96-973 GOV
Louis Fisher, Senior Specialist in Separation of Powers
Virginia A. McMurtry, Specialist in American National Government
Government Division
December 2, 1996
At various times, Congress has given the President statutory authority not to spend appropriated funds. That authority was elaborated and made more systematic with the Impoundment Control Act of 1974, which permitted the President to delay the expenditure of funds (deferral authority) and to cancel funds (rescission authority). To rescind funds, the President needed the support of both houses within 45 days.
The Line Item Veto Act of 1996 (Public Law 104-130, 110 Stat. 1200) supplements the rescission authority. Instead of requiring the President to obtain the support of both houses within a specified time period, the Line Item Veto Act puts the burden on Congress to disapprove presidential proposals, acting under expedited procedures, within a 30-day period. Any bill or joint resolution of disapproval is subject to a presidential veto, ultimately requiring a two-thirds majority in each chamber for override. These procedures delegate important new powers to the President, affect the balance between the legislative and executive branches, and change the budget process.
The Impoundment Control Act (ICA, Title X of the Congressional Budget and Impoundment Control Act) is amended by adding at the end a new part on "line item veto." These new sections become effective on January 1, 1997, and terminate on December 31, 2004 (due to inclusion of a sunset provision). The original provisions for rescissions under the ICA (2 U.S.C. 681ff) remain in effect.
New Authority. The Line Item Veto Act provides expanded rescission authority for the President. After signing a bill or joint resolution, the President may cancel in whole (1) any dollar amount of discretionary budget authority, (2) any item of new direct spending, and (3) certain limited tax benefits. This authority is available only when the President signs a bill or joint resolution. It is not available when the President allows a bill or joint resolution to become law without the President's signature or when the President exercises the veto power. In exercising authority under the Line Item Veto Act, the President must determine that such cancellation will (1) reduce the federal budget deficit, (2) not impair any essential government functions, and (3) not harm the national interest. The act requires the President, in identifying cancellations, to consider legislative histories and sources of information referenced in the law.
Special Messages. The President must notify Congress within five calendar days (Sundays excluded) after the enactment of the law from which the cancellations come. For each law from which the President has canceled items, the President shall transmit a single special message to Congress. Each of these special messages from the President are to be referred to the House and Senate Budget Committees and other appropriate committees. Such special message to Congress shall specify the items to be canceled, the reasons for the cancellation, and other consequences and facts bearing upon the cancellation. Several of these requirements are similar to those in section 1012 of the Impoundment Control Act of 1974. The new law also requires that, where applicable, the special message identify the specific states and congressional districts affected by the cancellation, and the total number of cancellations imposed during the current session on these states and districts. Each special message must be printed in the first issue of the Federal Register published after transmittal; the special messages are also printed as House documents.
Impact. The cancellations take effect upon receipt of the special message in the House and the Senate. "Cancellation" in this context means to prevent from having legal force; in other words, provisions canceled never become effective unless Congress reverses the action of the President by enacting a "disapproval bill." If a disapproval bill for the special message is enacted into law, all cancellations disapproved in that law become null and void and the items shall be effective as of the original date provided in the law to which the cancellation applied.
The Line Item Veto Act not only reverses the burden of action for rescissions, but also expands the scope of the President's authority to include three types of cancellations. In addition to authorizing the President to cancel in whole any dollar amount of discretionary budget authority (appropriations), the new authority also covers any item of new direct spending (entitlement), or any limited tax benefit displaying certain characteristics.
What Can Be Canceled. The act defines the subject matter that can be canceled. The term "appropriation law" includes any general or special appropriation statute or any statute making supplemental, deficiency, or continuing appropriations. The term "dollar amount of discretionary budget authority" does not include (1) direct spending (existing entitlements), (2) budget authority in an appropriation law that funds direct spending provided for in other law (some entitlements are funded in regular appropriations bills), (3) any existing budget authority rescinded or canceled in an appropriation law, or (4) any restriction, condition, or limitation in an appropriation law or the accompanying statement of managers or committee reports on the expenditure of budget authority. The statute limits the President to canceling dollar amounts, not the restrictions, conditions, or limitations that Congress places in an appropriation law. In exercising their cancellation authority, Presidents cannot convert a conditional appropriation to an unconditional appropriation. The cancellation authority applies only to the dollar amount.
The term "direct spending" means budget authority (other than an appropriation law), entitlement authority, and the food stamp program. The term "item of new direct spending" means any specific provision of law that is estimated to result in an increase in budget authority or outlays for direct spending relative to the most recent levels calculated by the Office of Management and Budget (OMB) pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985, as revised.
