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Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
AND TYPE
DATE
SUBJECT/TITLE
RESTRICTION
001. draft
Letter from Janet Reno to the President. Subject: Use of the Line Item
Veto Act (5 pages)
12/15/1997
P5
tlll
002. memo
For the Attorney General from the Solicitor General. Subject: NTEU
Line Item Veto Case. (4 pages)
12/1511997
P5
Ill Z..
003a. memo
For the President from Phil Caplan.
Ruff. [See 246164SS] (1 page)
12/17/1997
P5
I tis
003b. memo
For the President from Charles Ruff. Subject: Line Item Veto
Litigation. (6 pages)
12/16/1997
P5
\IIY
003c. letter
From Janet Reno for the President. Subject: Use of Line Item Veto.
(5 pages)
12/16/1997
P5
111~
003d. memo
For the Attorney General from the Solicitor General. Subject: NTEU
Line Item Veto Case. (4 pages)
12/15/1997
P5
Ill~
004. memo
The President's Cancellation of the Dollar Amount. .. (26 pages)
12116/1997
P5
\ \ l'l
~ubject:
Memo from Charles
COLLECTION:
Clinton Presidential Records
Counsel's Office
Bill Marshall
OA/Box Number: 20350
FOLDER TITLE:
Line Item Veto Litigation [binder] [1]
Van Zbinden
2007-0624-F
vz1219
RESTRICTION CODES
Presidential Records Act- [44 U.S.C. 2204(a)]
Freed~m
Pl National Security Oassified Information [(a)(l) ofthe PRA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA)
P3 Release would violate a Federal statute [(a)(3) of the PRA]
P4 Release would disclose trade secrets or confidential commercial or
financial information [(a)(4) of the PRA)
PS Release would disclose confidential advice between the President
and his advisors, or between such advisors [a)(S) of the PRA]
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(a)(6) of the PRA]
b(l) National security classified information [(b)(l) of the FOIA]
b(2) Release would disclose internal personnel rules and practices of
an agency [(b)(2) of the FOIA]
b(3) Release would violate a Federal statute ((b)(3) of the FOIA]
b(4) Release would disclose trade secrets or confidential or financial
information [(b)(4) of the FOIA)
b(6) Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
b(S) Release would disclose information concerning the regulation of
financial institutions [(b)(S) of the FOIA]
·
b(9) Release would disclose geological or geoph}rsic:!!J.j,J~or
concerning wells [(b )(9) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
of gift.
PRM. Personal record misfile defmed in accordance with 44 U.S.C.
2201(3).
RR: Document will be reviewed upon request.
of Information Act- [5 U.S.C. 552(b))
�12/15/97
!41002
DOJ COMM.o\ND CNTR .
20:4J
The President
The White Ilouse
Washington, DC 20500
Dear Mr. President:
This letter outlines the issues related to the defense.of
your exercise of the Line Item Veto Act to cancel the budget
authority contained in Section 642. of the Treasury and General
Government Appropriations Act of 1996, enacted October 10, 1997.
The Department of .Justice believes that defense of this
cancellation would be a mistake for several reasons, including
the following:
•
The Solicitor General has advised me that
defense of this cancellation would severely
undermine our constitutional defense of the
Act.
•
The defense of this cancellation will require
us to advance an extremely broad
interpretation of the Line Item Veto Act,
which finds very little support in the
statutory text.
•
...
Defense of-this cancellation will undermine
the inter-branch unity _,.,e have enjoyed .with
the Congress on issues· concerning the Act
. because the· Senate will file a brief against
us. :.
~~~:W~~~~.:~.?.:-~;-~;te~¥~·'ep~~~~·t~·1=·i~ns--:~·i~h t-he. Of.ftc~ · ot · ·
Manager,n,~?ltt;';~~~cl..~~~et.·,~~~~!QMB·.11) coneern:mg th1s cancellat10n.
A~ a
result:~o'~i:tt:hfP:~~:·~;scll:~~;t~lim~~~~ve:· fonnu-l;a;:S,e4.,·~-~:n.·-ar$Umemt that
comportsJ wit~ oMS·!;-S,. .f. :t'fi~St;ry. · If dlrected, we· \.irl.~l,ydefenc:3, th~
.,
cancellatl'£tif::6~~~:t:h~~- 'Jo·~~:is~i~ :flie'"(Jlstr].C"f-aouit~~· '""-we-f believe
1
however •::::~:t:;_,guc.~:"iJ~'ciefefiii:t:La__no.t,_.l.e.gally...c.orre.ct., ... and is not·,
in the best interes;Jts of t_he. Executive Branch, and th'\ls we . ,
believe thab-::-.~t;P.:~7-·tm-i-ted::.~tes:-:eheuld· aCE-e~t::-~·-~R-sent:. j\ldgment
that the cahce£1~a:tion was- invalid .. • .
.
.. i
... •'' ·.
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se~tion 642 a.lJ:ows ~n~Avidua.ls subject to the Civil Service
Retirement:: Sys-t;e{'R·:.:.:.p CSRSJi.~.·-~o.. -s-w-it;eh to t.h.e Fede;r-al Employe~
Retirement System ( 11 F.J:.Rs •l)-.::dtiring an.:· open season· to be condttctec:l
11
by the Offt"c-e-·or-F~rS'O'i'me·::t-Manage:ment ( "Ol?M ) irr··-1996.
In the
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DOJ COMMAND CNTR
The President
Page 2
141003
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cancellation message transmitt.ed to Congress pursuant to \the Line
;:}
Item Veto Act, you specified you were cancelling $854 mil~ion of
Q)/
11 discretionary budget
authority" contained in that provisi'
"due -c,--<...:0
to reductions in employee contributions to the Civil Service
:
11
Retirement and Disability Fund over·the next five years. The
message also explained that you had made the findings required by
the Line Item ·veto Act. The report attached to the special ·
message explained how the $854 million in reduced employee
contributions was calculated.
The National Treasury Employees Union ( "NTEU") and two of
its members have ch~llenged the cancellation. National Treasury
Employees Union v. United States, Civ. Act. No. -~:97CV02399
(D.D.C.). They claim that reduced employee contributions are not
11
discretionary budget authority" under the Line Item Veto Act,
or, in the· alternative, that the IJine Item Veto Act is
unconstitutional.
Overview of the Line Item Veto Act
The Line Item Veto Act authorizes the President to "cancel,"
as prescribed by the Act, ''any dollar amount of discretionary
budget authority," "any item of new direct spending," or "any
limited tax benefit." 2 U.S.C. § 69l(a}. Each of those terms
has a distinct meaning. The term "dollar amount of discretionary
budget authority" is defined, among other things, to include "t:.he.
entire dollar amount of budget authority . . . specified in an
appropriation law, or the entire dollar amount of budget
authority required to be allocated by a specific proviso in an
appropriation law for which a specific dollar figure was not
included." 2 U.s. c. § 69le (7) (A) (i) .
In making a cancellation under the Act, the President must
make express findings that the cancellation "'ill reduce the
federal deftcit;, not irnpi?-ir aJ?.Y essential government functions,
and .not . harm the national. interest. ·.The President must, within
five days of signing the law, ·transmit a·. "specialmessage" to
Congress that specifies'·· among other thi:ngs 1 the '1 dollar amount
of discretiqnarybudget authOrity, . . . which has been
cancelE?dr" ,the 11 account 1 department, or establ:i:?hment of the
Govern,ment·· for which such budget authority was ·to have been ·
available for obligation and the specific project or governmental
functions involved," and adjustments to be'made to the federal
governm,ent's discretionary spending limits.· 2 u.s.c. § 69la.
.. .
.
Cancellation of a dollar.amount of di:;cret:i,onary budget
authority acts to 11 rescind" that authority. 2 ti"'"s~c.
§ 6,9le(4) (A) .
Pursuant to the. Act, the caps established by the
Budget Enforcement Act are re?uced by the canceled dollar amount
·PHOTOC~a·.py
·
PRESERVA~
�12/15/97
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141 004
DRAFT
·The President
Page.3
so that the funds may not be spent on other projects.
