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49-006

2006
109TH CONGRESS 2D SESSION
HOUSE OF REPRESENTATIVES
Rept. 109-505

Part 1

LEGISLATIVE LINE ITEM

VETO ACT OF 2006

R E P O R T

of the

COMMITTEE ON THE BUDGET

HOUSE OF REPRESENTATIVES

to accompany

H.R. 4890

together with

MINORITY VIEWS

seneagle

JUNE 16, 2006- Ordered to be printed

COMMITTEE ON THE BUDGET
JIM NUSSLE, Iowa, Chairman
JIM RYUN, Kansas
ANDER CRENSHAW, Florida
ADAM H. PUTNAM, Florida
ROGER F. WICKER, Mississippi
KENNY C. HULSHOF, Missouri
JO BONNER, Alabama
SCOTT GARRETT, New Jersey
J. GRESHAM BARRETT, South Carolina
THADDEUS G. MCCOTTER, Michigan
MARIO DIAZ-BALART, Florida
JEB HENSARLING, Texas
DANIEL E. LUNGREN, California
PETE SESSIONS, Texas
PAUL RYAN, Wisconsin
MICHAEL K. SIMPSON, Idaho
JEB BRADLEY, New Hampshire
PATRICK T. MCHENRY, North Carolina
CONNIE MACK, Florida
K. MICHAEL CONAWAY, Texas
CHRIS CHOCOLA, Indiana
JOHN CAMPBELL, California		 JOHN M. SPRATT, JR., South Carolina,
Ranking Minority Member
DENNIS MOORE, Kansas
RICHARD E. NEAL, Massachusetts
ROSA L. DELAURO, Connecticut
CHET EDWARDS, Texas
HAROLD E. FORD, JR., Tennessee
LOIS CAPPS, California
BRIAN BAIRD, Washington
JIM COOPER, Tennessee
ARTUR DAVIS, Alabama
WILLIAM J. JEFFERSON, Louisiana
THOMAS H. ALLEN, Maine
ED CASE, Hawaii
CYNTHIA MCKINNEY, Georgia
HENRY CUELLAR, Texas
ALLYSON Y. SCHWARTZ, Pennsylvania
RON KIND, Wisconsin
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
Legislative Line Item Veto Act of 2006 1
Introduction 9
Summary 15
Background and Purpose 21
Legislative History 25
Key Constitutional Doctrines 29
Principal Court Decisions 35
Section by Section Analysis 41
Hearings 55
Votes of the Committee 57
Other Items Required Under the Rules of the House of Representatives 69
Minority Views 102

109TH CONGRESS

REPT. 109-505

HOUSE OF REPRESENTATIVES

2d Session

Part 1

--LEGISLATIVE LINE ITEM VETO ACT OF 2006

JUNE 16, 2006- Ordered to be printed

Mr. NUSSLE, from the Committee on the Budget, submitted the following

R E P O R T

together with

MINORITY VIEWS

[To accompany H.R. 4890]

[Including cost estimate of the Congressional Budget Office]

SECTION 1. SHORT TITLE.

SEC. 2. LEGISLATIVE LINE ITEM VETO.

`PART B--LEGISLATIVE LINE ITEM VETO

`LINE ITEM VETO AUTHORITY

`PROCEDURES FOR EXPEDITED CONSIDERATION

`PRESIDENTIAL DEFERRAL AUTHORITY

`IDENTIFICATION OF TARGETED TAX BENEFITS

`TREATMENT OF CANCELLATIONS

`REPORTS BY COMPTROLLER GENERAL

`DEFINITIONS

`EXPIRATION

SEC. 3. TECHNICAL AND CONFORMING AMENDMENTS.

`Part B--Legislative Line Item Veto
`Sec. 1011. Line item veto authority.
`Sec. 1012. Procedures for expedited consideration.
`Sec. 1013. Presidential deferral authority.
`Sec. 1014. Identification of targeted tax benefits.
`Sec. 1015. Treatment of cancellations.
`Sec. 1016. Reports by Comptroller General.
`Sec. 1017. Definitions.
`Sec. 1018. Expiration.
`Sec. 1019. Suits by Comptroller General.
`Sec. 1020. Proposed deferrals of budget authority.'.

SEC. 4. SENSE OF CONGRESS ON ABUSE OF PROPOSED CANCELLATIONS.

Introduction

-

OVERVIEW OF THE LEGISLATION

The concept of a presidential line item veto has long seemed a common-sense and straight-forward mechanism to help restrain spending. In its simplest and broadest form, it would allow the President to identify questionable spending items in bills passed by Congress, and get them promptly reconsidered, before the funding starts to flow. Thus it would establish an additional check against spending items that are excessive, unnecessary, merely parochial, or otherwise unable to stand on their own merits.

As is often the case, however, the execution is far more complicated than the concept.

The Legislative Line Item Veto Act of 2006 addresses each of the complications, from procedural to practical to constitutional, and creates a mechanism that will provide greater accountability and transparency to the process of spending taxpayers' money. A very brief description of the manager's amendment for the bill (offered by Mr. Ryan of Wisconsin), as reported by the Committee on the Budget, is as follows:

-Line Item Veto Authority. Within 45 days of the enactment of a law, the President may transmit a special message proposing to cancel any of three classes of budget provisions--an amount of discretionary budget authority, a direct spending item, or a targeted tax benefit. He can transmit up to five special messages per bill (an exception is made for omnibus bills), and there is no limitation on combining the three classes in any given special message.

-Procedures for Expedited Consideration. For each transmittal, Congress must introduce a bill (termed an `Approval Bill') reflecting the proposed cancellations, bring that bill to the floor, and have a vote on it. Amendments or motions to strike provisions, or add provisions, are not allowed--it must be an up-or-down vote on the entire list of proposed cancellations.

-Presidential Deferral Authority. While Congress considers legislation to permanently cancel or repeal spending and tax provisions, the President may defer discretionary spending or suspend the implementation of direct spending or tax provisions. Those budget provisions may be deferred for no more than 45 calendar days. The President also is authorized to renew a deferral for an additional 45 days.

-Nature of the Approval Bill. The approval bill must meet certain conditions. Primary among these is that Congress defines each cancellation that would produce budget authority or outlay savings, or would reduce revenue.

-Savings Go to Deficit Reduction. This bill would devote any savings from the Legislative Line Item Veto Act to deficit reduction. It would accomplish this primarily by reducing the limits established in the budget resolution by the amount of any savings.

Detailed descriptions of the legislation appear elsewhere in this report.

THE HISTORICAL CONTEXT

TRANSITION

No one can grasp today's budget situation apart from the unique moment in history in which it occurs. The Nation's priorities have changed profoundly and permanently in the past 5 years; and the fiscal challenges of this period reflect the awkwardness of the adjustment.

By the beginning of 2001, the government had enjoyed 3 consecutive years of growing budget surpluses--after nearly 3 decades of seemingly insoluble deficits. In January that year, the Congressional Budget Office [CBO] estimated $5.6 trillion in black ink over the succeeding 10 years. Federal Reserve Chairman Greenspan warned that the government might pay off all its debt by mid-decade and still be collecting more cash than it could spend. Even after enactment of President Bush's 2001 tax relief plan--and with signs of an economic slowdown beginning to show--CBO still projected surpluses of $3.4 trillion over the next 10 years.

Yet even as myriad interests clamored for larger shares of these swelling Federal funds, a new and more demanding limit on spending took hold. Having balanced the overall budget (the `unified' budget) every year since 1998, Congress now insisted on balancing the budget excluding revenue credited to the Social Security Trust Funds. Since the mid-1980s, critics had complained that Social Security revenue--which exceeded annual benefit obligations by substantial amounts--masked the true size of the government's budget deficits. They also criticized the `raiding' of these dedicated funds to cover costs other than Social Security payments.

So once the government, in 1999, actually achieved this balance-excluding-Social Security status--known as balancing the `on-budget' budget--it became an imperative. No statute required such a discipline; and it had no real impact on the government's ability to pay Social Security benefits. But it became a political requirement nonetheless. It became so important that when the on-budget balance appeared threatened, the House Budget Committee drafted legislation authorizing the President to sequester any funds needed to maintain it, and scheduled a markup--for 11 September 2001.

THE CHANGE IN PRIORITIES

Understandably and necessarily, on that day the war against global terrorism took precedence over everything, including budget discipline--and did so in a bipartisan fashion. Congress opened its wallet to fund reconstruction in New York and at the Pentagon, to shore up security measures within the United States, and to engage the terrorists directly in combat overseas. Congress and the President also kept commitments to a wide range of domestic priorities, including education, health, and veterans' benefits, delivering--among other things--prescription drug coverage in Medicare. By fiscal year 2006, Federal outlays in constant dollars were about 27 percent ($491 billion) higher than in 2001.

All this new spending brought with it the inevitable temptations. For example, fiscal year 2006 appropriations bills contained roughly 10,000 parochial or special-interest `earmarks, costing about $29 billion. Nevertheless, the commitment to budget discipline had been suspended, not terminated. It began to reawaken with the fiscal year 2004 budget debate, when the administration called for cutting deficits in half over the subsequent 5 years. Congress accepted the guideline, adhering to it through congressional budgets up to the present.

