distraction, that the
deficit is caused primarily by an unwillingness to make hard
choices on benefit programs or to levy the taxes to pay for the
true cost of government.
I would like--that admission of failure on the other side--
I could say, in a partisan way, the Democrats would like a
chance to balance the budget. And I didn't serve here then, so
I can't take credit for what happened in the '90s. I came in at
the end of it. But I want to use my time or let you use my time
to illustrate for me what happened in the '90s that made it
work.
But, before I do, I think there are two elephants in this
room that I haven't heard mentioned today. I just want to put
them out there. Elephants is a good symbol. One is the war cost
and the other is the huge tax cuts. These have got to have
something to do with our deficit.
I also want to make one other point--I am hoping I am going
to hear in your comments that there should be an effort in a
bipartisan way to deal with this.
But, we have a Speaker now who says he is looking for a
majority of the majority to make decisions. A classic example
is what happens in my years of serving honorably under the good
leadership on this committee. I can count only three or four
bipartisan amendments that were voted on in a bipartisan way in
this process of drafting a budget.
Mr. Horney, you sort of put your finger up first.
Mr. Horney. If I could, I think that we have a serious
long-term problem, no question about that, very serious. What
needs to be done, the only way it is going to be dealt with is
when Republicans, Democrats, the President, Congress come
together and look at everything, put everything on the table
and consider everything.
That is exactly what happened in 1990 when the current
President's father worked together with congressional Democrats
and Republicans. I was on the House Budget Committee staff at
that point. I was out at Andrews Air Force Base for part of
that time. A lot of people say that was a terrible experience,
but, in fact, it was an incredible experience of people saying
we think we have got an important problem, and that means
giving up some things I care about.
Democrats were not eager to cut Medicare, but they said, in
order to get deficit reduction, I will do it. Republicans were
not eager to raise taxes but said we are willing to do it in
order to reduce the deficit. They put together a package with
bipartisan support, President and Congress, that reduced the
deficit by $500 billion over 5 years and set the stage--it
didn't by itself achieve the balanced budget, but it certainly
had an important effect.
Mrs. Capps. Do you think a bipartisan coming together is
essential to this process?
Mr. Horney. I don't see how it can be done otherwise.
Because when you are dealing with Medicare, Medicaid, Social
Security and taxes, it has got to be a combination of
reductions in those programs and increases in revenues. I don't
see how either party can do those things by themselves.
Mrs. Capps. Would any of the others like to comment?
Mr. Lorenzen. I agree with everything Jim said about the
need for everything to be on the table and making tradeoffs,
that we are never going to be able to balance the budget by
cutting everyone else's priorities; and I think bipartisanship
is necessary to assure that any agreements are sustained so you
don't have the tough choice made for deficit reduction reversed
as soon as the other party is in power.
I think in the 1990s the other key was that there was a
bipartisan consensus that deficits mattered, were a problem,
and a bipartisan consensus we should achieve a balanced budget.
There were differences about how to achieve that, but when you
started with that goal, that it was the goal we wished to
achieve, that was able to focus the discussion in a way that we
have lost in recent years. Once you have that political will
and put everything on the table, then you can have the type of
discussions; and that is where budget enforcement tools such as
PAYGO and discretionary caps and others can help enforce and
further that will.
Mr. Toomey. I would like to address, if I could, very
briefly. We strongly disagree that the main reason we need to
get spending under control is because of the size of the
current deficit.
First of all, it is less than 3 percent of GDP, that is a
modest level.
More importantly, if the deficit as it is today were a
serious problem for the economy, everybody acknowledges it
would manifest itself in high interest rates, which we don't
have. We have extremely low interest rates.
The last point I would make is, you mention the tax cuts,
and I think it is indisputable that, at least if you dispute
the cause and effect, you can't dispute the fact that since the
tax cuts there has been a tremendous, robust and broad and
sustained economic recovery; and revenue to the Treasury has
grown and is at an all-time record high.
I wouldn't suggest that raising taxes is in any way a good
solution to the deficit program.
Mrs. Capps. Would you agree that there was a burst in the
economy in the '90s as well?
Mr. Toomey. Absolutely.
Mrs. Capps. So there might be some correlation.
Mr. Toomey. There was a whole different set of factors that
were going on then.
Mrs. Capps. I have one further question. You said that
deficits don't matter to the economy. Would you agree--did I
quote you right?
Mr. Toomey. What I am saying, the deficit at the current
size is not a constraint on economic growth.