§
2
691c (a) (1) (B) ~
Defending the Cancellation
If so directed, we propose to defend the cancellation on two
grounds. First, applying OMB' s int.erpretation of the scoring
rules that Congress has adopted for purposes of the Budget
Enforcement Act, reductions in governmental.receipts, such as the
lost employee contributions to the re~irement fund in this case,
are 11 discretionary budget authority 11 within the meaning of the
Line Item Veto Act if the reductions are the result of
substantive provisions of law inserted.into an appropriations
law.. We will argue that OMB' s interpretation of the Act is
entitled to deference, and·that OMB properly followed the scoring
rules·.
·
Second, we will argue that, irrespective of what the
cance1lation.did or what OMB did, Section 642 does contain budget
authority because employees who switch retirement programs
trigger a·series of government outlays, including permanent
appropriations to cover the fund's unfunded liability and
additional agency contributions to the CSRS/FERS fund. Moreover,
both NTEU and the Congressional Budget Office ("CB0 11 ) have
admitted that there is budget authority triggered by Section 642.
Although OMB's estimate of the financial impact of the
cancellation is different from the figure given in your
cancellation message to Congress, we will argue that this
discrepancy does not invalidate the cancellation.
Reasons Why This Cancellation Is Unlikely to Stand
Although we: believe· that this argument is not altogether
unreasonable_,_ andtha:t it is the best that can·be made under
the statute -- we .beli·eve that it is legally incorrect and has
lit.tle chanc:e of. success. ··To de'fend this cancellation, we must.
arg:ue'either· that reductions in income are 11 budget authority" or
that the· canc·!~dlation· should be upheld even if the special
mes.sage identified. the wrong "budget authority" and the wrong
11
dollar amount." Neither approach is promising.
Wi~h. respect to the first· argument, that a reduction in
income may. be ''cahceled" under a statute plainly designed to
apply to legislated spending (and "limited tax benefits"}, gives
every.appearance of unjustifiably expanding the President's
powers under the.Act. The plain language·of the Act appears to
preclude treating reductions in g·overnmental income as "budget
authority," and Scoring Rule 3 does not, by its plain terms,
PHOTOcQQ
PRESERVAW
py.
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The President
Page 4
,-\_ON PR~
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support the broader construction o:E "budget authority" th!t OMB
favors. Moreover, Section 642 is significantly different~from
the sorts of. cancelable provisions discussed in the legis ative
history of the J.;..ct.
~l
l({ (
r-
§/
~-o/
,-.o
•.
.
It would also be problematic to rely on scoring rules
~--~
developed under the Budget Enforcement Act to control
interpretation of the Line Item Veto Act. The scoring rules are
sUbject to frequent change and are interpreted differently by OMB
and.CBO; in this situation, one would not expect the Line Item
Veto to be subject to such variations. In addition, any argument
relying on OMB's interpretation of the scoring rules will provoke
a sharp response from Congress; the Senate Legal Counsel has
informed us that he ~ill file a brief against us.if we pursue
this argument.
·
The second possible argument -- that Section 642 contains
budget authority because it triggers additional government
payments -- is flawed because such payments ·are not mentioned in
your special message to Congress concerning the cancellation .
.There is no evidence .to indicate that the findings required by
the Line Item Veto Act were made with respect to those payments,
and.it is clear that the $854 million identified. in the message
does not correlate with those payments.
Cancellation of Section 642 raises other, very thorny
problems. For example, under the Act, cancellation of
discretionary budget authority operates to 11rescind 11 the funds
allocated; it does not repeal the provisiqn of law. Here we
would not be purporting to r~scind any furias allocated; we would
instead be effectively repealing the provision of law. Moreover,
there is a strong argument that, (~ven though the lost employee
contributions were "canceled," OPM would have to run the open
season because some employees may still want to switch programs.
Defense of This Lawsuit will Jeopardize Our Defense of the
Constitutionality of the Line Item Veto Act
The single·most important reason not to defend this
cancellation is the impact that it is ·likely to .have on a defense
, of the constitutionality of the Line Item Veto Act. As the
Solicitor General explains in the enclosed memorandum to me,
defense of this cancellation will jeopardize our constitutional
arguments in several ways:
•
Our best chance to defend the
constitutionality of the Act is .by arguing
that the President S cancellation authority
is narrow and closely analogous to his
historic discretion to decline to spend
1
PHOT~py
PRESE~I&J
�l<:!l<l/~1
DRAFT
The President
Page 5
appropriated funds. This cancellation cannot
be defended on that narrow basis, because it
involves reductions in receipts.
•
Our best chance to defend the
constitutionality of the Act depends on the
support of the Congress, who can argue to the
Court that their power is not infringed by
the Act. They will oppose the lawfulness of
this cancellation.
e
Defense of this cancellation will leave us
susceptible to the argument that the
President's cancellation authority is being
exercised without consideration of all of the
effects of the canceled provisions. This
will undermine our central argument that the
Act's requirements of formal presidential
findings and a special message place
meaningful constraints on the President's
discretion.
Conclusion
In sum, we believe that the chances of winning this lawsuit
are slim because the Line Item Veto Act does not extend to
cancellation of provisions such as Section 642. Moreover, the
e~pansive reading that we will be forced to give the Act in
defense of this cancellation will make the Solicitor General's
efforts to defend the constitutionality of the Act dramatically
·more difficult, and could cost us critical votes in the Supreme
Court. For these reasons, we strongly urge that the United
States ·DQ.t. defend the cancellation of Section 642, and instead
submit to a consent judgment in the district court.
Sincerely,
Janet Reno
Enclosure
COPY
�'t!:J
••
V\/1
u.S. Department of Justice
Office of the Solicitor General
December 15, 1997
MEMORANDUM TO THE ATIORNEY GENERAL
GENERAL~
FROM:
THE SOLICITOR
Re:
NIEU Line Item Veto Case
I understand that the Civil Division and OMB have concluded that a statutory defense
in the NIEU line item veto case is at least theoretically possible. For the reasons that
follow, however, I urge you and the President not to defend this cancellation- even in the
district court - but, instead~ to accept a consent judgment. I finnly believe that attempting
to justify 'the NTEU cancellation as a proper exercise of the President's authority would
seriously undermine our ability to defend the Line Item Veto Act against constitutional
challenge.
The Theory of Defense
This case involves the President's effort, pursuant to his authority under the Line Item
Veto Act, to cancel a provision of law that would have established an "open season" during
which certain federal employees could have s.witched their retirement coverage from CSRS to
FERS. The President's special message stated that he was cancelling a "dollar amount of
discretionary budget authority• totalling $854 million. That amount represented the
reduction in employee contributions to the retirement fund that was expected to occur during
the five-year period following the cancellation if the option to switch from C~RS to FERS
became available. The cancellation message itself did not make
whether the President
intended to cancel the entire open season provision or only the reduction in employee
. contributions .. We know from O'MB, however, that the intent was to prevent the open season
·
from going forward.
clear
To understand. the theory of defense, it is necessary to understand somethlng about
"scoring rules" OMB uses to carry out its responsibilities under a different statute, the
Budget Enforcement Act (BEA). Under that Act, OMB is required to provide an "estimate
.of the amount of discretionary new budget authority and outlays" contained in an
COPY
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<:U:110
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appropriations law. 2 U.S.C. 90l(a)(7). 1 OMB's established practice {based on!"'its
0~
interpretation of • Scoring Rule 3") is that a substmtive provision of law that is (inserted into
~)
an appropriations law .to reduce the government's income 'Will be •scored" as .. discretionary '}' F:.
!lew budget authority. "2 Consistent with its general practice, O:MB 11 SCOred 11
loss of \\\
~:::/·
emp~o!ee con~buti~ns that was expected to r:sutt from the CSRS!FERS open ~on
· ~~t<;/
proVIswn as "discrenonary new budget authonty.