Much of the deficit reduction so far was accomplished through revenue growth, which has consistently outpaced estimates despite the acceleration of tax relief. Containing spending has been harder, especially with the continuing war in Iraq. Then, of course, came Katrina. The magnitude of the Nation's worst natural disaster, and the need for prompt Federal assistance in substantial amounts, threatened to shatter the fragile restraint that had begun to return. But Congress did ultimately recover--with a package of entitlement reforms saving nearly $40 billion over 5 years (up from the previously planned $35 billion), and an across-the-board reduction in appropriated spending. This year's budget, as passed by the House, took further steps, with another round of entitlement reforms, and the creation of a set-aside fund for natural disasters--the latter included for the first time ever. In addition, a lobbying reform bill passed by the House contains provisions aimed at reining in the use of special-interest earmarks that increasingly clutter spending bills.

No one budget or budget discipline can permanently master Congress's budgetary challenges. Progress is incremental. But each new step adds to those before it, and the gains do accumulate. The Legislative Line Item Veto Act is another step along that path.

IMPOUNDMENTS AND RESCISSIONS

During his January 1988 State of the Union Address, President Reagan memorably hefted a 14-pound, 1,053-page omnibus appropriations bill that Congress had passed near the end of the previous year. `Congress shouldn't send another one of these,' he admonished. `No, and if you do, I will not sign it.'

For several years, the President had urged Congress to pass a presidential line item veto law. Since 1974, presidents had been all but powerless to strike the extraneous or wasteful provisions that Congress tended to load into its spending bills. A president could only veto an entire bill or accept it with all its costly baubles. Naturally, the larger the bill, the worse the problem became, as with the omnibus measure. But all spending measures were subject to it.

This limitation on presidential budgetary discretion was partly constitutional: a product broadly of the Constitution's fundamental (though not absolute) separation of legislative and executive powers, and specifically the charter's article I section 7, which prescribes how bills are to become laws. But the budget reforms of 1974 arguably worsened the problem, by sharply restricting presidents' longstanding and legitimate `impoundment' authority, making even this management practice all but impossible.

Since the beginning of the republic, presidents have had the ability to defer or refuse to spend funds provided by Congress. As noted in testimony to the Budget Committee: `[I]n the first Congress, President Washington was given discretionary spending authority in at least three appropriations bills to spend as little or as much as he pleased, up to the limit of those spending authorities; and the remainder that was left over, if he didn't spend it all, would, of course, be restored to the Treasury.' (Testimony of Charles J. Cooper, 8 June 2006) This authority remained during the 19th century and early 20th century, though the practice was seldom used. Still, the Congressional Research Service [CRS] concludes: `Virtually all Presidents have impounded funds in a routine manner as an exercise of executive discretion to accomplish efficiency in management.' (CRS, Item Veto and Expanded Impoundment Proposals, 22 November 2004)

The 1950s and 1960s saw increasing tensions between the President and Congress over the use of impoundment authority. Yet it was not until the 1970s that the matter finally culminated in congressional action.

During his administration, President Nixon imposed a moratorium on subsidized housing programs, targeted certain farm programs for elimination, and suspended community development activities--all frustrating congressional intent. With the Clean Water Act, he went further. Congress handily overrode his veto of the act; but the President subsequently (and flagrantly) impounded funds from it anyway.

That was as much as Congress could stand. So it countered with a new law (in the midst of Nixon's Watergate troubles), the Impoundment Control Act (Title X of the Congressional Budget and Impoundment Control Act, or ICA) in 1974. The ICA restricted the President's ability to impound funds, providing a statutory framework for Congress to review impoundment actions by the President. It permitted the President to delay the expenditure of funds (deferral authority) and to cancel funds (rescission authority). The President was required to inform Congress of all proposed deferrals and rescissions and to submit specified information about them.

A rescission action by the President required approval by both the House and the Senate within 45 days of continuous session or funds were required to be made available again for obligation.

These presidential authorities, still in place today, have proved ineffective. Congress can simply ignore presidential rescissions, in which case they just fade away. Nothing requires Congress to act. So various proposals were introduced during the 101st, 102d, and 103d Congresses to strengthen the rescission framework. This trend reached a kind of critical mass in the spring of 1996, with the passage of the Line Item Veto Act (enacted on 9 April 1996, with an effective date of 1 January 1997).

The constitutionality of the Line Item Veto Act was soon challenged. Upon appeal, the Supreme Court decided in a 6-3 decision that allowing the President to cancel provisions of enacted law violated the Constitution's presentment clause. (Detailed discussions of constitutional issues related to the line item veto and similar measures appear elsewhere in this report.) There the discussion ended--temporarily.

BENEFITS OF THE LEGISLATIVE LINE ITEM VETO ACT OF 2006

The Legislative Line Item Veto Act of 2006 builds on all previous efforts to strengthen and expedite the rescission process, refining their terms and practices and correcting their flaws. The principal advantages of the legislation are the following:

-Strengthens Current Practices. As noted above, the rescission process created by the Impoundment Control Act of 1974 is rarely used because it is largely ineffective. Congress can simply ignore rescissions submitted by the president. The Legislative Line Item Veto Act requires Congress to vote up or done on a stand-alone bill containing the items the President seeks to cancel.

-Provides Transparency and Accountability. It is well-known that earmarks and other special-interest items churn silently through the legislative mill and often fix themselves onto massive spending bills that Members never get an opportunity to read. This bill provides another opportunity to expose such measures to scrutiny. If they can stand on their own merits, they will survive.

There is a widespread public perception that the number of earmarked spending items is excessive. The large number of earmarks, the lack of transparency, and the lack of a rigorous justification process make it difficult to assure taxpayers that their dollars are being spent wisely. This bill helps Congress alter this course.

-The Bill is Constitutional. Unlike the Line Item Veto Act of 1996, this proposal has been adjudged by legal experts to be constitutional. It adheres to the procedures of article I. It keeps legislative and budgetary authority in Congress. Although it requires Congress to vote on the President's proposed rescissions, it assures that no law changes unless and until Congress votes to change it.

-It Is Comprehensive. The act applies the line item veto process to annual appropriations, items of `direct spending' (entitlements), and targeted tax benefits (as defined by the Chairmen of the tax-writing committees). Thus it covers all areas of spending and tax law subject to earmarking or special-interest spending.

-Taxpayers Are the Principal Beneficiaries. All savings would be used for deficit reduction, and could not be applied to augment other spending.

The Committee on the Budget reported the Legislative Line Item Veto Act of 2006 by a vote of 24-9. Subsequent text in this report describes the provisions of the measure in detail.

Summary of H.R. 4890, the Legislative Line Item Veto Act of 2006

-

BILL AS INTRODUCED

GENERAL CONCEPT

H.R. 4890, the Legislative Line Item Veto Act was introduced by Cogressman Paul Ryan on 7 March 2006. Under the bill as introduced, the President is authorized to send to Congress a request for a rescission of discretionary or mandatory spending, or a tax provision affecting fewer than 100 taxpayers (10 taxpayers in the case of a transitional relief provision).

To implement the rescissions and thereby cancel the spending Congress must vote to approve the proposals, and the President must sign the joint resolution.

Notwithstanding this requirement, the President has the authority to defer the spending (or tax benefit) for up to 180 days while Congress considers his recommendations.

PROCEDURE

Expedited procedures are established to accelerate Congressional consideration of the President's proposal.

The President transmits proposed rescissions to Congress, and the majority leader in each House introduces a joint resolution implementing the President's proposed rescissions within 2 legislative days of the President's transmittal. The introduced bill is referred to the committee of jurisdiction, and must be reported without substantive change. (If the committee fails to act within 5 legislative days of introduction, it is discharged from consideration.) On the floor of both the House and the Senate, the resolution is highly privileged, and debate is limited to 10 hours in the Senate and 4 hours in the House. A vote on final passage occurs within 10 days of the bill's introduction.

APPLICATION

The President's authority to propose rescissions applies to three distinct types of provisions:

Discretionary Spending. The President may propose rescinding a `dollar amount' of discretionary spending. This means he may propose rescinding an entire dollar amount: specified in an appropriations law; required to be allocated by an appropriations law despite the absence of a specific dollar amount in the law; represented in a table, chart, or text in the committee report or joint statement of managers accompanying the law; and required by an authorizing statute to be spent for a specific purpose for which budget authority has been provided by an appropriations law.

Items of Direct Spending. The President has broad authority to propose rescissions of direct (i.e., mandatory) spending. An item of direct spending includes any specific provision of law that results in a change (not just an increase) in budget authority or outlays, relative to current law. In addition, presidential authority to rescind items of direct spending extends to any direct spending provision enacted after enactment of H.R. 4890, regardless of when the President transmits his proposal.