Mrs. Capps. Would you share my concern that the trend might
be significant economically? And, also, would you think there
might be other considerations besides the economy that would be
important to consider with our deficit?
Mr. Toomey. First, the entitlement programs are
unsustainable; and they would lead to deficits that are
unmanageable. I will acknowledge that.
But I think the main reason to focus on the deficit is if
you believe it causes economic problem. If there is no economic
problem because it is so small, and it could well be that it is
that small at the moment, then I would say certainly don't
raise taxes to deal with something that is not an economic
problem.
Mrs. Capps. I am going way over my time. I have a naive
question to ask. Why do we never consider the war cost when we
talk about budget?
Mr. Toomey. Well, we do. Our organization doesn't get into
foreign policy matters, but we acknowledge it is very
expensive. War is always very expensive. We think, frankly,
that, given the costs of the war, it creates an even greater
need to have fiscal discipline on the discretionary and the
domestic side of spending.
Mr. Schatz. Mrs. Capps, we would actually like to see
offsets to pay for the cost of the war. This was done in the
Korean War and----
Mrs. Capps. Do you think we should do that now?
Mr. Schatz. We object to these supplemental appropriations
with offsets. I know Mr. Ryan and others have tried to offset
the nondefense part, but it seems an interesting way to fund
something you know you are going to spend money on because it
frees up money to do things we may not necessarily need in
other areas.
Mrs. Capps. It also precludes some oversight.
Mr. Ryan. If the gentlelady will yield, because you are the
last speaker. We did put $50 billion in the budget. Now as a
down payment on the next supplemental, I will be the first to
tell you I don't think that is enough, but there was an attempt
to try and acknowledge, at least in our baseline and our
deficit projections, the cost of the war. I agree with Mr.
Schatz. We should be seeking offsets for these things.
Mrs. Capps. For the cost of the war?
Mr. Ryan. I would love to cut the spending to pay for the
war. I am not going to win on that point. We have attempted to
offset the nonwar spending, and we have made some success on
that.
But I just wanted to make a point to you, which is the
budget resolution that just passed has $50 billion in it as a
down payment on the next war supplemental, so there is a
recognition in the budget that the war will cost money. The
administration never acknowledged that until, I think, this
year. I think OMB put it in their submission. So we in the
House have been recognizing that a lot longer than OMB has.
Mrs. Capps. Let me ask, why is it that we want to offset
the cost of the war with cuts to Medicare and Medicaid?
Mr. Ryan. Who said we are cutting those to pay for the war?
Mrs. Capps. Are there no other choices to pay for a war?
Where is the sacrifice?
Mr. Ryan. Well, I don't think anybody said cut Medicare and
Medicaid. We have not cut them. We have only restrained the
increase in spending on Medicare and Medicaid. So we have not
been cutting Medicare an Medicaid.
Let's stick with the topic at hand. I want to keep order
here.
Let me stop with this. I want to thank the witnesses for
coming and presenting very articulate testimony. I think each
of you raise a lot of insight into this issue. I think each of
you raised some of the issues we are dealing with, which is a
deferral authority, bundling duplicative submissions, all very
important issues that we have to grapple with; and, yes, I
think that there is some improvement in the fine-tuning area
that needs to happen.
I see Mr. Cooper.
Let me just say two reasons why we are doing this and why
we are talking about this.
No. 1, this bill introduces a new element of transparency
and scrutiny at the very stage in the process where it is
lacking. Provisions which typically have not faced scrutiny
hearings or good legislative oversight make it into the bills
at the conference stage. Members of Congress have one choice,
vote for or against the entire conference report. Oftentimes,
you will find you want to vote for a bill because of other
meritorious things like veterans, health care or something like
that; and so, therefore, you are forced to vote for other
things that are wasteful, unnecessary spending that haven't
gone through committee process.
The President has the same decision. Yes, it is a chainsaw.
So let's take a veterans bill. The President can either
sign it into law and get important things done like veterans
health care or take a chainsaw and veto the entire bill because
there are parts of it that never went through congressional
scrutiny, never went through hearings, and are wasteful
spending.
I think we need to change the culture of the way we spend
money here. This will not balance the budget, but this tool
will bring more transparency, more scrutiny, more
accountability at the very stage in the spending process where
it is so lacking. That I think will help change the culture of
spending here in Congress so we can get on to the bigger
picture, get on to the bigger things, change our culture and
talk to each other about how to actually balance a budget and,
yes, prepare for the retirement of the Baby Boom generation
which we are so ill-prepared for.