~-;/
th\
1111
•
The Civil Division has prepared a draft brief that attempts to defend· the cancellation
at issue on two alternative theories. The draft argues, first; that because Congress was aware
of OMB' s scoring practices when it enacted the Line: Item Veto Act, therefore since O:MB
"scored" the reduced employee contributions as .. discretionary new budget authority" for
BEA purposes, the reduced contributions should likewise-be regarded as "discretionary
budget authority"' subject to cancellation under the Line Item Veto Act. Significantly, the
draft brief does not argue that the reduced contributions satisfy the definition of "budget
.
authority" contained in 2 U.S.C. 622(2)(A)(i) -- a provision that expressly applies to the Line
Item Veto Act. The draft brief does contend, however, as an alternative theory, that because ·
certain outlays that would result from the open season provision do fall within the Section
622 definition, the cance11ation may be upheld on that basis if the court concludes that the
Section 622 definition of "budget authority" is controlling.
Reasons Not To Pefend the CSRS/FERS Cancellation
The theory of defense reflected in the draft brief is extremely weak, even as a
statutory matter. What is more, the defense rests upon an expansive interpretation of
presidential IX>Wer under the Line Item Veto Act that is inconsistent with the arguments we
have made in favor of the Act's constitutionality. At this critical stage, establishing the
· constitutionality of the President's cancellation authority tinder the Line Item Veto Act is
simply too important a goal to joopardize with a dubious and immoderate assertion of
statutory
1.
authority~
·
·
·
Cancellation of the CSRS/FERS provision cannot credibly be analogized to
any power the President has historically exercised.
Opponents of the Line Item Veto Act have contended, inter alia, that it results in an
unconstitutional delegation by Congress to the President of legislative power because the
President's cancellation authority is broad and standardless. Our brief in Raines v. ~
responded to that constitutional attack by arguing that the President's authority under the Act
(at least as applied to spending items) is closely analogous to the discretion Executive Branch
officials have historically possessed with respect to the decision whether or not to spend
appropriated sums. Indeed, our brief essentially eguared the cancellation of "discretionary
Such estimates might ultimately trigger a ~sequestration" under the BEA if discretionary spending
caps for the fiscal year are ~ceeded.
·
1
2
The Congressional Budget Office does not agree with that interpretation of Scoring Rule 3.
2
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budget authority" - the category invoked by the President's ~cellation message in ':s case
-- with decisions historically made by Presidents (in the nature of impoundments) nat to
spend money appropriated to an agency.
. ~
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'(:)
~
~),
.. That analogy _willb~ wh~lly und~ut if we ~nstrue the A~t _(and partic~larl~ its
:-Oc£' /
proVISlon for cancelling dlscretionary budget authonty") as pemutting the Pres1dent ~ . .L~~-z
invalidate an entire substantive provision of law simply by identifying some form of "-b~ ·
authorityn contained in or affected by the provision. The reduction in employee
contributions to the retirement fund is only one of a number of substantive provisions of law·
that are triggered by the special open season Congress enacted, and it is only one of many
financial consequences that follow from an employee's decision to switch from CSRS to
FERS, The authority to cancel ~e open season provision therefore cannot plausibly be
compared to any power the President has traditionally exercised to decline to spend the full
amount of funds that Congress has appropriated to a particular agency, or for a particular ·
purpose, for a fiscal year. Rather, our defense of the cancellation wil}. (neressarily) blur the
line between the refusal to spend appropriated funds and the invalidation of substantive
·
provisions of law. 3
1
2.
- Defending ihe CSRS/FERS cancellation will jeopardize our alliance· with
Congress in the constitutional defense.
In defending the Line Item Veto Act against the claim that the Act violates separation
of powers principles by authorizing ·the President to "repeal" Acts of Congress, it will be
·very important to have the full support of the Senate and House a.s amici curiae, arguing that
~ongre.ss does not regard the Act as an infringement on its constitutional prerogatives. If we
defend the cancellation on the theory described above, the Senate Legal Counsel is expected
to file an amicus brief arguing that tlie cancellation was improper. (Such an argument would
be consistent with the Congressional Budget Office's longstanding view that reductions in
governmental income resulting from provisions contained in appropriations laws should not
be scored as "discretionary new budget authority.") Such a filing would impair the image of
interbnmch un,ity we need to project, and might lead the Supreme Court to conclude_ that if
the Act is sustained, thejudiciary will be required (in the course of ruling on challengeS to·
individual cancellations) to resolve disputes between the political branches concerning an-ane
budgetary matters.
Cancellation of limited tax benefits is also concededly different from the authority that the President
. has historically possessed to decline to spend appropriated funds. The President's authority to cancel tax
provisions, however, is subject to limitations of its own- most obviously, the requirement that no roore
than 100 taxpayers be affected. The President's power to c.ancellimited tax benefits, moreover, is clear
on the face of the Line Item Veto Act, while the contention that the President may cancel entire
provisions of law based on relatively modest budget impacts has no apparent textual basis (and no
apparent stopping point). Finally, invalidation of the President's authority to cancel limited tax benefits
would (assuming that authority to be severable) leave the core of the Line Item Veto Act intact. The
provisions governing discretionary budget authority, by contrast, have always been regarded as the most
impOrtant and most defensible feature of the Act.
3
3
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.Defending the CSRSIFERS cancellation is inconsistent with our/prior
~·
rep~tations. that the President will exercise his authority natTowly and
~
1
.
with woe and clrcumspedi~n.
.
. \
. \\\ ct-. ;,
0
The
tried, in a
of ways, to ronvey the
the cancellation authonty under the Lme Item Veto Act as an especially Important
presidential prerogatiye, to be exerciSed with particular care and circumspection. It is quite
important that we do all we can to persuade the Court that the Act is in fact being
administered on'that basis. The Supreme Court's decisions during the last Term suggest a
particular aversion to anything that smacks of ''symbolic legislation," and we should make
every effort to prevent the Court from.regarding the Line Item Veto Act in that light.
3.
~reSident-~as
~ariety
_mes~e ~t h~~/
To defend the .CSRS/FERS cancellation ~- even in the district court -- would
significantly undermine that effort. The d.mft brief does not contend that the reduction in
employee contributions that the President's special message identified as the cancelled item
falls 'Within the definition of "budget authoritf' contained in 2_U.S.C. 622(2)(A)(i). Instead,
the draft brief argues (in eSsence) that established OMB scoring practices can be used to
replace rather than·to elucidate the·statutoty defmition. O:MB sincerely regards the various·
scoring rules (and its own construction .of them) as substantial constraints on its own
discretion. The contention that the President's cancellation authority extends beyond items
covered by the statutory definition, however, is likely to strike the Supreme Court as an
ex~rdinary assertion of executive power.
. Similarly, to defend the.cancellation on the alternative theory that the "open season"
provision of the Treasury Appropriations Act triggers certain provisions of Q..ther laws that
might fit the definition of "budget authority" in 2 U.S. C. 622(2i would require us to offer a
rationale that is not set forth in the President's cancellation message -- suggesting that the
President may rely on statutory provisions and financial consequences that are far afield from
the appropriations provision that he purported t.O Ca.ncel. That altermtive would undermine
another important point we made in Raines v.1bn! in defense of the Act: that the President
is subj~t to imwrtant procedural limitations on the exercise of his cancellation authority by
the ·requirements that he (a) make specific deteimina.tions and (b) include particular
information about the cancellation in his cancellation message, both of which are lacking here
with respect to .the suggested alternative rationale.
At worst, a defense of the cancellation along the lines set forth in the draft brief may
suggest to the Court that the President's authority i_s being exercised cavalierly or C3l"elessly.
Even if the Court does not regard our position as wholly unreasonable, however, it will
surely conclude that the President is intent on construing his own cancellation authority under
the Line Item Veto Act in the broadest possible manner. That perception cannot help but"
lessen the Court's willingness to sustain the Act against constitutional challenge.
4
COPY
�;.,
. ,.,, .
·~
MR.P~
December 17, 1997
Attached is an well written memo from Chuck Ruff on pending
litigation in federal district court relating to your authority
· under the Line Item Veto Act (Act). The Justice Department
must file its brief in the case by Thursday.