Targeted Tax Benefits. Generally, a targeted tax benefit is defined as either a revenue-losing provision (relative to current law) benefiting 100 or fewer taxpayers, or a transitional relief provision benefiting 10 or fewer taxpayers. To refine the definition, several exceptions to the general rule are included. For example, a provision benefiting fewer than 100 taxpayers is not a targeted tax benefit if it provides a similar benefit to all taxpayers operating in the same industry, engaging in the same activity, using the same type of property, or issuing the same type of investment. In addition, a set of anti-avoidance rules prevents circumvention of the 100-taxpayer rule through formalistic distinctions--e.g., all corporations part of the same affiliated group (and therefore under common control) are treated as a single taxpayer.

SUMMARY OF THE MANAGER'S AMENDMENT

Line Item Veto Authority. Within 45 days of the enactment of a law, the President may transmit a special message proposing to cancel any of three classes of budget provisions: an amount of discretionary budget authority, a direct spending item or a targeted tax benefit. He can transmit up to five special messages, and there is no limitation on combining the three classes in any given special message.

Procedures for Expedited Consideration. Congress must introduce a bill reflecting the proposed cancellations, bring that bill to the floor, and have a vote on it. Amendments or motions to strike provisions, or add provisions, are not allowed it must be an up or down vote on the entire list of proposed cancellations.

Presidential Deferral Authority. Parallel to the authority to propose cancellations is the authority to temporarily suspend the implementation, or the obligation of certain budget authority, of budgetary resources and revenue measures. The President is authorized to withhold spending or suspend benefits up to 45 days. The President may not withhold or suspend any dollar amount until he transmits the special message.

The President may make funds available earlier if he concludes withholding or suspension of funds would not `further the purposes' of the Act. A vote of a House of Congress on an approval bill that does not receive sufficient support to pass would be an indication that the deferral should be ended. The President may renew the deferral for another 45 days if the Congress has not been able to consider the approval bill in the initial period, though it is not predicated on such a vote. The renewal period is authorized automatically upon the transmittal of a supplemental special message.

Definition of the Approval Bill. The introduced approval bill, in order to effectuate the proposed cancellation of the budget provisions, must meet certain conditions. Primary among these is that the Congressional Budget Office [CBO] must estimate that each cancellation would produce budget authority or outlay savings. Another criterion is that the President must not have proposed the same cancellation in a separate special message either previously or in a contemporaneously transmitted special message. If two special messages are transmitted at the same time to the Congress, and those messages do contain the same proposed cancellation, the majority leader, in introducing the approval bill for each special message, may choose in which bill the individual proposed cancellation should be included.

For discretionary rescissions it is generally simple to identify the budgetary effect of a provision of discretionary spending. Generally an appropriation of budget authority follows a straightforward process: `There are hereby appropriated' an amount for a specified purpose.

Under the terms of this act, a proposed cancellation must propose the rescission of all of a specified appropriation. If the proposal is to rescind only an amount within the overall appropriation, the amount of the proposed cancellation must be identified for a specific purpose in the report or joint statement accompanying the bill (or a table or chart). In the unusual circumstance where an appropriation of budget authority is disputed between CBO and Office of Management and Budget [OMB] (for instance the year in which the budget authority is determined to be available), the estimate prepared by CBO governs the preparation of the approval bill with respect to that proposed cancellation of discretionary budget authority.

With respect to direct spending, there are unusual cases, though they occur more frequently than those for discretionary spending, when OMB, which prepares the special message initially identifying the items of direct spending, disagrees with CBO as to the effect legislative provisions might have. In this circumstance, the cancellation that CBO estimates to have no budgetary effect is not included in the approval bill prepared by the majority leader of that House of Congress. If it is included, the privileged nature of the bill to expedited consideration could be questioned. Because the CBO estimate determines whether an item of direct spending has a budgetary impact, and because both majority leaders are using this estimate, any approval bill introduced in the House or the Senate by the leaders will be identical.

For purposes of tax benefits, the approval bill may only include items from a specified list prepared at the time any conference report on a tax bill is prepared. A tax bill is defined as any bill that makes changes to the Internal Revenue Code of 1986, though a targeted tax benefit is revenue oriented and does not include spending items such as refundable tax credits (such as the Earned Income Tax Credit).

The specified list of targeted tax benefits is prepared by the Chairmen of the Senate Finance and House Ways and Means Committees and inserted into the tax bill that is then sent to the President. Once that bill is signed into law, the President may review that portion of the law and choose from the list any provision he believes is a targeted tax benefit that should be canceled.

If the chairmen believe there are no targeted tax benefits included in the tax bill to be enacted into law, then the section in question provides for a statement that there are no such benefits, and in such a situation, the President may not include any proposed cancellations of targeted tax benefits in a special message related to that public law. This does not preclude the President from identifying and proposing to cancel any item of direct spending related to the tax code, such as refundable tax credits, which are classified as direct spending. Any item increasing direct spending in such a case could be a proposed cancellation, but the legislative text of the proposal may not have an effect on revenue or it would be considered an inappropriate item to include in the approval bill.

Again, in any situation where OMB and CBO diverge in their estimates of the budgetary effects of the proposed cancellations, the latter shall determine whether a provision in the numbered list of cancellations proposed by the President may be included in a bill introduced by the majority leader of the respective House.

Government Accountability Office. When the President transmits a special message to the Congress, the Legislative Line Item Veto Act requires the Comptroller General to prepare a report determining whether any discretionary budget authority is not made available for obligation, item of direct spending or targeted tax benefit continues to be suspended after the deferral authority expires.

SUMMARY OF THE MAJOR CHANGES MADE BY THE MANAGER'S AMENDMENT

NUMBER AND TIMING OF SPECIAL MESSAGES

H.R. 4890 as Introduced. No limit on number or timing.

Manager's Amendment. President may submit 5 special messages per enacted law, and 10 special messages per enacted omnibus reconciliation or appropriations law.

WITHHOLDING PERIOD FOR FUNDS IN REQUESTED RESCISSION

H.R. 4890 as Introduced. 180 day withholding for funds proposed for rescission.

Manager's Amendment. President is authorized to withhold spending or suspend benefits up to 45 days. The President may not withhold or suspend any dollar amount until he transmits the special message. The President may make funds available earlier if he concludes withholding or suspension of funds would not `further the purposes' of the act. A vote of a House of Congress on an approval bill which does not receive sufficient support to pass would be an indication that the deferral should be ended. The President may renew the deferral for another 45 days if the Congress has not been able to consider the approval bill in the initial period, although his authority is not predicated on such a vote. The renewal period is authorized automatically upon the transmittal of a supplemental special message.

REPEATED SUBMISSIONS OF PROPOSED CANCELLATIONS

H.R. 4890 as Introduced. No limit on number of times an item may be submitted.

Manager's Amendment. President may not resubmit any proposed cancellation that is the same or substantially similar to one he has proposed previously.

TAX APPLICATION

H.R. 4890 as Introduced. Applies to tax benefits affecting 100 or fewer taxpayers (10 or fewer in the case of transitional relief). The President determines which provisions meet the definition of targeted tax benefit.

Manager's Amendment. Applies to tax benefits affecting a single beneficiary. The amendment includes references to `targeted tax benefit' throughout Part B to allow for consideration of repeal of these benefits under the same procedure as those for discretionary spending and direct spending. The Chairmen of the Ways and Means and Finance Committees identify targeted tax benefits and allows the President to only rescind those benefits on the list.

MANDATORY SPENDING

H.R. 4890 as Introduced. Allows President to modify mandatory spending policies.

Manager's Amendment. Does not allow the President to `modify' direct spending items or targeted tax benefits, but does allow limited conforming changes to law to assure direct spending savings.

LEGISLATIVE TEXT

H.R. 4890 as Introduced. A rescission bill is introduced exactly as proposed by the President.

Manager's Amendment. Defines an `approval' bill and identifies certain criteria the list of proposed cancellations must meet if they are to be included in that bill--e.g. all direct spending items must be scored by CBO as reducing budget authority or outlays.

SUMMARY OF THE AMENDMENTS ADOPTED IN COMMITTEE

AMENDMENT OFFERED BY MR. CUELLAR

Neither the bill as introduced nor the manager's amendment offered by Mr. Ryan included a `sunset' provision, which means the procedure set out by its terms would be permanent. Mr. Cuellar offered an amendment to include a specific date on which the procedure would expire, October 1, 2012. This 6-year time period does not mean that the Legislative Line Item Veto Act of 2006 is simply a short-term concept, but rather that it should be reviewed and if needed revised after that time period. This sunset builds in a fixed time when the Congress must reconsider the procedure, determine what has worked and what, if anything, has not.

The amendment was agreed to by voice vote.

AMENDMENT OFFERED BY MR. MCCOTTER

Mr. Neal offered an amendment to include certain language within the text of Title X of the Impoundment Control Act of 1974. This language prohibited the President from using his authority to propose to cancel budgetary provisions of discretionary budget authority, item of direct spending, or targeted tax benefits to effect legislative negotiations with Members of Congress.

Mr. McCotter offered language to replace the text of the Neal amendment with his own. The McCotter substitute would not insert language into the Impoundment Control Act but rather would be a freestanding `Sense of Congress.'

