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Balancing the budget via veto: "... a new set of checks and balances effectively would be created: Congressional spending would be checked by the president's reduction veto power, and abuse ... would be balanced by Congress' ability to cancel the power with a budget surplus".

FALLING DEFENSE SPENDING and the economic boom of the 1990s helped create the first balanced Federal budget in 29 years in fiscal year 1998. However, it did not last long and surpluses have since flipped to annual deficits of more than $400,000,000,000. New national security concerns seem to have caused Congress and the Administration to open the spending floodgates to a wide range of defense and nondefense increases. To curb spending and ensure that large deficits do not once again become the norm, some sort of institutional check is needed. Historically, fiscal conservatives have sought restraint from a line item veto or balanced budget amendment (BBA) to the Constitution. Those proposals thus far have failed because they have been ill-defined or technically flawed. Besides, they offered no assurance that spending would be constrained. Moreover, supporters have not overcome the political and constitutional objections that such proposals would weaken the congressional "power of the purse" and shift budgetary control to the president or the Federal courts.

A BBA coupled with a supermajority voting requirement to protect against tax increases would be a valuable constraint. Yet, such a reform has not garnered enough political support for passage. The traditional line item veto may be a useful means for cutting spending, but the president also could employ it as a threat to veto spending to gain support for his own increases. These two concepts, however, can be integrated into a "balanced budget veto" (BBV), whereby the line item veto would become a self-executing means for enforcing budget balance in a manner that promotes spending restraint.

The BBV is a novel form of line item veto that would eliminate what always has been the fatal flaw in any balanced budget mandate--the lack of an effective enforcement mechanism favoring spending cuts over tax increases. The BBV is not the simple adoption of a line item veto and BBA simultaneously, Rather, it would be directed at the specific goal of balancing the budget by making its use conditional on the budget being unbalanced. In other words, the president would be able to exercise a line item veto only when Congress failed to control costs. A bright-line test would be used to determine if a fiscal year ended with a deficit, and, if it did, the president would be empowered with line item veto authority throughout the next annual session of Congress.

For practical and technical reasons relating to the nature of the Federal budget process, the veto enforcement itself would be a power to reduce specific monetary amounts rather than a true "item" veto. It would not enshrine balanced budgets as constitutional doctrine. Instead, it would create an incentive for Congress to curb Federal deficits as soon as possible to regain the spending controls that a veto otherwise would bestow upon the president. in effect, Congress would be penalized institutionally and politically for not balancing the budget. The resulting transfer of power to the president would act as a counterweight and fiscal control mechanism lacking in current balanced budget proposals. The president would be expected to use this enhanced prerogative to cut spending or face criticism from Congress and the public that would view costly presidential initiatives as cynical attempts to retain the veto function. Most important, in the best tradition of our constitutional system of checks and balances, the president's veto authority would be protected from encroachment by Congress in the modern era of "omnibus" spending bills, while Congress could curb any abuse of the line item veto by balancing the budget on its own.

The first balanced budget amendment was proposed in 1936, and since then, numerous constitutional mandates to prohibit deficit spending have been initiated in Congress. The closest that the BBA came to passage occurred in 1995 when, following a month-long debate, Sen. Robert W. Byrd (D.-W. Va.) succeeded in defeating the proposal by a single vote. At the same time, however, the line item veto was given new life with its inclusion in the 1994 Contract With America. Supporters of the line item veto believed that it was politically impossible to follow state legislatures in adopting a line item veto by constitutional amendment: thus, the Contract With America version proposed merely a statutory or legislative line item veto. That approach was adopted in the Line Item Veto Act of 1996. The Supreme Court struck down that law as unconstitutional in June, 1998. in Clinton v. City of New York.

The primary issue in Clinton was whether the cancellations of certain tax and spending provisions were tantamount to a presidential repeal or amendment of duly enacted statutes. If so, then the cancellations violated either the Presentment Clause (because no amending or repeal legislation was passed by both Houses and presented to the president), or the separation of powers doctrine (by impermissibly transferring legislative power to the Executive Branch), or both. The majority did not address the separation of powers issue, but instead found a violation of the Presentment Clause. Laws receive temporal standing under the Constitution, whereby subsequent statutes can amend or repeal prior statutes, but prior statutes cannot nullify, in whole or in part, subsequent ones. The Presentment Clause secures this temporal standing not only by requiring that subsequent repeal or amending legislation be presented to the president, but by mandating that such legislation first "shall have passed" both Houses of Congress. The Line Item Veto Act was objectionable because it violated this rule of temporal standing.