~~
.v$
In short, Chuck believes we should defer to Justice and permit
them to enter into a consent judgement stipulating that your
cancellation of a pension provision in the Treasury/Postal
· Appropriations B.ill exceeded your statutory authority under the
Act. Justice has serious reservations about the statutory issue
and believes defense of this cancellation would harm its
broader, constitutional defense of the Act.
Chuck has also attached a memo from the Attorney General
and a memo from the Solicitor General, but I think you only
need to read Chuck's memo. It is of a length that I would
normally summarize for you, but the memo is well reasoned
and a fairly quick read.
Views. Erskine asked John Podesta to read the memo; John
concurs with Chuck's recommendation, but he thinks it's a
very close call. Frank Raines disagrees with Chuck and feels ·
Justice should defend the cancellation.
Phil Capl~ .
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'97 DEC 17 AM8: 13
lHE WHITE HOUSE
WASHINGTON
December 16, 1997
1\-\t P~Stn£»T Y.~S, ~E~
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MEMORANDUM FOR THE PRESIDENT
THROUGH: ERSKINE BOWLES
FROM:
CHARLES F.C. RUFF C1-..
SUBJECT:
LINE ITEM VETO LITIGATION
. "
Litigation is pending in the federal district court relating to three instances in which you
exercised your authority under the Line Item Veto Act (Act). The three cases have been
consolidated before Judge Hogan. One of these cases involves a challenge by the National
Treasury Employees Union (NTEU) to your use of the line item veto to cancel Section 642 of the
"Treasury and General Appropriation Act, 1998." Section 642 would have allowed federal
employees to switch retirement coverage to the Federal Employees Retirement System (FERS)
. from enrollment in the Civil Service Retirement System (CSRS).
In all three cases, the plaintiffs are challenging the constitutionality of the Act. The
NTEU also contends, however, that the cancellation of Section 642 exceeded your statutory
authority underthe Act because it canceled lost receipts (in the form of reduced employee
,contributions to federal trust funds caused by the provision) rather than appropriated funds.
Senate Counsel, who supports our position on the constitutionality of the Act, has signaled that
it is likely to file on the side of the NTEU on the statutory claim. The parties d~ not dispute that
Section 642, if implemented, would have had negative budget consequences.
·
The Office of Management and Budget (OMB) strongly asserts that the cancellation is
valid and wants to defend it. The Department of Justice (DOJ) has very serious reservations
about the statutory issue and believes that the defense of this cancellation would harm its
broader, constitutional defense of the Act. DOJ, therefore, proposes to enter into a consent
judgment that the 642 cancellation falls outside the scope of the Act.
We have had extensive discussions with OMB and DOJ in an effort to develop an
approach thatwould enable DOJ to defend your use of the line item veto in this case without
endangering the defense of the Act's constitutionality. Justice must file its brief in response to
plaintiffs motion for summary judgment by December 18. Memoranda of the Attorney General
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and of the
General, setting out their recommendations, are attached for your refj'rence.
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We believe that we should defer to DOJ' s conclusion that defending this provision
undermine the constitutional defense of the Act, but want to make you aware ofthe issue before
any formal action is taken.
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BACKGROUND
The Act allows the President to cancel "any dollar amount of discretionary budget
· authority" but requires him to specify the dollar amount canceled in a Special Message to
Congress. In this case, your Special Message specified $854,000,000 (over five years) as the
amount canceled. This figure was based on OMB's estimates ofthe amount of federal receipts ·
from employee contributions that would be lost if employees were allowed to switch from CSRS
to FERS. OMB's decision to treat these lost receipts as "discretionary budget authority" was in ·
accord with its customary practice and was based on its understanding of the statutes and rules
governing budget scoring.
An alternative measure of Section 642's cost is the amount of additional federal outlays to
employee trust funds. that would have been required if employees were allowed to switch from
CSRS to FERS. In accordance with its customary practice, OMB did not estimate the cost of
increased outlays and your Special Message, therefore, did not directly reference such a cost.
The Congressional Budget Office, however; relied upon this cost, and not upon the reduction of
employee receipts, in its report concluding that the cancellation of Section 642 would constitute a
reduction in budget authority that would reduce the deficit as required by the Act. (The
difference in approach between OMB and CBO, in this respect, is attributable to differing
understandings of budgetary scoring rules.) ·
The statutory question raised by this cancellation is whether the Act authorizes the
President to cancel a provision (other than a limited tax benefit) whose budgetary effect consists
of a loss of federal receipts rather than an outlay of federal funds. A secondary issue is whether
this cancellation can be defended on the grounds that the effect of Section 642 would be to
increase federal outlays even though that rationale was not presented to the Congress in the
Special Message.
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·.
B.
ARE LOST RECEIPTS CANCELABLE UNDER THE ACT?
1.
The Position of OMB
OMB argues that the Act must be interpreted, and was intended to be interpreted, i.n light
of the Congressionally mandated rules governing budget scoring. Those rules, according to
OMB, require that the lost employee contributions be scored as positive budget authority. Thus,
even though the Act does not explicitly allow for the cancellation oflost receipts (other than in
the context of a limited tax benefit); OMB' s contention that the Act incorporates the budgetary
scoring rules leads to the conclusion that the lost employee contributions at issue are cancelable.
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OMB also asserts that, as the agency charged w1th est1matmg the budgetary effects of laws and .
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applying budgetary scoring rules, its expertise in interpreting the statutory language entitled to \\ \
judicial deference. Finally, OMB contends that Section 642 is the exact type of legis! tion that
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should be subjectto cancellation because it 1) was essentially a pay raise; 2) was adde o the
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Appropriations Bill at Conference without debate by either the House or the Senate; and 3
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would have a substantial budgetary effect.
2.
The Position ofDOJ
DOJ views the Act as an outgrowth ofthe President's limited power to impound
appropriated funds and not as an extens'ion of budgetary enforcement legislation. Accordingly, it
does not read (he Act as incorporating budgetary scoring rules .. Rather, it contends that the Act
must be strictly construed in light of its historical antecedents -- the President's historical power
to impound funds. DOJ, therefore, stresses that because the Act does not contain explicit
language authorizing cancellations of the kind at issue in this case, that power can not be
inferred. Moreover, DOJ argues that because the Act explicitly allows cancellations based upon
lost receipts only in very highly specified circumstances (limited tax benefits), Congress did not
Intend for the President to have a broad authority to cancel such lost receipt provisions outside
the limited tax benefit context.
Finally, DOl is concerned that a broad reading of the President's statutory powers to
cancel receipt-reducing provisions would be inconsistent with the position it has taken in its
constitutional defense of the Act. Throughout the line item veto litigation, DOJ has argued that
the Act grants only very modest, and clearly defined, powers to the President. Arguing that the
line item veto power extends beyond the express wording of the statute would undercut its
previous position.
C.
RE-CHARACTERJZING THE CANCELLATION
OMB and DOJ also disagree as to whether the cancellation of Section 642 could be
defended as a cancellation of future outlays in order to avoid, or to supplement, the argument that
the Act allows for .the cancellation of lost receipts. As noted previously, allowing federal
employees to switch enrollment from CSRS to FERS
lead to additional outlays in future
years and the Congressional Budget Office (CBO) relied on this fact in its review of the
budgetary effect of the cancellation. Arguably, therefore, the cancellation would have been
proper if the Special Message set forth these estimated future outlays rather than the lost receipts
as the items to be canceled. OMB asserts that the cancellation could also be justified on this
ground. OMB. submits that, if the Court rejects its scoring as the appropriate standard for
evaluating what is cancelable under the Act, the CBO position (anq the common sense position)
that increased outlays are cancelable items should provide the governing standard.
will
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DOJ raises several objections. First, DOJ argues that, technically speaking (and
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consistent with its constitutional theory), a line item veto does not cancel a provision. It cancels \\\' l ~
the funds to be expended under that provision. If this is true, then the item that was c celed in
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this case was the $854,000,000 in lost receipts. Substituting a new dollar amount base upon
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amounts of future outlays, therefore, would not simply "amend" the previous cancellatio , ut
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wo,uld instead constitute an entirely new cancellation. Second, DOJ is troubled by an argumenr---. that would suggest you made specific determinations (as the Act requires) about the effects of
canceling one item (future outlays) when in fact you specified another (lost receipts). Althot+gh a
"functional" argument can be made suggesting that the two items (future outlays and lost
receipts) are equivalents, DOJ is concerned that such an argument would appear disingenuous.