The language itself bore a resemblance to the Neal amendment insofar as it expressed the intent of Congress that the President should not `condition the inclusion or exclusion or threaten to condition the inclusion or exclusion of any proposed cancellation in any special message under this section upon any vote cast or to be cast by any Member of either House of Congress.'

Mr. McCotter's substitute amendment was agreed to and the committee adopted that language as a new section of the measure.

Background and Purpose

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CURRENT LAW

The Impoundment Control Act of 1974 (Title X of the Congressional Budget and Impoundment Control Act, P.L. 93-344), established two categories of impoundments: deferrals, or temporary delays in funding availability; and proposed rescissions, or permanent cancellations of discretionary budget authority (should they be agreed to by the U.S. Congress). With a rescission, the funds must be made available for obligation unless both Houses of Congress take action to approve the President's rescission request within 45 days of `continuous session.'

Deferral authority is only allowed to the President for administrative reasons. If he defers budget authority for any reason, he has to explain to Congress in detail the following:

1. The amount of the budget authority proposed to be deferred;

2. Any account, department, or establishment of the Government to which such budget authority is available for obligation, and the specific project or governmental functions involved;

3. The period of time during which the budget authority is proposed to be deferred;

4. The reasons for the proposed deferral, including any legal authority invoked to justify the proposed deferral;

5. To the maximum extent practicable, the estimated fiscal, economic, and budgetary effect of the proposed deferral; and

6. All facts, circumstances, and considerations relating to or bearing upon the proposed deferral and the decision to effect the proposed deferral, including an analysis of such facts, circumstances, and considerations in terms of their application to any legal authority, including specific elements of legal authority, invoked to justify such proposed deferral, and to the maximum extent practicable, the estimated effect of the proposed deferral upon the objects, purposes, and programs for which the budget authority is provided.

SUMMARY OF PROPOSED CHANGES

Although the Legislative Line Item Veto Act of 2006 retains the President's deferral authority embodied in current law, the proposal replaces the current rescission process with a new procedure to `cancel' budgetary provisions. This new procedure, proposed many times before, is often referred to as `expedited rescission.'

The President may still transmit, as under current law, to the Congress a special message to propose to cancel specified spending or tax provisions (although current law only provides for special messages to propose the cancellation of discretionary budget authority). The proposed cancellation procedure expands the current system, which is confined only to spending contained in appropriations measures, to include direct spending and targeted tax benefits.

It also enhances the expedited consideration procedures for an `approval' bill to enact into law the President's proposed cancellations. Under the current system, although there are expedited procedures, Congress can easily circumvent the process. Congress is constitutionally empowered to deactivate any expedited consideration procedures if either House chooses, but the process outlined in the proposed bill provides stronger tools to address wasteful spending and a far more powerful procedure to require a vote on spending and tax cancellations.

The Legislative Line Item Veto Act of 2006 has the following main elements:

Line Item Veto Authority. The President is authorized under this act to transmit a `special message' that proposes to cancel provisions falling into one of three classes of budgetary provisions--discretionary budget authority, items of direct spending, or targeted tax benefits. The President must transmit this message no later than 45 days after signing the bill to which the cancellations apply into law. He may transmit no more than five special messages for each public law. The President may send 10 special messages for an omnibus appropriations bill or omnibus reconciliation bill signed into law. Each message may combine, in any fashion the President determines, the three classes of budgetary provisions.

Procedures for Expedited Consideration. Within 5 days of receiving a special message, the majority leader of each House of Congress must introduce an `approval bill' that includes the proposed cancellations. The bill is immediately referred to the committee or committees of jurisdiction and they have 7 days in which to consider the bill. The committee(s) must report the bill with or without recommendation, but may not amend. If a committee cannot or will not report the bill after that time period, a motion to discharge the committee may be brought to the floor by any Member of Congress. Upon adoption of that motion, the bill is considered on the floor. Amendments or motions to strike provisions, or add provisions, are not allowed--it must be an up-or-down vote on the entire list of proposed cancellations.

Presidential Deferral Authority. During the time Congress is considering the approval bill that will permanently cancel spending and tax provisions, the President may suspend discretionary spending or the implementation of direct spending and tax provisions.

This deferral may last for only 45 calendar days, although it may be extended for an additional 45 days.

If the 45 days elapse during a time the Congress is in an extended recess, such as between sessions of Congress, the President may transmit the message on the first day the Congress reconvenes.

Definition of an Approval Bill. The approval bill must meet certain conditions. The Congressional Budget Office must analyze the proposed cancellations and issue a report to Congress. Only those items having a legitimate budgetary effect may be included in the approval bill. Even if the Office of Management and Budget asserts a provision has a budgetary effect, if the Congressional Budget Office disagrees, the proposed cancellation is not included in the approval bill considered by Congress.

Deficit Reduction. This bill would devote any savings from the Legislative Line Item Veto Act to deficit reduction. It would accomplish this primarily by reducing the limits established in the budget resolution by the amount of any savings.

PURPOSE OF PROPOSED CHANGES

The Legislative Line Item Veto Act of 2006 provides an effective mechanism for rooting out and eliminating particular, unnecessary spending items.

It will provide Congress an additional tool for reducing unnecessary spending and expressly dedicate any savings achieved by this procedure to deficit reduction. It brings transparency and accountability to spending bills, providing a strong deterrent to wasteful earmark project requests.

The bill establishes the means to more easily consider unnecessary entitlement spending. That form of spending poses a great long-term challenge to the Federal budget. The bill creates an expedited process for Congress to vote on the President's proposed rescissions of discretionary spending and other changes in budgetary provisions to reduce Federal spending. It requires Congress to act on the President's proposed legislative changes by requiring an up-or-down vote on his proposed cancellations of discretionary spending, direct spending, and targeted tax benefits.

Legislative History

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BEFORE THE CONGRESSIONAL BUDGET ACT

During the 19th century and early 20th century, U.S. presidents had the ability to defer or refuse to spend funds provided by Congress. But the practice was seldom used, and tended to be employed in a specific manner. According to the Congressional Research Service: `Virtually all Presidents have impounded funds in a routine manner as an exercise of executive discretion to accomplish efficiency in management.' (CRS, Item Veto and Expanded Impoundment Proposals, 22 November 2004.)

That began to change during the administration of President Franklin D. Roosevelt, who at times refused to spend moneys for the purposes intended by Congress. The 1950s and 1960s saw increasing tensions between the President and Congress over the use of impoundment authority.

But it was not until the 1970s when the matter finally culminated in congressional action.

THE CLASH WITH NIXON

During his administration, President Nixon imposed a moratorium on subsidized housing programs, targeted certain farm programs for elimination, and suspended community development activities--all frustrating congressional intent.

With the Clean Water Act, he went further. The President vetoed the bill originally passed by Congress, and Congress then handily overrode his veto. Yet despite the veto override, the President imposed an impoundment involving the Clean Water Act funds.

Congress countered by passing the Impoundment Control Act (Title X of the Congressional Budget and Impoundment Control Act, or ICA) in 1974. The ICA restricted the President's ability to impound funds, providing a statutory framework for Congress to review impoundment actions by the President. It permitted the President to delay the expenditure of funds (deferral authority) and to cancel funds (rescission authority). The President was required to inform Congress of all proposed deferrals and rescissions and to submit specified information on the same. A rescission action by the President required approval by both the House and Senate within 45 days of continuous session or funds were required to be made available again for obligation.

Various proposals were introduced during the 101st, 102d, and 103d Congresses to modify the framework for congressional review of rescissions by the President. More than two dozen proposals to strengthen the rescission power, or augment it with a statutorily derived veto, were introduced in the 103d Congress alone.

RECENT LEGISLATIVE ACTIONS

EXPEDITED RESCISSIONS ACT OF 1993

On 1 April 1993, Congressman John Spratt introduced the Expedited Rescissions Act of 1993 in the House of Representatives.

This bill amended the Congressional Budget and Impoundment Control Act of 1974 to allow the President to transmit to both Houses of the Congress, for expedited consideration, a special message that proposed to rescind all or part of any item of budget authority provided in an appropriation bill.

It would have required that the special message be transmitted no later than 3 days after the President approved the appropriation bill and be accompanied by a draft bill that would, if enacted, rescind the budget authority proposed to be rescinded. It set out House and Senate procedures for the expedited consideration of such a proposal.

The bill also would have terminated the President's authority 2 years following enactment.

On 29 April 1993, the House passed the bill on a recorded vote of 258-157 (Roll No. 150).

On 5 October 1994, the Senate Committee on the Budget held a hearing on the measure. It was not considered on the floor of the U.S. Senate.

EXPEDITED RESCISSIONS ACT OF 1994

On 17 June 1994, Congressman John Spratt introduced the Expedited Rescissions Act of 1994.

On 23 June 1994, the Committee on Rules reported the bill.

The bill would have amended the Congressional Budget and Impoundment Control Act of 1974 to allow the President to transmit to both Houses of the Congress, for expedited consideration, one or more special messages proposing to rescind amounts of budget authority or to repeal any targeted tax benefit provided in a revenue bill.

