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American governors tell us how to reform the budget.

A survey of 188 current and former state chief executives provides significant suggestions for reducing the Federal deficit.

A survey of 118 U.S. governors and former governors--including Jimmy Carter, Ronald Reagan, Michael Dukakis, and Bill Clinton--reveals a strong consensus that both a line-item veto for the president and a balanced-budget amendment to the Constitution would be effective methods of reducing the massive Federal budget deficit. A majority of the governors also say that Congress has too much power over the budget process and the president too little.

America's governors and former governors have a unique perspective on budget reform issues. Most of them have had practical experience with the line-item veto and balanced-budget requirements in their states. The fact that most governors have found those budget tools useful in restraining deficits and unnecessary government spending suggests that they may be worth instituting on the Federal level.

With the deficit continuing to skyrocket, budget reform again is on the legislative agenda of Congress. A balanced-budget amendment narrowly was defeated in the House in 1992 and will be debated again in 1993. The line-item veto--which would allow a president to veto specific programs or projects within a spending bill without having to veto the entire bill--has been endorsed by Pres. Clinton. Both measures command very high public support. Polls consistently reveal that three of four Americans support a balanced-budget amendment to the Constitution. About two-thirds of Americans approve of a line-item veto.

Those and other fiscal reforms under consideration in Congress are budget tools that already are in place in the states. Except for Vermont, every state has some form of balanced-budget requirement--although they vary widely in stringency. Forty-three governors have line-item veto authority. Many states also have constitutional or statutory spending- and tax-limitation provisions.

Yet, there has been very little attention devoted to the critical issue of how those measures actually have worked in the states. Although several studies have found that the line-item veto and the balanced-budget requirement have had a disciplining effect on state spending and borrowing, those findings have not prompted Congress to act.

One way to determine whether budget reforms work is to consult America's governors. They are the one group that has the hands-on experience in working with many of the deficit-reduction ideas that are under consideration in Washington. They can bring a special perspective to the issue. Some governors, such as Tommy Thompson of Wisconsin, have relied heavily on the line-item veto to cut expenditures and balance the budget. Generally speaking, however, governors have not been consulted by Federal policymakers.

To add their voices to the debate, the Cato Institute surveyed the nation's current and former governors on budget reform. Of 274 current and former governors contacted, 118 completed all or part of the survey, for a response rate of 43%. Sixty-seven of the respondents are Republicans, 50 Democrats, and one an Independent. Nineteen of the respondents are current governors. The governors were sent a one-page, five-question survey and asked to write a more detailed response to explain their answers. Roughly half did so. The following are the questions and a summary of the responses:

"Was/is the line-item veto a useful tool to you as governor in balancing the state budget?" Sixty-nine percent of the governors said the line-item veto was a "very useful tool"; 23%, a "somewhat useful tool"; and seven percent, "not useful." Republicans were only slightly more likely than Democrats to believe that the line-item veto was useful. Ninety-one percent of Democratic governors said the line-item veto was "very useful" or "somewhat useful."

"Do you think that a line-item veto for the president would help restrain Federal spending?" Ninety-two percent replied yes. Eighty-eight percent of the Democrats agreed that the line-item veto would help restrain Federal spending. In contrast to the situation in Congress, there is bipartisan support among governors for the line-item veto.

"Based upon your experience as governor with balanced-budget requirements, do you think that a balanced-budget amendment to the Constitution for the Federal government is desirable?" Fifty-five percent stated that a balanced-budget amendment would be "very desirable"; 21%, "somewhat desirable"; and 23%, "not at all desirable." Responses to this question differed markedly by party affiliation. Nearly 70% of Republicans answered that a balanced-budget amendment was "very desirable," but among Democrats there was no consensus, with about one-third each split among "very desirable," "somewhat desirable," and "not at all desirable." The governors' responses roughly mirror party support for a balanced-budget amendment in Congress.

"Should the Federal government be required to reimburse states for the cost of Federal mandates?" Such imposed requirements are eating up larger and larger shares of state budgets. Some states devote as much as half of their budgets to Federally mandated spending. Several even have passed provisions that would prohibit Congress from enacting legislation that mandates any further unfunded spending. Eighty-eight percent of the governors maintained that the Federal government should be required to reimburse states for mandated spending. Democrats were slightly more in favor of requiring full reimbursement than were Republicans-91% to 84%.

"In your opinion, does Congress or the president have too much authority over the Federal budget today.?" Ever since Congress passed the Budget Reform and Impoundment Control Act of 1974, every president has complained that Congress has usurped the executive branch's traditional powers over the budget process. The governors agree. Fifty-five percent felt "Congress has too much power"; two percent that "the president has too much power"; and 43% believed "the balance of power is about right." On this question, there was a large difference between the two parties. Sixty-nine percent of the Republicans said Congress has too much power, whereas 35% of the Democrats did.