Finally, ·DOJ is uncomfortable with relying on the future outlay theory when OMB did not rely
upon that theory in the first instance.
D.
WOULD DEFENSE OF THIS PROVISION HARM THE BROADER,
CONSTITUTIONAL ARGUMENT?
DOJ rightly asserts that, even in the best case scenario, the constitutionality of the line
item veto is precarious. DOJ is, therefo~e, understandably.wary about any statutory construction·
that would appear to stretch the President's powers under the Act beyond a narrowly confmed
authority analogous to impoundment. DOJ has acknowledged to the Supreme Court, for
example, that the provision authorizing the President to cancel limited tax benefits is on less firm
historical footing than is the cancellation of a typical appropriation, and is constitutionally
sustainable only because that power is carefully limited under the statute. Supporting the
cancellation of the lost receipts in this case, DOJ fears, would not only be viewed by the'Court as
an expansion of the President's power beyond traditional boundaries, but also as an expansion
that would occur in a seemingly boundless manner. (In this respect, DOJ is also concerned that
the cancellation of Section 642 is particularly problematic because it encompasses a cancellation
of a non-budgetary provision oflaw --the right of employees to switch pension programs.)
DOJ also believes that its constitutional case would be harmed if the Senate Counsel files
on the side of the NTEU on the statutory issue. It is concerned that if the President and the
Congress do not agree on the powers the Act gives to the President, the Court might void the
legislation entirely in order to avoid a series of inter-branch disputes raising intractable
separation of powers issues.·
Finally, DOJ is concerned that the secondary argument (that the cancellation could be . ·
recharacterized as a line item veto of future outlays rather than lost receipts) could harm the
constitutional defense by suggesting that the provisions of the Act directing the President to
make specific findings about the nature and impact of the cancellation are not mandatory. DOJ
has argued that the findings provisions confme the power of the President and, therefore, serve to
· refu~e the plaintiffs' contention that the Act improperly delegates broad and unchecked powers to
the Executive. Accordingly, DOJ believes that if it now asserts that the findings provisions are
not mandatory, its position on the improper delegation claim will be weakened.
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While DOJ's position has force, there are some competing considerations. F;rst, the
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scoring rules 9MB employed in this case do not give unlicensed authority t~ the Pfsident. \ w~
.Rather those rules are· Congressionally mandated provisions designed to measure c mpliance
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with the Congressional Budget Act and constrain budgetary scoring decisions. Alth gh the
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power conferred to the President, under OMB's approach, is broader than the statutory
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construction offered by DOJ, that power is not unlimited. For example, the scoring rules wou~
not authorize the President to cancel a broad tax benefit. Additionally, while the power to
cancel lost receipts is broader than the President's historical. impoundment prerogative, it is not
considerably greater than that granted to the President in the Act's provision that allows for the
cancellation of limited tax benefits.
3)
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Second, OMB argues that ifthe Act were not construed to allow the cancellation of
provisions such as 642, its value as a budget enforcement tool would be seriously diminished
because so few provisions ~orth canceling fit the model of a simple dollar appropriation.
Third, in its response to the findings-recharacterization issue, OMB would contend that
requiring strict adherence to the fmdings requirements of \he Act is also problematic. The Act
provides only five days in which to cancel an item, and demanding precision in the fmdings
would be both impractical and unrealistic. Indeed, even DOJ concedes that the Act would not
require that the exact dollar amount of a cancellation be established in order for a cancellation to
be upheld. Accordingly, OMB argues, ifthe Act does not require an exact dollar determmatioh,
there is no reason to concede that the Act does require an exact determination as to the specific
source of the cancelable budget authority.
Finally, OMB notes that DOJ's constitutiona~ concerns would be triggered only ifthe
district court upheld your statutory authority to effect this cancellation. If the lower court
invalidated the cancellation on statutory grounds, that decision would strengthen, rather than
weaken, the constitutional case. OMB, therefore, concludes that the risk in litigating the
statutory issue in district court is not as substantial as DOJ would suggest.
E.
RECOMMENDATION
In my judgment, the arguments advanced in support of your statutory authority to cancel
. Section 642 are stronger than DOJ believes them to be, and the legitimacy of the cancellation
could be appropriately defended in district court, albeit with no guaranty of success. Iri addition,
Frank Raines strongly believes that the cancellation was valid under the Act and that it furthered
important budgetary and policy interests. He also disagrees with the Solicitor General's position
that defending the cancellation wouid undermine the-broader, constitutional defense of the Act;
and he would, therefore, request that you direct DOJ to defend the cancellation in district court ..
I believe, however, that' we must give great weight to the Solicitor Genenil's feat that to
defend the cancellation in the case that will trigger the Supreme Court's first ruling on the
constitutionality of the Act would undermine the governp1ent's constitutional position. Although
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I am reluctant to acquiesce in a decision to assert error in the exercise of the veto; I{have
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. concluded that we should, in the final analysis, give dispositive weight to the view\ of the \\\- \
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S?licitor Gener~l. I resp~ct his a:sessn:~nt of the litiga~ion risks pos~d in the Supre~~ Court
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even though I disagree with DOJ s positiOn on the ments of the SectiOn 642 cancellat~n. I . , ,,,r-o<O>/
recommend, therefore, that we allow DOJ to consent to judgment in this case.
·
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December 16, 1997
The President
The White House
Washington, DC 20500
Dear Mr. President:
This letter outlines the issue~ related to the defense of
your exercise of the Line Item Veto Act to cancel the budget
authority contained in Section 642 of the Treasury and General
Government Appropriations Act of 1998, enacted October 10, 1997.
The Department of Justice believes that defense of this
cancellation would be a mistake for several reasons, including.
the following:
•
The Solicitor General has advised me that
defense of this cancellation would severely
undermine our constitutional defense of the
Act.
•
The defense of this cancellation will require
us to advance an extremely broad
interpretation of the Line Item Veto Act, ·
which finds very little ·support in the
statutory text.
•
Defense of this cancellation will undermine
the inter-branch unity we have enjoyed with
the Congress on issues concerning the Act
because the Senate will file a brief against
us.
We have had extensive consultations with the Office of
Management and Budget ( 11 0MB") concerning this cancellation. As a
result of those discussions, we have formulated an argument tha~
comports with OMB's theory. If directed, we will defend the
canc~llation on this basis in the district court.
We believe,
however, that such a defense is not legally correct, and is not
in the best interests of the Executive Branch, and thus we·
believe that the United States should accept a consent judgment
that the cancellation was invalid.
Overview of the Case
Section 642 allows individuals subject to the Civil Service
Retirement System ( 11 CSRS") to switch to the Federal Employee
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Retirement System ( "FERS '.') during an open season to be
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by the Office of Personnel Management ( "OPM") in 1998.
In
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cancellation message tran~mitted to Congress pursuant to the L1ne
Item Veto Act, you specified you were cancelling $854. million of
"discretionary budget authority" contained in that provision "due
to reductions in employee contributions to the Civil Service
Retirement and Disability Fund" over the next five years. The
message also explained that you had made the findings required by
the Line Item Veto Act. The report attached to the special
message explained how the $854 million in reduced employee
contributions was calculated.
'
The National Treasury Employees Union ("NTEU") and two of
its members have challenged the cancellation. National Treasury
Employees Union v. United States, Civ. Act. No. 1:97CV02399
(D.D.C.). They claim that reduced employee contributions are not
"discretionary budget authority" under the Line Item Veto Act,
or, in the alternative, that the Line Item Veto Act is
unconstitutional .