It would have required the special message be accompanied by a draft bill or joint resolution that rescinds the budget authority or repeals the targeted tax benefit.

It also would have required the bill to include a Deficit Reduction Account. The bill would have allowed the President to place rescinded amounts in the account. It would have set out House and Senate procedures for the expedited consideration of such a proposal.

Kasich Subsitute. An Amendment in the nature of a substitute was made in order and offered by Representatives John Kasich and Charles Stenholm. It extended the rescission procedures to Presidential proposals to repeal `targeted tax benefits' in revenue bills; provided that 50 House Members could request a vote on a motion to strike an individual rescission from the President's proposed rescission package and that the special rescission procedures established by the substitute were permanent. It also applied the special rescission procedures proposed by the President to any time during the year. It did not apply the expedited consideration procedures to alternative rescission packages proposed by the Appropriations Committees, and it specified that the President had the option of earmarking savings from proposed rescissions for deficit reduction. The amendment was adopted by a vote of 298-121.

On 14 July 1994, the House passed the bill on a recorded vote of 342-69.

On 5 October 1994, the Senate Committee on the Budget held hearings on the measure.

THE LINE ITEM VETO ACT OF 1996

Plans for an expanded rescission measure began moving forward early in the 104th Congress. On 4 January 1995, H.R. 2, the Line Item Veto Act, was introduced in the House. H.R. 2 granted the President line item veto rescission authority. The President was authorized to rescind all or part of any discretionary budget authority or to veto any targeted tax benefit if the President determined that such rescission: would help reduce the Federal budget deficit; would not impair any essential Government functions; and would not harm the national interest. The President was required to notify the Congress by special message of such a rescission or veto after enactment of an appropriations act providing such budget authority, or a revenue or reconciliation act containing a targeted tax benefit. H.R. 2, as amended, easily passed the House on 6 February 1995, by a vote of 294-134.

The Senate passed a companion bill, S.4., the Line Item Veto Act, which promoted a `separate enrollment' approach rather than the enhanced rescission approach favored by the House. Under this approach, each item of spending would be enrolled as a separate bill, so the President could address each separately.

The House and Senate struck a compromise implementing an enhanced rescission bill, which was signed into law on 9 April 1996 (Public Law 104-130), with an effective date of 1 January 1997. This legislation became known as the Line Item Veto Act of 1996.

The constitutionality of the Line Item Veto Act was soon challenged. Upon appeal, the Supreme Court decided in a 6-3 decision allowing the President to cancel provisions of enacted law violated the Constitution's presentment clause.

Key Constitutional Doctrines

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The principal doctrines to consider in examining possible challenges to the Legislative Line Item Veto Act are `standing,' `congressional standing,' `delegation of authority,' `separation of powers,' and `the presentment clause.' These are the same issues examined in the challenge to the Line Item Veto Act of 1996, which was ultimately found unconstitutional for violating the presentment clause.

SUMMARY OF THE DOCTRINES

Standing. Article III confines the jurisdiction of the Federal courts to actual cases and controversies. Among the essential elements of what the Court considers a case or controversy for purposes of determining if a plaintiff has standing to bring suit is an injured plaintiff. The requirement that a plaintiff show that he or she has suffered `injury in fact' is a key requirement of the Court's doctrine of standing. To meet the requirements of standing, a plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief. Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324.

Congressional Standing. In Raines v. Byrd, 521 U.S. 811 (1997)--which concerned the 1996 Line Item Veto Act--the Court in addressing the matter of standing distinguished between a personal injury to a private right and an institutional (injury). The Court viewed the plaintiffs as alleging an institutional injury: they were injured in their official capacities as Members of Congress by the alteration of the effect of their votes and the shifting of power between the executive and legislative branches. The Court ultimately determined that the Members of Congress lacked standing to sue, and remanded the case to the lower court with instructions. The Members were not granted standing because they had not alleged a sufficiently concrete injury under article III.

Delegation Doctrine. The delegation doctrine maintains that broad delegations of authority to the administrative branch of government are unconstitutional. The delegation doctrine is a fundamental separation of powers principle that requires the legislative branch to make the laws. In the words of Montesquieu, who was taken quite seriously by the Framers: `When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.' Montesquieu, The Spirit of Laws, Book XI, Part 6 (G. Bell & Sons, ed., London 1914).

Separation of Powers. The Constitution was crafted with three branches of government: the legislative (article I), the executive (article II), and the judicial (article III). The separation of powers provides a system of shared power known as checks and balances. Each of these branches has certain powers, and each of these powers is limited, or checked, by another branch.

In its opinion in Nixon v. Administrator of General Services, 433 U.S. 425 (1977) the Court considered the charge of the appellant--President Nixon--of a violation of the separation of powers. The Court rejected the appellant's argument that the separation of powers doctrine was an air-tight, rigidly compartmentalized structure, calling the interpretation unconvincing and `archaic.' The Court concluded that in determining whether the law in question (which determined the terms and conditions upon which public access may be granted to Presidential documents and recordings) disrupts the proper balance between the branches of government, the focus must rest on the extent to which the executive branch is prevented from accomplishing its constitutionally assigned functions. The Court found that the documents would remain within the control of the executive branch through the Administrator of General Services and the archivist, and the appellant's interpretation of the separation of powers was incorrect and without merit.

Unlike the Court in Nixon, the Court in Bowsher v. Synar 478 U.S. 714 (1986), did find a violation of the separation of powers. The Court addressed whether the assignment by Congress to the Comptroller General of the United States of certain functions under the Balanced Budget and Emergency Deficit Control Act of 1985 violated the doctrine of separation of powers. The act (Public Law 99-177), also commonly known as the Gramm-Rudman-Hollings Act, set a maximum deficit amount for Federal spending for each of fiscal years 1986 through 1991. The act required across-the-board cuts in Federal spending to reach the targeted deficit level and accomplished the automatic reductions through a process spelled out in section 251. The Directors of the Office of Management and Budget [OMB] and the Congressional Budget Office [CBO] were required to report jointly their deficit estimates and budget reduction calculations to the Comptroller General, who--after reviewing the reports--was to submit his conclusions to the President. The President would then issue a sequestration order mandating the spending reductions specified by the Comptroller General. The Court held that the role of the Comptroller General in the deficit reduction process violated the separation of powers imposed under the Constitution. The District Court held (478 U.S. 714, 721) that:

[S]ince the powers conferred upon the Comptroller General as part of the automatic deficit reduction process are executive powers, which cannot constitutionally be exercised by an officer removable by Congress, those powers cannot be exercised and therefore the automatic deficit reduction process to which they are central cannot be implemented.

The decision was appealed and was heard by the Supreme Court pursuant to section 274(b) of the act. The Supreme Court also held that congressional participation in the removal of executive officers was unconstitutional.

In Metropolitan Washington Airports Authority v. Citizens for the Abatement of Aircraft Noise, 501 U.S. 252 (1991) the Supreme Court considered whether or not Congress' retention of certain management and policy controls violated the separation of powers. Although Congress vested managing authority for Washington National and Dulles International Airports in a regional entity, Congress required that nine Members be included on a Board of Review that followed operative decisions made by the Board of Directors for possible veto action. The Court found that Congress' scheme of congressional control, including its retention of substantial authority over the appointment and removal of members of the board, did violate separation of powers principles because the Board of Review was found to be acting as an agent of Congress.

Congress passed new legislation that made adjustments to the control wielded by Congress over the Board of Directors. The Board of Review no longer retained veto authority over operative decisions, nor were Members of Congress required to sit on the Board of Review. But the Board was to comprise of persons drawn from a list determined by the Speaker of the House and the President pro tempore of the Senate. The Court of Appeals for the District of Columbia looked beyond the explicit terms of the revised statute [Hechinger v. Metropolitan Washington Airports Authority, 36 F.3d 97, 105 (D.C.Cir.1994)] and took into consideration its practical effect. The court found that there were practical consequences inherent in the Board of Review's ability to delay action by the Directors. The court concluded that the Board of Review still retained the ability to exercise undue influence over the authority. The court was particularly concerned by the Board's ability to delay and possibly overturn decisions made by the authority by referring the decisions to Congress for review. It concluded that the revised statute still violated the separation of powers.

Presentment Clause. The presentment clause contained in article I, section 7 of the Constitution requires every bill passed by the House and Senate (bicameral passage), before becoming law, to be presented to the President, and, if he disapproves, to be repassed by two-thirds of the Senate and House.