In the FY04 budget, the Administration proposes a line item veto that supposedly "would correct the constitutional flaw in the 1996 Act." Yet, the Administration does not explain how the flaw would be corrected, except to suggest that any new line item veto authority be "linked to deficit reduction." Moreover, any such statute would be a pale imitation of the item veto power that George Bush enjoyed as governor of Texas. A constitutional fight needs to commence to balance the budget by cutting spending. The focus of this battle should be the balanced budget veto.

It is common to hear that Congress can balance the budget whenever it wishes, simply by demonstrating the political will to do so. True enough, but it also brings to mind Aesop's fable about belling the cat. Like so many mice, members of Congress enthusiastically concur that belling the cat (balancing the budget) is a great idea, but then slink away at the thought of actually doing it. Indeed, the support for a balanced amendment derives in large part from the tenet that only a constitutional mandate can force Congress to discipline itself. The flaw in this belief was pointed out years ago by Byrd, longtime chairman of the Senate Appropriations Committee and perhaps the most formidable opponent of both the BBA and line item veto. In an op-ed piece in 1993, written shortly after the Senate Judiciary Committee reported a version of the BBA to the full Senate, Byrd criticized the wishful thinking that underlay the BBA, arguing that you cannot legislate political courage: "... I do not see how a constitutional amendment will give us politicians any more spine than we now have."

This point is telling and deserves a direct response. Except in rare cases, courts do not enforce the nation's laws directly: rather, they enforce the penalties for violating those laws. By failing to include any penalty in the BBA, its proponents rendered the amendment still-born and unenforceable. Members of Congress will make the hard choices necessary to balance the budget only when a penalty exists that makes it more painful not to do so.

It is important to note that the BBV does not turn the Constitution into any sort of economic straitjacket. Unlike proposals that require a balanced budget, the BBV does not demand a specific budget result. Instead, it creates a mechanism that is flexible enough to permit Congress to cope with genuine military or economic crises, while strong enough to compel a balanced budget in the absence of such situations. It does not dictate a balanced budget, but simply declares what the constitutional effect of an unbalanced budget would be, namely, the authorization of a presidential reduction veto. Under this constitutional scheme, a new set of checks and balances effectively would be created: Congressional spending would be checked by the president's reduction veto power, and abuse of this power would be balanced by Congress' ability to cancel the power with a budget surplus. Whereas the BBA requires but cannot enforce a balanced budget, the BBV enforces but does not require one.

A self-executing veto

In that sense, the BBV is not simply enforceable but self-executing because it entails only certification that debt held by the public increased over the course of the prior fiscal year. Instead of mandating that Congress take affirmative steps to balance the budget, which immediately creates all sorts of difficult compliance issues, the BBV would impose a constitutional penalty for failing to redress the marten As soon as the requisite certification is completed, Congress and the president would know whether the reduction veto power could be used and for precisely how long.

Perhaps most important, the judiciary would not become entangled in the budget process and, indeed, only would become involved in a dispute between the political branches in the unlikely event that they disagreed over whether the proper certification was being made. There would be a bright-line test to establish when the BBV can be used, and since the authority being invoked solely is a reduction veto over monetary amounts, there would be no litigation over the meaning of an "item" or whether the president could strike language that conditions or accompanies the monetary amounts in question. The president could exercise the BBV with little or no risk that courts would have to intervene, either to interpret the model amendment or resolve disputes with Congress over how the reduction veto function is being used.

The fact that the amendment would be self-executing, however, does not mean that members of Congress automatically would proceed to balance the budget. They might prefer to accept the consequences of allowing the president to exercise the reduction veto, at least for some limited period. Still, the BBV would create a penalty in terms of losing power to the president that most members of Congress likely would dread more than simple voter concern about an unbalanced budget.

Rather than deny or denigrate this fear as overblown or implausible, the BBV turns what would otherwise be its greatest flaw--use of the item veto power as a political weapon--into its principal virtue. For it is precisely this political threat that offers the likelihood of pressuring Congress into balancing the budget. Instead of trying to downplay the inevitable shift in political power that a reduction veto would trigger, the BBV embraces this shift. The end result would be a political dynamic that strongly favors balanced budgets and a quick end to deficit spending that otherwise would be necessary in times of military conflict, economic recession, or other national emergency.