.Overview of the Line Item Veto Act
The Line Item Veto Act authorizes the President to "cancel,"
as prescribed by the Act, "any dollar amount of discretionary
budget authority," "any item of new direct spending," or "any
limited tax benefit." 2 U.S.C. § .691(a). Each.of those terms
has a distinct meaning. The term "dollar amount of discretionary
budget authority" is defined, among .other things, to include "the
entire dollar amount of budget authority . . . specified in an
appropriation law, or the eritire dollar amount of budget
authority required to be allocated by a specific proviso in an
appropriation law for which a specific dollar figure was not
included." 2 U.S.C. § 691e(7) (A) (i)'.
In making a cancellation under the Act, the President must
make express findings that the cancellation will reduce the
·federal deficit, not impair any essential government functions,
and not harm the national interest.
The President must, within
five days of signirig the law, transmit a "special message" to
Congress th~t specifies, among other things, the "dollar amount
of discretionary budget authority, . . . which has been
canceled," the "account, department, or-establishment of the
Government for which such budget authority was to have been
available for obligation and the specific .project or governmental
functions involved," and adjustments to be made to the federal
government's discretionary spending limits. 2 U.S.C. § 69la.
Cancellation of a dollar amount of discretionary budget
authority acts to "rescind" that authority. 2 U.S.C.
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§ 691e(4) (A).
Pursuant to the Act, the caps
Budget Enforcement Act are reduced by the canceled dolla
so that the funds may not be spent on other projects.
2
§ 6 91 c (·a) ( 1) (B) .
. Defending the Cancellation
If so directed, we propose to defend the cancellation on two
·grounds. First, applying OMB' s interpretation of the scoring
rules that Congress has adopted for purposes of the Budget
.Enforcement Act, we will argue that reductions in governmental
receipts, such as the lost employee contributions to the
retirement fund in this case, are "discretionary budget
authority•i within the meaning of the Line Item· Veto Act· if the
reductions are the result of substantive provisions of law
inserted into an appropriations law. We will argue that OMB's
interpretation of the Act is entitled to deference, and that OMB
properly followed the scoring rules.
Second, we will argue that, irrespective of what the
cancellation did or what OMB did, Section 642 does contain budget
authority because employees who switch retirement programs
trigger a series of· government out'lays, including permanent
appropriations to cover the fund's unfunded liability and
additional agency contributions .to the CSRS/FERS fund.
Moreover,
both NTEU and the Congressional Budget Office ("CBO") have
admitted that there is budget authority triggered by Section 642.
Although CBO's estimate of the financial impact of the
cancellation is different from the .figure given in your
cancellation message to Congress, we will argue that this
discrepancy does not invalidate the cancellation.
Reasons Why This Cancellation Is Unlikely to Stand
Although we believe that ·this argument is not altogether
unreasonable -- and that it is the best that can be made under
the statute -- we believe that it is legally incorrect and has
little chance of ultimate success. To defend this c~ncellation,
we must argue either that reductions in income are "budget .
authority" or that the cancellation should be upheld even if the
special message identified the wrong "budget authority" and the
wrong "dollar amount." Neither approach is promising.
With respect to the first argument, the statute was plainly
designed to apply to legislated spending (and 11 limited tax
benefits"). To argue that it permits cancellation of a reduction
in income gives every appearance of unjustifiably expanding the
President's powers under the Act.
The plain language of the Act
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appears to preclude treating reductions in governmental
"budget authority,n and Scoring Rule 3 does not, by its pr in
terms, support the broader construction of "budget authorit 11
that OMB favors. Moreover, Section 642 is significantly
different from the examples of cancelable provisions discussed in
the legislative history of the Act.
It would also be problematic to rely on scoring rules
developed under the Budget Enforcement Act to· control
interpretation of the Line Item Veto Act;· The scoring rtiles are
subject to frequent change and are inte.rpreted differently by OMB ·
and CBO; in this situation, one would not expect the Line Item
Veto to be subject to such variations. Significantly, any .
argument relying on OMB's interpretation of the scoring rules
will provoke a sharp response from Congress; the Senate Legal
Counsel has informed us that he will file a brief against us if
we pursue this argument.
The second possible argument -- that·Section 642 coiJ.tains
budget authority because it triggers additional government
payments -- is flawed _because such payments are not directly
mentioned in your special message to Congress concerning the
cancellation. There is no evidence to indicate that the findings
required by the Line Item Veto Act were made with respect to
those payments, and it is clear that the $854 million identified
in the message does not correlate with those payments.
Cancellation of Section 642 raises other, very thorny
problems. For example, under the Act, cancellation of
discretionary budget authority operates to 11 rescind 11 the funds
allocated; it does not ·repeal the provision of law. This
cancellation, however, does not purport to rescind any funds
allocated; it effectively seeks to repeal the provision of law.
Nevertheless, there is a strong argument that, even though the
lost employee contributions were 11 Canceled," OPM will still have
to run the open.season because.some employees may want to switch
programs.
Defense of This Lawsuit Will Jeopardize Our Defense of the
Constitutionality of the Line Item Veto.Act
The single most ·important reason not to defend this
cancellation is the impact that it is likely to have on a defense ·
of the constitutionality of the Line Item Veto Act. As 'the·
Solicitor General explains in the enclosed memorandum to me,
defense of this cancellation will jeopardize our constitutional
arguments in several ways:
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Our best chance to defend the
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constitutionality of the Act is by arguing
that the President's cancellation authority
is narrow and closely analogous to his
historic discretion to decline to spend
appropriated funds. This cancellation cannot
be defended on that narrow basis, because it
involves reductions in receipts.
•
Our best chance to defend the
constitutionality of the Act depends on the
support- of th~ Congress, .who can argue to the
Court that their power. is not infringed by
the Act. They will oppose the lawfuln~ss of
this cancellation.
•
Defense of this cancellation will leave us
susceptible to the argument that the
President's cancellation authority is being
exercised without consideration of all of the
effects of the canceled provisions. This
will undermine our central argument that the
Act's requirements of formal presidential
findings and a special message place
meaningful constraints on the President's
discretion.
,.... I"
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Conclusion
In sum, we believe that the chances of winning this lawsuit
are slim because the Line Item Veto Act should not be read to
. extend to cancellation of provisions such as Section 642.
Moreover, the expansive reading that we will be forced to give
the Act in defense of this cancellation will make the Solicitor
General's efforts to defend the constitutionality of·the Act
dramatically more difficult, and cbuld cost us critical votes in
the Supreme Court. For these reasons, we strongly urge that the
United States not defend the cancellation of Section 642, and
instead submit to a consent judgment in the district court.
/
Janet Reno
Enclosure
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Office of the Solicitor General
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1M Solicitor Gmeral
December 15, 1997
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MEMORANDUM TO THE ATTORNEY GENERAL
FROM:
THE SOLICITOR GENERALcp--
Re:
NTEU Line Item Veto Case
, I understand that the Civil Division and OMB have conciuded that a statutory defense
in the NTEU line item veto case is at least theoretically possible. For the reasons that
follow, ·however,. I urge you and the PreSident !lQt to defend this cancellation- even in the
. district court - but, instead, to accept a consent judgment. I firmly believe that attempting
to justify· the NTEU cancellation· as a proper exercise of the President's authority would
seriously undermine our ability to defend the Line Item Veto Act against constitutional
challenge.
·
The Theory of Defense
This ca:se involves the President's effort, pursuant to his authority under the Line Item
. Veto Act, to cancel a provision of law that would have established an "open season" during
which certain federal employees could have sWitched their retirement coverage from CSRS to
FERS. The President's special message stated that he was cancelling a "dollar amount of
discretionary budget authority" totalling $854 million. That amount represented the
reduction in employee contributions to the retirement fund that was expected to occur during
the five-year period following the cancellation if the option to switch from CSRS to FBRS ·
became available. The cancellation message itself did not make clear whether the President
intended to cancel the entire open season provision or only the reduction in employee
contributions. We know from OMB, however, that the intent was to prevent the open season
from going forward.