Before the 1996 Line Item Veto Act was struck down, President Clinton used his veto authority a total of 82 times. The constitutionality of the veto authority was challenged in Clinton v. City of New York, 524 U.S. 417 (1998). The case raised the question of whether or not a cancellation of an item of direct spending in the Balanced Budget Act of 1997, and a limited tax benefit in the Taxpayer Relief Act of 1997--both of which had already been enacted into law--constituted a violation of the Constitution's presentment clause. The Court determined that the actions of the President prevented one section of the Balanced Budget Act of 1997, and one section of the Taxpayer Relief Act of 1997, from having legal force and effect. From the Court's perspective, the President had amended two acts of Congress by repealing a portion of each, and `repeal of statutes, no less than enactment, must conform with article I,' INS v. Chadha, 462 U.S. 919, 954, 103 S.Ct. 2764, 2785-2786. The Court emphasized that statutory repeals must conform to the presentment clause's `single, finely wrought and exhaustively considered, procedure' for enacting a law. The Court determined that the cancellation procedures of the Line Item Veto Act did not conform to the tenets of the presentment clause and that nothing in the Constitution authorized the President to amend or repeal a statute, or portions of a statute, unilaterally.

HOW H.R. 4890 ADDRESSES CONSTITUTIONAL DOCTRINES

Delegation of Powers. The Legislative Line Item Veto Act of 2006 has two provisions that may engage the delegation concept: first, the deferral authority allowed to the President; and second, the direct influence in the legislative process given to the executive branch.

The authority provided to the President to defer the obligation of discretionary spending authority, or the implementation of an item of direct spending, or a targeted tax benefit is distinct from legislative authority, because the discretion granted to the President has no permanent effect on the statute. Statutes enacted by Congress often provide at least a modicum of discretion to the executive branch in the ways budgetary resources are used. The deferral authority is indistinguishable from this insofar as it allows the President a set period of time (45 days, with a possible extension of another 45 days) to determine whether Congress will agree to cancel a given spending or tax provision. During this deferral period, the President is allowed to wait before committing the resources of the U.S. Government, but it is not a permanent change in law unilaterally carried out by the executive branch, and hence not legislative in nature.

The second issue arising under the Legislative Line Item Veto Act is the participation of the President in the legislative process. First and foremost, the President, by the nature of the Constitution, is intrinsically involved in the legislative process even if he is not a formal legislative actor. The line between legislative and executive is not a clear or bright one: The President signs legislation; the Vice President, under certain unusual circumstances, votes in the Senate--and may preside over the deliberations of that House; the President proposes legislation often and submits a budget--as required by Congress--on an annual basis.

The question is whether this act provides the President an undue amount of influence in the legislative process. In this case, the President is allowed to provide to the Congress a proposed list of legislative items in an enacted bill that he believes it should reconsider. The Congress is under no obligation through this statute to do so--it merely provides rules to move the proposal to the front of the line of those measures considered on the floor of the House or the Senate.

Presentment Clause. The Legislative Line Item Veto Act of 2006 is specifically designed to avoid violating the presentment clause. With the 1996 Line Item Veto Act, that clause, as delineated in the Court case previously cited, was violated because the statute was effectively being amended, according to the Court, after the fact without congressional approval. In the case of the Legislative Line Item Veto Act, however, the President merely proposes that a particular provision be canceled--he does not do so unilaterally. To invalidate budgetary resources under this act requires an act of Congress and the assent of the President, the same as any other law enacted pursuant to the Constitution of the United States.

Simply put, the `presentment' of a law to the President, under the Constitution, is undisturbed because only a subsequently enacted law amends the law under review. This is indistinguishable from any other exercise of legislative or executive power.

Principal Court Decisions

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(IN REVERSE CHRONOLOGICAL ORDER)

Clinton v. City of New York. The case of Clinton v. City of New York, 524 U.S. 417 (1998), resulted from President Clinton's decisions to cancel, pursuant to the Line Item Veto Act of 1996, two provisions in bills that were presented to him and signed by him: a mandatory spending provision waiving the Federal Government's right to recoupment of New York State taxes levied against Medicaid providers and a limited tax benefit providing capital gains tax relief to certain agricultural refining and processing companies.

The plaintiff-appellees, claiming injury as a result of President Clinton's actions, filed suit arguing that the Line Item Veto Act of 1996 violated the U.S. Constitution. The U.S. Supreme Court ruled that: first, the appellees had standing to bring the suit; and second, the act violated the presentment clause of the Constitution. Therefore, the act was nullified.

In determining that the appellees had standing to bring suit under article III, the Court first ruled that the provision of the act that provided for `expedited review' (i.e., allowing plaintiffs to skip the step of first appealing a Federal district court decision to a circuit court, and instead going straight to the Supreme Court) was available to governmental and organizational plaintiffs even though the act's language referred to `individuals.' The Court then held that the appellees satisfied the requirement that they have a concrete personal stake in having an actual injury redressed, and therefore that the suits satisfied the `case and controversy' requirement for standing.

Next, the Court ruled that the Line Item Veto Act violated the presentment clause of the Constitution. From the Court's perspective, the President had amended two acts of Congress by repealing a portion of each and `repeal of statutes, no less than enactment, must conform with article I'--specifically the presentment clause of article I, section 7. The Court considered significant that whereas constitutional veto power operated before a bill becomes a law, cancellation authority operated after a bill became law. The Court then emphasized that statutory repeals must conform to the presentment clause's `single, finely wrought and exhaustively considered, procedure' for enacting a law. The Court determined that the cancellation procedures of the Line Item Veto Act did not conform to the tenants of the presentment clause--such as the requirement that a repeal of a statute be passed by both Houses of Congress--and that nothing in the Constitution authorized the President to amend or repeal a statute, or portions of a statute, unilaterally. Because the cancellation authority violated article I, section 7, the Court declared the Line Item Veto Act unconstitutional.

Raines v. Byrd. The Line Item Veto Act was enacted in April 1996 and became effective on 1 January 1997. Six Members of Congress who had voted against the act brought suit in the District Court for the District of Columbia challenging its constitutionality. In Raines v. Byrd, 521 US 811 (1997), the Court in addressing the matter of standing distinguished between a personal injury to a private right, and an institutional one.

The Court viewed the plaintiffs as alleging an institutional injury: they were injured in their official capacities by the alteration of the effect of their votes, and the shifting of the power between the executive and legislative branches. Although the Court in Raines gave consideration to Coleman v. Miller, 307 U.S. 433 (1939)--a case in which Kansas State legislators were found to have standing to bring suit against State officials for a claim of vote nullification--it did not find Coleman to be dispositive in the Raines case. There were significant differences in the facts of the two cases. In Coleman the vote was nullified due to a tie breaking vote cast by the State's lieutenant governor. In Raines, the vote was not nullified, rather it was simply lost outright. The Court ultimately determined that the Members of Congress lacked standing to sue and remanded the case to the lower court with instructions. The Members were not granted standing because they had not alleged a sufficiently concrete injury under article III.

Metropolitan Washington Airports Authority v. Citizens for the Abatement of Aircraft Noise. In this 1991 case, the Supreme Court considered whether or not Congress' retention of certain management and policy controls violated the separation of powers.

Although Congress vested managing authority for Washington National and Dulles International Airports in a regional entity, Congress required that nine Members be included on a Board of Review that followed operative decisions made by the Board of Directors for possible veto action. The Court found that Congress' scheme of congressional control, including its retention of substantial authority over the appointment and removal of members of the board, did violate separation of powers principles because the Board of Review was found to be acting as an agent of Congress.

Congress passed new legislation that made adjustments to the congressional control wielded by Congress over the Board of Directors. The Board of Review no longer retained veto authority over operative decisions nor were Members of Congress required to sit on the Board of Review. But the Board of Review was to comprise persons on a list determined by the Speaker of the House and the President pro tempore of the Senate.

The Court of Appeals for the District of Columbia looked beyond the explicit terms of the revised statute and took into consideration the practical effect of the statute, Hechinger v. Metropolitan Washington Airports Authority, 36 F.3d 97, 105 (D.C.Cir.1994). The court found that there were practical consequences inherent in the Board of Review's ability to delay action by the Directors. The court concluded that the Board of Review still retained the ability to exercise undue influence over the Authority. The court was particularly concerned by the Board's ability to delay and possibly overturn decisions made by the Authority by referring the decisions to Congress for review. It concluded that the revised statute was still a violation of the separation of powers.

Bowsher v. Synar. The Court in Bowsher v. Synar, 478 U.S. 714 (1986), addressed whether the assignment by Congress to the Comptroller General of the United States of certain functions under the Balanced Budget and Emergency Deficit Control Act of 1985 violated the doctrine of separation of powers.

The act (Public Law 99-177), commonly known as the Gramm-Rudman-Hollings Act, set a maximum deficit amount for Federal spending for each of fiscal years 1986 through 1991. The act required across-the-board cuts in Federal spending to reach the targeted deficit level, and accomplished the automatic reductions through a process spelled out in section 251.

The Directors of the Office of Management and Budget and the Congressional Budget Office were required to report jointly their deficit estimates and budget reduction calculations to the Comptroller General, who--after reviewing the reports--was to submit his conclusions to the President. The President would then issue a sequestration order mandating the spending reductions specified by the Comptroller General.

The suit challenging the constitutionality of Gramm-Rudman-Hollings was brought by Congressman Synar, who had voted against the act. A similar suit was also brought by the National Treasury Employees Union, who alleged an injury as a result of the automatic spending reduction of certain cost-of-living benefits to the union's members. A three-judge district court concluded that the union had standing because it had suffered an actual injury as a result of the suspension of member benefits, and that the Members of Congress had congressional standing to sue.