Canceling Items in Committee Reports. The President is not limited to dollar amounts identified in a bill or joint resolution. The term "dollar amount of discretionary budget authority" means (1) the amount specified in an appropriation law; (2) the entire dollar amount required to be allocated by a specific proviso in an appropriation law for which a specific dollar figure was not included; (3) any dollar amount represented separately in any table, chart, or explanatory text included in the statement of managers or the governing committee report accompany such law; (4) any dollar amount in a law (other than an appropriation law) that mandates the expenditure of funds; and (5) certain procurement items, whether in appropriations or in authorizations, that mandate the expenditure of funds. Thus, the President can cancel items that are located not only in law, but in nonstatutory sources such as committee reports.
The scope of the President's discretion, therefore, depends on the level of detail that Congress chooses to place in committee reports. Because of the potential power in the item veto statute, these reports may be written to limit or expand presidential choices, for example, combining an item that the President with one he opposes. Details (tables, charts, etc.) might be removed from a report and placed on plain paper, with the understanding that agencies would comply with this nonstatutory control at the risk of sanctions being imposed in subsequent legislation. Other types of legislative strategies could be employed in drafting committee reports and public laws, done as a conscious effort to direct presidential action.
Limited Tax Benefits. The act defines a "limited tax benefit" as any revenue-losing provision that provides a federal tax deduction, credit, exclusion, or preference to 100 or fewer beneficiaries; and any federal tax provision change that provides temporary or permanent transitional relief for 10 or fewer beneficiaries. The definition of limited tax benefit does not apply in a number of cases spelled out by the (Line Item Veto Act (110 Stat. 1209).
The statute directs the Joint Committee on Taxation (JCT) to review any revenue or reconciliation bill or joint resolution that includes any amendment to the Internal Revenue Code (IRC) that is being prepared by a conference committee. The JCT must identify any provision that constitutes a "limited tax benefit" as defined in the Line Item Veto Act and provide the conference committee with a listing of such provisions or formally certify that the measure contains none. The information provided by the JCT may be included as a separate section of a bill or joint resolution. When the JCT list is included in the bill, the President's cancellation authority is confined to those limited tax benefits. If a revenue or reconciliation bill does not list the limited tax benefits, the President may use the authority granted in the statute to cancel any limited tax benefit that meets the definition in section 1026. There shall be no judicial review of the congressional identification of a limited tax benefit in a conference report.
The statute does not appear to give the President any authority to modify or rewrite limited tax benefit provisions. Such provisions must be canceled in whole. As explained by the Joint Committee on Taxation (JCT) in its draft report of November 12, 1996, the committee staff "will not consider an item a `provision' unless it consists of language that can be separately stricken without otherwise having substantive effect." According to the JCT report, the President could not strike language if the remaining language would require modification in order to be comprehensible.
The President's opportunity to cancel limited tax benefits can be broadened or narrowed by legislative drafting techniques. It was pointed out during debate that "any tax lawyer worth his salt can find a few extra people to qualify for the targeted tax benefits, thereby bringing the number of beneficiaries above 100 and out of range of rescission authority." (142 Congressional Record S2961, daily ed. March 27, 1996; remarks of Senator Byrd). Because of questions about how the statutory language will be interpreted, concerning limited tax benefits, the JCT is preparing an analysis of the appropriate procedures to be followed.
The Line Item Veto Act contains a "lockbox" procedure to help insure that any savings from cancellations go toward deficit reduction. This is accomplished by binding the new procedures to existing requirements relating to discretionary spending limits and the pay-as-you-go requirements established in the Budget Enforcement Act of 1990.
For appropriations, the act requires OMB to (1) estimate the reduction in federal budget authority and outlays that result from such a cancellation, including reductions to discretionary spending limits for each fiscal year; (2) estimate the deficit decrease that will result from such cancellation; and (3) reduce the federal spending caps by the amount of such estimated budgetary savings (after the expiration of the time period for congressional consideration of a disapproval bill, plus 10 days).
For new entitlement or other mandatory spending or limited tax benefits, the lockbox procedure is slightly different. In general, the savings resulting from the cancellation of direct spending items or tax breaks would not be available to use as offsets elsewhere. Although OMB must provide an estimate of the deficit decrease resulting from such cancellations, the amount is not incorporated into the pay-as-you-go ledger.
The Director of the Congressional Budget Office is also required to estimate savings resulting from each cancellation and then submit an estimate of the reduction in budget authority and outlays resulting from a cancellation for each outyear to the House and Senate Budget Committees.