To understand the theory of defense, it is necessary to understand something about
"scoring rules" OMB uses to carry out its responsibilities under a different statute, the.
Budget Enforcement Act (BEA). Under that Act, OMB is required to provide an "estimate
of the amount of discretionary new budget authority and outlays" contained in an
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appropriations law. 2 U.S.C. 90l(a)(7). OMB's established practice (based on ,itt;'->";y<:-'<S)\
interpretation of "Scoring Rule 3") is that a substantive provision of law that is fitserted into
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an appropriations law to reduce the government's income will be "scored" as "discretionary
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new budget authority. " Consistent with its general practice, OMB "scored" th~ loss of
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employee contributions that was expected to result from the CSRS/FERS open skson . \\\"'( ·::' i
provision as "discretionary new budget authority."
- .
. -~The Civil Division has prepared a draft brief that attempts to defend the cancellation
at issue on two alternative theories. The draft argues, first, that because Congress was aware
of OMa's scoring practices when it enacted the Line Item Veto Act, therefore since OMB
"scored" the reduced employee contlibutions as "discretionary new budget authority" for
BEA purposes-, the reduced contributions should likewise be regarded as "discretionary
budget authority" subject to cancellation under the Line Item Veto Act. Significantly, the
draft brief does not argue that the reduced contributions satisfy the definition of "budget
authority" contained in 2 U.S.C. 622(2)(A)(i)- a provision that expressly applies to the Line
Item Veto Act. The draft brief does contend, however, as an alternative theory, that because
certain outlays that would result from the open season provision do fall within the Section
622 defmition, the cancellation may be upheld on that basis if the court concludes that the
·_Section 622 definition of "budget· authority" is controlling.
Reasons Not To Defend the CSRS/FERS Cancellation
The theory of defense reflected in the draft brief is extremely weak, even as a
statutory matter. What is more, the defense rests. upon an expansive interpretation of
presidential power under the Line Item Veto Act that is inconsistent with the arguments we
have made in favor of the Act's constitutionality. At this critical stage, establishing the
constitutionality of the President's cancellation authority under the Line Item Veto Act is
simply too important a goal to jeopardize_ with a dubious and immoderate assertion of
statutory authority.
1.
Cancellation of the CSRs/FERS provision cannot credibly be analogized to
any power the President has historically exercised.
Opponents of the Line Item Veto Act have contended, inter alia, that it results in an
unconstitutional delegation by Congress to the President of legislative power because the
President's cancellation authority is broad and standardless. Our brief in Raines v. Byrd
responded to that constitutional attack by arguing that the President's authority under the Act
(at least as applied to spending items) is closely analogous to the discretion Executive Branch
officials have historically possessed with respect to the decision whether or not to spend
appropriated sums. Indeed, our brief essentially equated the caneellation of "discretionary
1
Such estimates might ultimately trigger a "sequestration" under the BEA if discretionary spending
caps for the fiscal year are exceeded.
2
The Congressional Budget Office does not agree with that interpretation of Scoring Rule 3.
2
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bu.dget authority" -- the category invoked by the President's cancellation message/l'n°this case
-- with decisions historically made by Presidents (in the nature of impoundments} not to
\ _ · ~\
spend money appropriated to an agency.
\
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.. ~at analogy _will b~ wh~lly undercut if we ~nstrue the A~t.(andpartic~lat'ly its
. ~;',,/
prov1s10n for cancelling "discretionary budget authonty") as permttting the Prestdenh~...:-f
invalidate an entire substantive provision of law simply by identifying some form of "budget · ·
authority" contained in or affected by the provision. The reduction in employee
contributions to the retirement fund is only one of a number of substantive provisions of law
that are triggered by the special open season Congress enacted, and it is only one of many
fmancial consequences that .follow from an employee's decision to switch from CSRS to
FERS. The authority to cancel the open season provision therefore cannot plausibly be
compared to any power the President has traditionally exercised to decline to spend the full
amount of funds that Congress has appropriated to a particular agency, or for a particular
purpose, for a fiscal year. Rather, our defense of the cancellation will (necessarily) blur the
line between the refusal to spend appropriated funds and the invalidation of substantive
·
provisions of law. 3
2.
Defending the CSRS/FERS cancellation will jeopardize our alliance with
Congress in the constitutional defense.
In defending the Line Item Veto Act against the claim that the Act violates separation
of powers principles by authorizing the President to "repeal" Acts of Congress, it will be
very important to have the full support of the Senate and House as amici curiae, arguing that
Congress does not regard the Act as an infringement on its constitutional prerogatives. If we
defend the cancellation on the theory described above, the Senate Legal Counsel is expected
· to ftle an amicus brief arguing that the cancellation was improper. (Such an argument would
be consistent with the Congressional Budget Office's longstanding view that reductions in
governmental income resulting from provisions contained in appropriations laws should not .
be scored as "discretionary new budget authority.")· Such a filing would impair the image of
interbranch unity we need to project, and might lead the Supreme Court to conclude that if
the Act is sustained, the judiciary will be required (in the course of ruling on challenges to
individual cancellations) to resolve disputes between the political branches concerning arcane
budgetary matters.
3
Cancellation of limited tax benefits is also conceded! y different from the authority that the President
has historically possessed to decline to spend appropriated funds. The President's authority to .cancel tax
provisions, however, is subject to limitations of its own- most obviously, the requirement that no more
than 100 taxpayers be affected. The President's power to cancel limited tax benefits, moreover, is clear
on the face of the Line Item Veto Act, while .the contention that the President may cancel entire
provisions of law based on relatively modeSt budget impacts has no apparent textual basis. (and no
apparent stopping point). Finally, invalidation of the President's authority to cancel limited tax benefits ·
would (assuming that authority to be severable) leave the core of the Line Item Veto Act intact. The
provisions governing discretionary budget authority, by contrast, have always been regarded as the most
. important and most defensible feature of the Act.
·
3
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3.
Defending the CSRS/FERS cancellation is inconsistent with o;ur prior
~
\
representations that the President will exercise his authority barrowly and
:::!).
. with care and circumspection.
.
\.
~
\\\4
The President has tried, in a variety of ways, to convey the message that'b~'6~~/;.
the cancellation authority under the Line Item Veto Act as an especially important
· · .....-presidential prerogative, to be exercised with particular care and circumspection. It is quite
important that we do all we can to persuade the Court that the Act is in fact being
administered on that basis. The Supreme Court's decisions during· the last Term suggest a
particular aversion to anything that smacks of "symbolic legislation," and we should make
every effort to prevent the Court from regarding the Line Item Veto Act in that light.
To defend the CSRS/FERS cancellation -- even 1n the district court -- would
significantly undermine that effort. The draft brief does not Contend that the reduction in
employee cOntributions that the President's special message identified as the cancelled item
falls within the definition· of "budget authority" contained in 2 U.S.C. 622(2)(A)(i}; Instead,
the draft brief argues (in essence) that established OMB scoring practices can be used to
·replace rather than to elucidate the statutory definition. OMB sincerely regards the various
scoring rules (and its own construction of them) as substantial constraints on its own
discretion. The contention that the President's cancellation authority extends beyond items·
covered by the statutory definition, however, is likely to strike the Supreme Court as an
extraordinary ·assertion of executive power.
·
Similarly, to defend the cancellation on the alternative theory that the "open season"
provision of the Treasury Appropriations Act triggers certain provisions of other laws that
might fit the definition of "budget authority" in 2 U.S.C. 622(2). would require us to offer a
rationale that is not set forth in the President's cancellation message -- suggesting that the
President may rely on statutory provisions and fuiancial consequences that are far afield from
the appropriations provision that he purported to cancel. That alternative would undermine
another important point we made in Raines v. Byrd in defense of the Act: that the President
is subject to important procedural limitations on the exercise of his cancellation authority bythe requirements that he (a) make specific determinations and (b) include particular
information about the cancellation in his cancellation message, both of which' are lacking here
with respect to the suggested alternative rationale.