One of the issues raised before the district court was whether the delegation doctrine had been violated. The delegation doctrine maintains that broad delegations of authority to the administrative branch of government are unconstitutional. The court found that while the act delegated broad authority, delegation of similarly broad authority had been upheld in the past, thus rejecting the claim under the delegation doctrine. Nevertheless, the Court held that the role of the Comptroller General in the deficit reduction process violated the separation of powers created by the Constitution. The district court held (478 U.S. 714, 721) that:

`[S]ince the powers conferred upon the Comptroller General as part of the automatic deficit reduction process are executive powers, which cannot constitutionally be exercised by an officer removable by Congress, those powers cannot be exercised and therefore the automatic deficit reduction process to which they are central cannot be implemented.'

The decision was appealed and was heard by the Supreme Court pursuant to section 274(b) of the act. The Supreme Court also held that congressional participation in the removal of executive officers was unconstitutional.

Allen v. Wright. In this 1984 case, parents of public school children sought injunctive relief to bar the application of an Internal Revenue Service [IRS] code provision that granted tax-exempt status to private schools. The parents, who were African-American, alleged that allowing private schools that discriminated on the basis of race to receive tax-exempt status was unlawful.

The parents asserted that they were harmed because the government's action constituted tangible Federal financial aid and other support for racially segregated educational institutions, and fostered and encouraged continued segregation contrary to the efforts of Federal courts, the Department of Health, Education, and Welfare, and local school authorities to desegregate public school districts that had been operating racially dual school systems. They asked for an order directing the IRS to replace its 1975 guidelines with standards consistent with the requested injunction.

The District Court determined that the plaintiff lacked standing to sue, and that the requested relief was contrary to the will expressed by Congress's 1979 ban on strengthening IRS guidelines. The Court of Appeals for the District of Columbia reversed, and granted standing on the basis that as African-American parents they were denigrated by the government's action in allowing tax-exempt status to a racially segregated private school.

Article III confines the jurisdiction of the Federal courts to actual cases and controversies. Among the essential elements of what the Court considers a case or controversy for purposes of determining if a plaintiff has standing to bring suit is an injured plaintiff. After reviewing the case upon writ of certiorari, the Supreme Court determined that the plaintiff lacked standing to sue. The Court's analysis of the standing doctrine considered several judicially self-imposed limits on the exercise of Federal jurisdiction, such as the general prohibition on a litigant's raising another person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked. The requirement of standing, however, has a core component, expressly that a plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief, 454 U.S. at 472. The Court concluded that plaintiff's injury did not constitute a judicially cognizable injury, and that the alleged injury was not fairly traceable to the assertedly unlawful conduct of the IRS.

INS v. Chadha. Mr. Chadha entered the U.S. on a nonimmigrant student visa. Upon expiration of the visa, Mr. Chadha did not leave the United States as prescribed by law. Instead he stayed and was subject to deportation proceedings in which he was ordered by the Immigration and Naturalization Service [INS] to show cause why he should not be deported. Mr. Chadha applied for a suspension from deportation.

The suspension was granted pursuant to Sec. 244(a)(1) of the Immigration and Naturalization Act, which authorizes the Attorney General, in his discretion, to suspend deportation. The suspension was reported to Congress as required by 244(c)(1) of the act. The House of Representatives invoked its authority under 244(c)(2) which authorizes either House of Congress, by resolution, to invalidate the decision of the executive branch, pursuant to authority delegated by Congress to the Attorney General, to allow a particular deportable alien to remain in the United States. The House passed a resolution pursuant to 244(c)(2) vetoing the suspension and deportation proceedings were reopened.

Mr. Chadha challenged that Sec. 244(c)(2) was unconstitutional and moved to terminate the deportation proceedings. The Board of Immigration Appeals dismissed the case for lack of authority to rule on the constitutionality of the matter. Mr. Chadha then filed a petition for review of the deportation order in the Court of Appeals. The INS joined Mr. Chadha arguing that 244(c)(2) was unconstitutional. The Court of Appeals held that 244(c)(2) violated the constitutional doctrine of separation of powers. The Attorney General was ordered to cease deportation efforts.

The Supreme Court in 1983 held that Sec. 244(c)(2) was severable from the remainder of the act and that the action taken by the House pursuant to 244(c)(2) was essentially legislative in purpose and effect, and thus was subject to the procedural requirements of article I, section 7, for legislative action. The presentment clause contained in article I, section 7 of the Constitution requires every bill passed by the House and Senate, before becoming law, to be presented to the President, and, if he disapproves, to be repassed by two-thirds of the Senate and House.

Nixon v. Administrator of General Services. Former President Nixon brought suit challenging the constitutionality of the Presidential Recordings and Materials Preservation Act (Public Law 93-526). Nixon v. Administrator of General Services, 433 U.S. 425 (1977). The Supreme Court faced the issue of whether the act was unconstitutional on its face as a violation of, among other doctrines, the separation of powers.

Soon after Nixon resigned the presidency, he asked the Archivist to send 42 million pages of documents and 880 tape recordings of conversations to him in California. To abrogate an agreement between Nixon and the Archivist, Congress passed and President Ford signed the Presidential Recordings and Materials Preservation Act, requiring the General Services Administration [GSA] to retain complete possession and control of the materials, and to issue regulations governing public access to the materials.

Nixon asserted that Congress impermissibly delegated to a subordinate executive branch official power over the President's materials, and therefore infringed on the separation of powers. The Court rejected this argument out of hand, finding that President Ford's role in signing the act, President Carter's intervention in favor of the act, and GSA's status as an executive branch agency under the President's direction, provided evidence of official executive branch involvement in the enacting and implementing the statutory scheme. The Court held that the separation of powers doctrine does not require treating the three branches as `three air-tight departments,' and characterized Nixon's view as archaic. According to the Court, the key concern of separation of powers is whether a legislative act prevents another branch from exercising its constitutionally assigned functions.

The Nixon Court went on to explain that only where such a disruption is possible should the Court enquire whether that impact is justified by an overriding need to promote the constitutional objectives of Congress. But because the act allowed an executive branch agency to retain control of the materials and provided for safeguards before allowing non-executive persons to use the materials, the Court found that the act would not lead to a disruption of the executive branch's constitutional functions. Therefore, the act did not infringe upon the executive branch's power and did not violate the Constitution under the separation of powers doctrine.

Section by Section

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SECTION 1. SHORT TITLE

This section names the bill the `Legislative Line Item Veto Act of 2006.'

SECTION 2. LEGISLATIVE LINE ITEM VETO

Subsection (a) amends Title X of the Congressional Budget and Impoundment Control Act of 1974 by striking all of part B (except sections 1016 and 1013, which are designated as sections 1019 and 1020, respectively). It then inserts the following new sections:

Section 1011. Cancellation of Budgetary Resources

Pursuant to subsection (a), after the enactment of any bill or joint resolution providing discretionary budget authority, or enacting an item of direct spending or a targeted tax benefit, the President may send a special message to Congress to cancel any specific provision in one or more of those budgetary classes. The President, though, must send the message to Congress within 45 calendar days of the enactment of the new law.

If the last day of that 45-day period falls on a day in which the Congress has been adjourned for an extended period (45 days or more) or if it falls on a day after which the Congress has adjourned at the end of the second session of that Congress, then the President's authority to transmit a special message is extended to the first day the Congress reconvenes. The President may transmit the special message after the 45-day period has expired only in those specific circumstances.

The contents of the special message must specify the amount of budget authority, the specific item of direct spending, or the targeted tax benefit that the President proposes be canceled; any account, department, or establishment of the Government to which such budget authority or item of direct spending is available for obligation; and the specific project or governmental functions involved. It rescinds the discretionary BA or suspends the direct spending or tax procedures. It must, to the maximum extent practicable, explain the estimated fiscal, economic, and budgetary effects of the proposed cancellations.

The special message must include a numbered list of proposed cancellations--this would take the form of rescissions of amounts of discretionary budget authority and legislative language canceling the effects of items of direct spending and targeted tax benefits (and making appropriate conforming changes in law). Cancellations of targeted tax benefits must be drawn from a list of such provisions included in a tax measure, if such a list is provided. Any provision included in a special message that is not on that list will not be included in an approval bill for consideration by Congress.

The President is allowed to transmit to the Congress up to five special messages for any enacted law. All must be transmitted within the 45-day period of the signing of the bill, unless one of the exceptions already noted applies.

The President is not allowed to propose to cancel a specific budgetary provision more than one time. Although he is allowed five special messages for each enacted law, he may not repeatedly send to Congress the same proposed cancellation. Any savings resulting from cancellations enacted as part of an approval bill will go toward reducing the deficit.

Any amounts of discretionary budget authority, items of direct spending, or targeted tax benefits canceled when an approval bill is signed into law are dedicated to deficit reduction. After the enactment of an approval bill, the Chairmen of the Committees on the Budget of the Senate and the House of Representatives must revise the levels of the concurrent resolution on the budget in force at the time to ensure that the savings achieved are not used to finance other spending, whether discretionary or mandatory (or, in cases of increased revenues, are not used to reduce other taxes).

