Line-Item Veto, Spending Caps Likely To Be Ineffective, Experts Say

Published June 21, 2006

(Chicago, IL – June 21, 2006) Last week, Senator Bill Frist, M.D. (R-TN) announced his support for a proposed budgetary reform bill called the Stop Over-Spending Act. The bill proposes three strategies for restraining federal spending: a line-item veto, a two-year budget cycle, and new statutory caps on spending.

The following comments are from experts affiliated with The Heartland Institute, a 22-year-old nonprofit research and education organization based in Chicago that promotes free-market solutions to social and economic problems. For more information about The Heartland Institute or to arrange interviews with the experts quoted below, contact Michael Van Winkle at 312/377-4000 or email [email protected].

Steve Stanek, managing editor of Budget & Tax News, [email protected]

Line-item vetoes are over-rated and can be used to increase spending. A governor or president can threaten to cut spending desired by key lawmakers unless they give in on spending the governor or president wants. So the lawmakers end up with their spending approved, and the governor or president gets his spending approved. A governor or president also can use the line-item veto to reward friends and punish enemies.

New Mexico Gov. Bill Richardson used his line-item veto authority to reject $269 million in spending proposed for the state’s FY 2007 budget … but he approved $414 million in spending for projects desired by his office. He cut $57,000 to provide global positioning systems for New Mexico’s National Guard troops in Iraq, but spent $75,000 for a New Mexico Office of Music. He vetoed $50,000 for educational technology in Roswell but approved $1 million for a flight simulator at Balloon Fiesta Park.

Regarding two-year budget cycles, there are states with two-year budget cycles that still have runaway spending. It’s true Congress would have more time to mull spending decisions. But if the decision is to keep spending more money, what’s the point? Was a lack of time for careful thought responsible for Alaska’s Bridge to Nowhere, or the Mississippi Railroad to Nowhere, or the spending for the Paper Hall of Fame? No, no, and no.

We have Congressmen and Senators who want to spend my tax money on projects that benefit themselves, their friends or family members, or others who have the right connections. Time is not the issue. If Congressmen and Senators can find time to jaunt across Europe and Asia on someone else’s dime, they can find time to study a budget even on a one-year budget cycle.

Finally, limits on discretionary spending will likely be viewed as the minimum spending level, rather than the maximum. If the limit is 2.75 percent of GDP, lawmakers will spend 2.75 percent. The maximum will become the minimum and spending cuts will be all the more unlikely.

John Semmens, economist and policy advisor to The Heartland Institute, [email protected]

Statutory reform cannot bind future sessions of Congress. A simple majority of those voting could put aside any spending constraints.

The Stop Over-Spending Act may be well-intended, but it’s not likely to be effective. The search for a “mechanism” to restrain spending cannot overcome a lack of will to make the cuts needed.

Rather than spend a lot of effort to pass this bill, it might be more worthwhile for Congress to focus on actually cutting spending. Many examples of wasteful and unnecessary spending in each year’s budget are pointed out by organizations like the National Taxpayers Union and Citizens Against Government Waste.

We would have more confidence in the seriousness of Sen. Frist if he would use his skills to surgically remove unneeded expenditures from the budget.