Congress has 30 calendar days of session (only days when both the House and Senate are in session count), after receipt of a special message, to consider a disapproval bill under expedited procedures. A disapproval bill (or joint resolution) must be introduced no later than five days after the special message is received. In the Senate, even after the 30-day review period, a disapproval bill which began consideration under the expedited procedures may continue under these procedures, whereas in the House the expedited procedures no longer will apply after the expiration of the 30-day period. Generally, only one bill for each special message may be acted upon using the expedited floor procedures in the House and Senate. However, it may be in order in the House to consider a Senate bill covering a special message, even if the House previously has considered a similar disapproval bill, provided the House has not already rejected a disapproval bill for the same special message.
If Congress adjourned sine die at the end of a Congress prior to the expiration of the 30-day period and a disapproval bill was then pending in either chamber or a committee thereof (including conference committee), or was pending before the President, a disapproval bill for the same special message may be introduced within the first five calendar days of session of the next Congress and the 30-day period begins on the day the disapproval bill is introduced.
Committee Action. All disapproval bills are to be referred to the appropriate committee or committees in the House and Senate. Any disapproval bill introduced in the House must disapprove all the cancellations in the special message to which it relates. Any House committee receiving a disapproval bill must report it without amendment, and with or without recommendation, not later than the seventh calendar day after introduction. If the committee fails to report, a motion is in order to discharge the committee from further consideration of the bill. This motion to discharge is highly privileged, and debate on it is limited to one hour.
In the Senate, a disapproval bill may contain any number of the cancellations included in a single special message from the President. Unlike the House, a Senate committee may report a disapproval bill with amendments that can delete cancellations or insert other cancellations contained in the President's special message. However, Senate committees are also subject to the reporting deadline of seven days or automatic discharge occurs, with the bill being placed directly on the Calendar. When the Senate receives a disapproval bill from the House, it is not referred to committee, but is placed on the Calendar.
House Floor Action. Various procedural restrictions apply to expedited action. General debate on a disapproval bill is limited to one hour. No amendment is in order during floor consideration, except that any Member, if supported by 49 other Members, may offer an amendment striking one or more cancellations from the bill.
Excluding time for recorded votes and quorum calls, the time for consideration of amendments shall not exceed one hour. The House may consider a Senate-originated bill unless it has already rejected a disapproval bill for the same special message.
Senate Floor Action. Only one disapproval bill relating to a given special message is to be considered under expedited procedures in the Senate, but the Senate may choose a Senate-originated bill over a House-passed one. The act stipulates a basic 10-hour overall limit for Senate floor consideration of a disapproval bill. A single motion to extend debate for no more than five additional hours is in order. Senate consideration of a message from the House on a disapproval bill is limited to four hours. Senate amendments, whether offered in committee or on the floor, must either strike or insert a cancellation that is included in the President's special message. A point of order would lie against any amendment offered in the Senate relating to any other matters, unless waived by a three-fifths vote. Debate on any Senate floor amendment is limited to one hour.
Conference Action. In the case of disagreement between the two houses with respect to a disapproval bill, conferees are to be promptly appointed and a conference promptly convened. Any conference report on a disapproval bill must include all cancellations in agreement and may include any or all of the cancellations in disagreement, but may not add any cancellations not committed to the conference. Debate in the House on the conference report and any amendments in disagreement is limited to one hour for each. Consideration of the conference report and any amendments in disagreement in the Senate is limited to four hours. If Congress fails to complete action on the disapproval bill within the 30-day period allowed, the items designated by the President in the special message remain canceled. Ten days after that period the lock-box mechanism goes into effect.
Override Vote. The House-amended version of S. 4 (the line item veto bill ultimately signed into law), required any veto override vote for a disapproval measure to occur within five days. However, the public law and the conference report are silent regarding the procedure to be followed when Congress votes to override the President's veto of a bill or joint resolution of disapproval. Under ordinary circumstances, Congress can schedule an override vote at any time during the two years of a Congress. Given the purpose of the Line Item Veto Act, it would seem that Congress would schedule an override vote immediately following the President's veto in order to release funds for obligation by agencies.
The Line Item Veto Act provides for expedited judicial review to test the constitutionality of the statute. Any Member of Congress or any individual adversely affected by this statute may bring an action in the U.S. District Court for the District of Columbia for declaratory judgment and injunctive relief on the ground that any provision of the statute violates the Constitution. Any order of the district court may be appealed directly to the Supreme Court. It is the duty of the district court and the Supreme Court to advance on the docket and expedite the disposition of a legal challenge. A case brought by the National Treasury Employees Union, challenging the constitutionality of the statute, was dismissed on July 3, 1996, by a federal judge because the union's claims were "too speculative and remote" to confer standing on the plaintiffs. NTEU v. United States, 929 F.Supp. 484, 488 (D.D.C. 1996). Other legal challenges are expected in 1997.
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