Similarly, logrolling would be undermined because those members who feared that the president would veto their parochial projects would be less likely to support passage of pork-barrel legislation for other members. From die viewpoint of those members who are disfavored by the president, extra spending for other members simply would postpone the time when Congress could nullify the BBV. Consequently, if a Republican president selectively vetoes projects supported by a senior Democrat on one of the appropriations committee, that Democrat likely would oppose parochial spending on behalf of other members (both Democrat and Republican). Conversely, junior members of Congress would refuse to support the projects of senior members if just the senior members would benefit from the selective exercise of the reduction veto power. The president, in effect, could divide and conquer unless a majority of members worked towards a balanced budget.

In any case, the president would be negotiating from strength by being able to threaten the "stick" (cutting a member's project) instead of having to rely primarily on a "carrot" (offering more spending for a member's district). Using a BBV, any president who wanted to cut overall spending levels could leave unaffected the smaller spending projects, which members often care about most, in exchange for substantial cuts in larger projects or structural alterations in entitlement programs. Congress would be more likely to support such cuts because balancing the budget then would work to its institutional advantage. On the other hand, if the president's agenda was likely to increase the deficit, then Congress would scrutinize that proposal more closely, In the end, Congress would want to control its own fiscal destiny, and the best way for members to prevent the president from promoting the Administration's prioritics at their expense would be to limit spending in the first place.

A final objection derives from how the Federal budget would be balanced, and it arises with any type of balanced budget requirement. This relates to the fear that Congress primarily will rely on lax increases rather than spending cuts. That concern permeated the 1995 debate when House Republicans attempted to honor their Contract With America commitment to a three-fifths supermajority voting requirement for raising revenue. As soon as House Republicans began backing away from this commitment, political support for the BBA among progrowth conservatives waned considerably. Indeed, their real fear during the debate over the BBA was not that Congress would raise taxes to comply with a balanced budget mandate, but that the BBA would be an excuse for raising taxes continuously.

The BBV cannot guarantee that Congress will shun tax increases as a means for balancing the budget, hut it would create a strong presidential bias against any tax increase legislation that would make it easier for Congress to revoke the reduction veto power. To the contrary, the president would have an incentive to keep tax revenue low and place the onus of balancing the budget on spending cuts, which historically have been more difficult for Congress to accept. Only if higher revenues were generated by a growing economy--as the case in the late 1990s--would the president receive political benefits that outweighed any institutional loss of the reduction veto authority.

Moreover, once the president has the reduction veto power, the public will expect to see it used, and the president more likely would be held politically accountable for not balancing the budget. Similarly, rival presidential candidates will be especially critical of any failure to veto egregious or expensive pork-barrel projects. Under political pressure to monitor congressional pork, the president also would be less likely to invite charges of hypocrisy by requesting presidential pork. At the same time, there would be political advantages to showing that the president is wielding effectively this authority and not merely paying lip service to the goal of a balanced budget.

From Pres. Bush's perspective, advocating a BBV would be a "win-win" situation. Since near-term ratification of the amendment would occur during a time of deficit spending, he would benefit from the enhanced reduction veto power until the budget was balanced from economic growth or legislative action. Congress might well be less prone to support expensive military engagements or domestic initiatives, but a majority vote is still 'all that would be needed to approve a presidential spending request.

Bush repeatedly has called on Congress to "restore the president's line item veto authority," an authority that should be "linked to deficit reduction." A balanced budget veto may he .just the tool that he and fiscal conservatives in Congress are seeking to control spending and reduce the deficit. A balanced budget veto not only would solve the enforcement problem that has bedeviled the design of a balanced budget amendment, it would avoid the rigidity of a BBA that might serve as an excuse for Congress to raise taxes.

Anthony W. Hawks is an attorney practicing in Alexandria, Va.
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Title Annotation:National Affairs
Author:Hawks, Anthony W.
Publication:USA Today (Magazine)
Geographic Code:1USA
Date:Jan 1, 2004
Previous Article:Music industry to sing a new tune.
Next Article:Events, candidates, and the 2004 election.

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