The governors were asked to suggest other needed budget reforms that may have been tested on the state level. Some of the responses proposed that the Federal government: * Separate the operating budget from the capital budget and require all operating expenses to be paid from revenues, rather than debt (seven governors). * Reduce Federal mandates on states (seven). * Reduce or, eliminate automatic cost-of-living adjustments for entitlements (five). * Give the president the item reduction veto (four). * Require the president to submit a balanced budget (four). * Impose an across-the-board budget freeze on spending (four). * Require all new programs to be funded by a specific tax (four). * Require fiscal impact statements for all new spending programs (three). * Restore rescission / impoundment power to the president (three). * Raise taxes on the wealthy (three). * Require a three-fifths vote to enact a tax increase (two). * Place restraints on size and pay of Congressional staff (two). * Reduce defense spending more rapidly two). * Implement term limits for members of Congress (two). * Establish a rainy day fund that would require setting aside a portion of revenues during good times to get through economic downturns without big deficits (one). * For every dollar of new program expenditures, reduce existing expenditures by two dollars (one). * Implement competitive bidding on Federal contracts (one). * Tie Congressional salaries to achieving a balanced budget (one). * Replace the income tax with a consumption tax (one).

Speaking from experience

The findings of the survey contradict the critics of budget reform in Congress who argue that such measures would not help resolve the nation's fiscal crisis. For example, Rep. Bill Gradison (R-Ohio), a member of the House Budget Committee, has stated that, "The budget process needs leadership, not reform." The experience of the states, according to their governors, suggests that the line-item veto and balanced-budget requirement do work and are needed in Washington. Among their comments, the following were particularly relevant:

"The line-item veto is a useful tool that a governor can use on occasion to eliminate blatantly |pork barrel' expenditures that can strain a budget. At the same time he must answer to the voters if he [or she] uses the veto irresponsibly. It is a certain restraint on the legislative branch." --Keith H. Miller (R.-Alaska), 1969-70.

"Congress's practice of passing enormous spending bills means that funding for everything from a Lawrence Welk Museum to a study of bovine flatulence slips through Congress. The president may be unable to veto a major bill that includes such spending abuses because the majority of the bill is desperately needed. A line-item veto would let the president control the irresponsible spending that Congress can't. A line-item veto already works at the state level. It not only allows a governor to veto wasteful spending, it works as a deterrent to wasteful spending legislators know will be vetoed."--Pete Wilson (R.-Calif.), 1991-present.

"When I was governor in California, the governor had the line-item veto, and so you could veto parts of a bill or even part of the spending in a bill. The president can't do that. I think, frankly--of course, I'm prejudiced--government would be far better off if the president had the right of line-item veto."--Ronald Reagan (R.-Calif.), 1967-75.

"To the detriment of the Federal process, the president is not held accountable for a balanced budget. Congress takes control over budget development with its budget resolution, after which, the president may only approve or veto 13 appropriation bills. Without the line-item veto the president has minimal flexibility to manage the Federal budget after it is passed."--L. Douglas Wilder (D.-Va.), 1990-present.

"The balanced-budget amendment would provide the fiscal discipline necessary to force Washington policymakers to actually achieve what nearly all Americans acknowledge to be a necessary goal. . . . The very purpose of the amendment is to discipline the executive and legislative branches actually to make these choices and not to propose or perpetuate vast spending programs without providing revenues to fund them. The amendment would, in effect, make Congress and the president more accountable for the spending decisions that they make while in office."--Dick Thornburgh (R.-Pa.), 1979-87.

"The reason Congress lacks fiscal discipline is that it can print money ad libitum. The deficit is driving up the cost of capital and killing us in international economic competition. In terms of government reform, the states are where the action is now--because we have to balance our budgets!"--William E Weld (R. -Mass.), 1991-present.

"The balanced-budget amendment imposes discipline and financial responsibility where it belongs. No governmental body should hide behind platitudes and deficits when spending the public's money."--Dixy Lee Ray (D.-Wash.), 1977-81.

"The only way to control the size of government is to limit it overall--choices among spending programs cannot be enforced without a ceiling."--Pete du Pont (R.-Del.), 1977-85.

"I've long opposed the balanced-budget amendment for several reasons: One, it should not be in the Constitution. Two, the Federal government in the national interest needs to spend in excess of revenue from time to time. I now support a balanced-budget amendment because the president and Congress are unable to grapple with deficits and such an amendment could be a means of focus and fiscal discipline." --William L. Guy (D.-N.D.), 1961-73.

"The balanced-budget amendment is the only way to force some discipline on Federal budgeting."--Evan Bayh (D.-Ind.), 1989-present.

"Obvious waste exists everywhere in Federal government. Trillion-dollar budgets hide billions of waste and pork. Until someone has the courage to face reality, we will go deeper and deeper in debt. The country is already bankrupt by any business standpoint." --Burton M. Cross (R.-Maine), 1953-55.
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Author:Moore, Stephen
Publication:USA Today (Magazine)
Date:May 1, 1993
Words:1877
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