Correspondingly, when an approval bill is enacted, the Office of Management and Budget must revise the discretionary caps and the PAYGO scorecard to reflect the spending and revenue changes--if those spending controls are reauthorized so as to be in force when an approval bill is enacted. PAYGO and the discretionary caps expired at the end of fiscal year 2002.

SECTION 1012. PROCEDURES FOR EXPEDITED CONSIDERATION

Subsection (a) requires that, after Congress has received a special message from the President proposing cancellations, the majority leader of the House and the Senate respectively (or their designees) shall introduce a bill to approve such cancellations within 5 days of session of each applicable House.

CONSIDERATION IN THE HOUSE OF REPRESENTATIVES

This subsection requires a committee of the House of Representatives, to which an approval bill is referred, to report the bill without amendment within 7 legislative days of the referral. If a committee does not report the bill within seven legislative days, any member may make a privileged motion to discharge the relevant committee or committees from consideration of the bill.

The Member offering the privileged motion to discharge must give notice to the House of his or her intent to do so, after which the Speaker must schedule a time to consider the motion within the next 2 legislative days. The privileged motion to discharge is debatable for 20 minutes after which the previous question is considered as ordered on the motion and a motion to reconsider the vote on which the motion is disposed of is not allowed. If the motion is agreed to, the House then moves to immediate consideration of the approval bill under the expedited procedures set out in this subsection. If the approval bill has been reported or a motion to discharge has already been disposed of, the privileged motion to discharge provided in this subsection is not in order.

If an approval bill is reported from committee, or it has been discharged through regular House procedure, then it is in order for any Member to offer a privileged motion to proceed to consideration of the bill. It is a highly privileged motion and provides for the immediate consideration of the bill once agreed to. The Member offering the privileged motion to proceed to consideration must give notice to the House of his or her intent to do so, after which the Speaker must schedule a time to consider the motion within the next 2 legislative days. If the motion to proceed to consideration is agreed to, the approval bill must be immediately considered on the floor.

If the majority leader of the House, or his designee, has introduced an approval bill and Congress adopts a concurrent resolution providing for adjournment sine die at the end of a Congress and that approval bill has either not been reported by a committee or considered by the House, then it shall be in order for any Member to immediately give notice of his or her intention to offer either a privileged motion to discharge that approval bill from committee or a privileged motion to proceed to consideration of that approval bill as provided for in this subsection. When Congress adopts a resolution to adjourn sine die, that Congress does not immediately end: Certain types of legislation must still be considered before the Congress adjourns. If an approval bill has been introduced, and the House adopts a motion to proceed to consideration, the House must consider it under the specified procedures of this act. In this circumstance, it does not matter at what stage the approval bill is, as long as it has been introduced, a motion to discharge the bill and bring it to the House floor still would be in order.

The bill is considered as read. All points of order against consideration are waived. The previous question is considered as ordered. Five hours of debate are equally divided. One motion to limit debate on the bill is in order. A motion to reconsider the vote on passage is not in order. The bill is not open to amendments, including motions to strike individual cancellations.

Finally, an approval bill received from the Senate is not referred to committee and may be brought up for consideration as an alternative to the House-introduced bill.

CONSIDERATION IN THE SENATE

A motion to proceed to the consideration of a bill in the Senate under this subsection is not debatable. It is not in order to move to reconsider the vote. Debate in the Senate on an approval bill, and all debatable motions and appeals may not exceed 10 hours, equally divided. Debate on any debatable motion or appeal in connection with a bill under this subsection shall be limited to not more than 1 hour, equally divided and controlled. A motion in the Senate to further limit debate on a bill under this subsection is not debatable. A motion to recommit the bill is not in order.

If the Senate receives the House companion bill to the bill introduced in the Senate before the required vote, then the Senate may consider and vote on the House companion bill in lieu of considering and voting on the Senate bill.

If the Senate votes, pursuant to paragraph (1) , on the bill introduced in the Senate, then immediately following that vote, or upon receipt of the House companion bill, the House bill is deemed to be considered and read for the third time, and the vote on passage of the Senate bill shall be considered to be the vote on the bill received from the House.

Subsection (b) applies to both the Senate and the House and makes it clear that no amendment or motion to strike a provision from an approval bill is allowed to be considered. It is important the approval bill is not amended in either House so as to avoid different versions of the measures being passed by the two Houses of Congress. By avoiding these differences, the measure's consideration may be further expedited because it avoids a conference committee.

SECTION 1013. PRESIDENTIAL DEFERRAL AUTHORITY

Subsection (a) affords the President the authority to choose not to obligate discretionary budget authority, and not to implement items of direct spending or targeted tax benefits (under certain limitations) for 45 calendar days beginning on the day a special message is received by either the House or the Senate.

The time for this deferral period runs consecutively, so that from the time the transmittal is received in either the House or the Senate, the period begins. It ceases after the 45th day after the day of transmittal. This period may, however, be renewed by the President at his discretion with two limitations: He may only extend the time period if he sends a special supplemental message to Congress notifying both Houses of the need to do so; and he must send that message after the 40th day of the first 45-day period.

A supplemental special message is simply that a supplement to the initial special message transmitted pursuant to the authority to defer budgetary provisions, explained in section 1011. The message must notify Congress that the President intends to extend his deferral authority, which is authorized under section 1013 of the act, by an additional 45 days.

As part of this supplemental special message, the President must specifically explain why special circumstances have arisen so that the original 45-day period is insufficient to accommodate the proposed cancellations and their consideration by the Congress. This extension may apply, for example, if Congress is in an extended recess and has been unable to consider a bill to approve the cancellations proposed by the President within the initial 45-day deferral period. Such a circumstance must be explained in detail in the supplemental special message.

Under no circumstances is this additional deferral authority to be used by the President subsequent to the defeat of an approval bill in either House of Congress. Once Congress acts on an approval bill, this deferral authority must be discontinued by the President, even though it is not legally or constitutionally required, and he must not extend it for the renewal period. The President cannot transmit a supplemental special message to Congress subsequent to a negative vote on an approval bill by either House.

Up to five special messages proposing cancellations of budgetary provisions may be transmitted for each public law enacted after this act, but only one supplemental special message may be transmitted for each of those special messages for that law. A supplemental special message is an additional component of the original special message transmitted under the authority of this act. A supplemental special message does not count toward the five special messages allowed for each public law it is not a special message in and of itself. It is merely an adjunct of a previously transmitted special message. Its form is not set out specifically through legislative language, but its requirements and parameters are made clear in this report.

In addition, the President may submit a valid supplemental special message only after 40 calendar days have expired during the initial 45-day deferral period. This is to ensure Congress has enough time to consider the proposed cancellations before the President asks for more deferral authority. Though it is not legally or technically circumscribed, the authority to renew deferrals would occur during exceptional circumstances when the Congress has been unable to consider the approval bill that includes the proposed cancellations.

After the expiration of the 45-day period and absent a renewal, or after the expiration of the renewal 45-day period, the budgetary provisions proposed to be canceled and which have been deferred, must be implemented or obligated, as the case may be, as is required by the Constitution and the Congressional Budget and Impoundment Control Act of 1974.

As the special supplemental message may not be transmitted to Congress prior to 40 calendar days after the initial transmittal, once the 45-day period has expired, no special supplemental message may be transmitted; the authority to renew the deferral period has also expired. Hence, should the initial 45-day period expire, and no renewal special supplemental notice be transmitted during that period, immediately thereafter, the (for example) budget authority appropriated must be made available for obligation as if the deferral had never occurred.

Additionally, once the 45-day period has elapsed without a supplemental special message having been sent, the option of sending such a supplemental message is not available. Deferral authority under this act has entirely expired once the initial 45-day period has ended and no supplemental special message has been transmitted.

It is understood that the legislative calendar of the Congress is not relevant for the calculation of this deferral period, with the singular exception of last day on which the transmittal of the original special message may occur. If the Congress has adjourned to a future date when the initial deferral period expires, the supplemental special message is unaffected.

Even in the unusual circumstance when a supplemental special message is transmitted after the second session of a Congress has adjourned but before the first session of the next Congress has convened, the Congress still represents the people of the United States, and the Senate is a continuing body, so that the communication of such a transmittal is always valid to extend the deferral authority.

Although the authority to defer spending and certain tax benefits under the initial 45 days (and any applicable renewal period) is independent of legislative actions taken by Congress, it is the intent of the Committee that if a vote is taken on an approval bill by either House, and one approved bill is not agreed to by that House, then the suspension of any provision of law must be revoked and that provision put into effect as if it had always been effective under the terms of the public law in which it was originally included.

Out of constitutional concerns, the committee has not directly tied the suspension/deferral period to a failed vote or on approval. It does, though, indicate its intent that such a vote should have that effect. The President must immediately suspend the deferral of all budgetary provisions included in an approval bill of proposed cancellations that, after floor consideration of the bill, has not received the requisite votes to pass in a House of Congress.