I will control the time right now and then yield. Mr.
Cooper raised his hand first.
Mr. Cooper. Thank you, Mr. Chairman.
I just wanted to ask Mr. Toomey because I think he said in
response to Mrs. Capps a couple of times that deficits at the
current level don't pose an overwhelming threat. I would just
like to ask Mr. Toomey to speculate, what about deficits that
were twice as large as those you acknowledge today?
Mr. Toomey. It is hard to say on precisely what level the
markets would start to say this is not sustainable and we need
higher interest rates. I think the right way to look at this is
not in absolute dollar terms but in terms of percentage of GDP.
Mr. Cooper. I agree. Right now, it is 2.6 percent. What if
it were 6.2 percent?
Mr. Toomey. I think it is fair to say, based on other
historical facts, if it looked like it would be sustained at
that level, that would start to probably become problematic.
Mr. Cooper. If it starts becoming a problem at the doubling
level, what would it be like if it were 10 times larger?
Mr. Toomey. I think it would be a very serious problem.
Mr. Cooper. Let me point out to you that the U.S.
Department of Treasury issued a report in December of last year
that said the real U.S. deficit wasn't $319 billion for the
year 2005, it was $760 billion, or 6.2 percent of GDP; and it
seems to be climbing, according to that analysis. So you would
indicate that would start being a problem.
Mr. Toomey. The analysis includes really the way the
counting occurs for the big entitlement programs.
Mr. Cooper. Social Security and Medicare. It does include
Civil Service retirement and some veterans benefits, but it
completely excludes Social Security and Medicare. If you add
those in, according to Harvard Law School Professor Howell
Jackson, the 1-year deficit for America for 2005 was $3.3
trillion, or 10 times larger than the acknowledged figure of
$319 billion.
Mr. Toomey. I would simply suggest that what we choose to
acknowledge and how we describe it and whether we include the
unfunded mandates and the accrual of those liabilities, when
the entitlement programs--that matters much less than the real-
world observation of the marketplace and the judgment the
market makes on the sustainability. Right now, the market is
saying what we are currently doing is sustainable to the extent
that 30-year bonds have 5 percent yields.
Mr. Ryan. We are going way beyond line-item veto. You guys
can have this conversation another time over in the corner if
you want to. I want to just keep order here.
Mr. Spratt has asked to be recognized, and at this time let
me recognize Mr. Spratt.
Mr. Spratt. Mr. Chairman, let me make an observation in
light of what you said a minute ago.
As I sat here listening, I was trying to discern what is
our purpose. Is it to reduce, if not wipe out, the deficit? Is
it to deal with this thing called earmarking? Or is it some
other purpose? What is our objective here?
What you suggest is, no, we probably won't do much more
than dent the deficit at best. We might be able to control a
bit of spending, but mainly it is to change the culture of this
place. If that is our objective, then I think it probably ought
to start here.
The reforms we are focusing on should be more internal
reforms, as opposed to going to the White House and have the
White House superimposed upon our processes. Let's look around
here.
Let's be honest with ourselves. One of the problems we have
with devising any truly strong budget controls is that we have
something called the Rules Committee, which has almost
unbridled authority when it comes to mowing down most of the
barriers that we would put in place simply by overriding points
of order and things of that nature.
So if that is the objective--and I think you probably put
it right, that should be the objective--then let's go at it
from that point of view and deal internally with this
institution, clean out our own closet before we go downtown and
ask the President----
Mr. Ryan. Let me reclaim time and summarize, just give you
one example of how the Rules Committee did not waive points of
order.
Last week, we had a military quality of life bill which
left unprotected $500 million in spending that occurred above
the 302(b). Mr. Hensarling went to the floor with six points of
order which were unprotected which were allowed in the rule and
knocked that spending out.
So the Rules Committee did not wipe this away. The Rules
Committee allowed a Member of Congress, any Member of Congress,
to go to the floor and literally wipe out $500 million in
spending just last week.
So I have would say that there are some positive
developments in the culture around here. This would be yet
another positive development in bringing more scrutiny,
transparency and accountability to the budget process precisely
at the stage where it lacks.
Let me just conclude by thanking our witnesses for coming.
I am just going to adjourn the hearing, and we can talk in a
minute. Because we are way past the time we had planned on it.
So I want to thank the witnesses for coming.
This hearing is adjourned.
[Whereupon, at 11:46 a.m., the committee was adjourned.]