.
At worst, a defense of the cancellation along the lines set forth in the draft brief may
suggest to the Court that the President's authority is being exercised cavalierly or carelessly.
Even if the Court does not regard our position as wholly unreasonable, however, it will
surely conclude that the President. is intent on construing his.own cancellation authority under
the Line Item Veto Act in the broadest possible m~er. That perception cannot help but
lessen the Court's willingness to sustain. the Act against constitutional challenge.
·
4
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d.d.; 14
THE PRESIDENT'S CANCELLATION OF THE
DOLLAR AMOUNT OF DISCRETIONARY BUDGET
AUTHORITY IN THE CSRS/FERS PROVISION
WAS AUTHORIZED BY THE LINE ITEM VETO ACT
There is no merit to NTEU's claim that the Presid
cancellation with respect to the CSRS/FERS provision was not
authorized by the Line Item Veto Act. 1
Under the Line ·Item
Veto Act, the President is authorized to cancel "the entire
dollar amount of budget authority required to be allocated
by a specific proviso in an appropriation law for which a
specific dollar figure was not included, " such as the
CSRS/FERS provision.
2 U.S.C. 69le(7) (A) (i).
As required
by 2 U.S.C. 901 (a) (7) (C), 902 (d), OMB determined, on the
basis of "scorekeeping guidelines" prescribed by Congress
.
.
an~mandated
....._......
for use in this situation, that the CSRS/FERS
.
provision contained discretionary budget authority, and it
estimated that the amount of this authority was S854 million
1
NTEU added this claim as a new cause of action in its
amended complaint (~~ 23-24), but did not cite any statutory
basis for it. The Line Item Veto Act authorizes suits by
affected individuals for declaratory and injunctive relief
only upon the ground that the Act is unconstitutional. 2
U.S.C. 692(a) (1). However, NTEU has alleged that the effect
of the challenged cancellation is prevent its CSRS employee
members from switching to FERS during an "open season"
conducted by OPM (Amended Complaint, ~~18, 22, 24), and it
has named the United States as a defendant. Therefore, we
have construed NTEU's amended complaint to state a cause of
action under the Administrative -Procedure Act, 5 U.S.C. 702,
and to seek an injunction compelling the government to
conduct the "open season," on the ground that the·
President's underlying cancellation is not authorized by the
Line Item Veto Act. Under this construction, judicial
review is limited strictly to the question of whether the
President complied with. the Act in exercising his
cancellation authority.
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over the next five fiscal years, due to the anticipate:d,.
.
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reduction in contributions to. the Civil Service Retirement \\\\
.
I
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and Disability Fund ("CSRDF"] by the CSRS employees
were.
~~·
~
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authorized under the CSRS/FERS provision to switch to~
The President relied upon OMB's determination and estimate
in canceling the entire amount of discretionary budget
authority in the CSRS/FERS provision, which he identified in
•,
his special·· message to Congress as $854 million "due to
reductions in employee contributions to the (CSRDF] ."
Attachment A.
Because Congress left to the President the task ot
specifying the dollar amount of discretionary budget
authority in the CSRS/FERS provision, the President pioperly
-----··
· relied upon OMB' s determination and· estimate, and it is
entitled
to
judicial deference.
Nationsbank of North
Carolina v. Variable Annuity Life Ins., 115 S. Ct. 810, 813814 (1995); Chevron U.S.A.
Inc~
v. Natural Resources Defense
CounciL Inc., 467 U.S. 837, 844 (1984).
Such deference is
particularly warranted where, as here, the President was
required to make this complex budgetary determination under
a new statute within a
fiv~
day period.
NTEU claims that, in his special message to Congress,
the President identified the reduced employee contributions
to the CSRDF as the
canceling.
d~scretionary
budget authority he was
NTEU contends that a reduction in receipts to
-2-
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�DEC-16-1997
22:15
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the government, such as a reduction in employee
·~ .
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contributions to the CSRDF, is not "budget authori tk•• within
the meaning of the Congressional Budget and
control Act of 1974,
2··u.s,.c.
1
~J
Imp;undm~~/
622 (2J (A), to which the Line
Item Veto Act was added by amendment.
In contrast, NTEU
says that an increase in aqency contributions.to the CSRDF
il.. "budget, auth:ority_'J under 2 U.S.C.
?~~
(2) (A}, and i t
points out that the amount of that increase under the
CSRS/FERS provision, as opposed to the amount of lost
employee contributions, was deemed "budget_authority" by the
Congressional Budget Office· ["CBO"J in its estimate of the
costs of that provision.
NTEU therefore argues that the
reduced employee contributions were not subject to
.-·
·--~-;ncellation under the Line Item Veto Act.
However, ·as his special message clearly states, the
President canceled $854 million in discretionary budget
authority contained in the CSRS/FERS provision ".due.
J:..a
reductions in employee contributions" to the CSRDF (emphasis
added).
The President's cancellation, and the OMB estimate
upon which the President relied, thus used the dollar amount
of lost employee contributions to the·CSRDF as a yardstick
to measure the fiscal effects of the CSRS/FERS provision.
One of those effects, which is expressly mentioned in the
President's special message, is an incraase in agency costs,
which NTEU and CBO say are "budget authority" within the
-3-
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�DEC-16-1997
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me anii'lg of 2 U. S .C. 62 2 ( 2) (A) •
/~
0\
.
I
The d> f ference bet we;n OMB :\
and CBO over the lost employee contributions is real\y a
'i\
\0\
\,
difference over whether those contributions should be~.
~~
,......
;·
-~~/
~
.
yardstick for measure the dollar amount of discretionary
budget authority in the CSRS/FERS provision, and that
difference stems·from their contrasting interpretations of
the prescribed scorekeeping guidelines rather than a
:rA
.
...
contrasting·· constructions of 2 U.S. C. 622 (2) (A}
o
Therefore,
the President's cancellation was not inconsistent with 2
U.S • C ~
622 ( 2) (A)
o
Moreover, the President's reliance upon.OMB's estimate
of the dollar amount of discretionary budget authority in
the CSRS/FERS provision, rather than CBO's, reflects the
----~-"
statutory
preference with OMB's estimate enjoys, and was
essential to implementation of the.important "lockbox"
provisions of the Line Item Veto Act, 2 U.S.C.
69lc(al (1} (B),
(b).
Those provisions, which are designed to
prevent the expenditure of canceled dollar amounts for other
purposes, require that the dollar amount canceled be exactly
the same as the dollar amount estimated by OMB.
The President Properly Relied Upon
OMB's Estimate of Budget Authority
Required to be Allocated by the CSRS/FERS
Provision in Making the Challenged Cancellation
1.
Pi scretionary B1ldCJPt Aurhorit}:::.
-4-
As.
we described in
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�DEC-16-1997
22:15
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the opening s.ection of this brief, supra pp.
I
President is authorized by the Line Item Veto Act to cancel
"any dollar amount of discretionary budget authority. ' · 2
U.s.c.
69l(a) (1}.
The Act defines the term
of discretionary budget authority" to mean, among other
things, "the entire dollar amount of budget authority
.. required to be. allocated by a specific proviso in an
. ·'·
;....
.
.
..:
..
appropriation law for which a specific dollar figi.lre was not
included."
2 U.S.C. 69le(7) (A) (i).
Accordingly, if a
"dollar amount of budget authority" was "required to be
allocated" by the CSRS/FERS provision, which was enacted in
the Treasury and General Government Appropriations Act,
1998, the President was authorized to cancel the entire
··--amount of it, even though a "specific dollar figure was not
included" in that provision.
Although Congress defined a
'~dollar
amount of
discretionary budget authority" to include the entire dollar
amount of budget authority required to be allocated by a
specific proviso in an appropriation law
~for
which a
..
'·
specific dollar figure was not included," 2 U.S.C.
69-le (7) (A)
(i),
it also required the President to specify, in
every special cancellation message, "the dollar amount of
discretionary budget authority" being canceled.
69la (b) (1) (A).
2 U.S.C.
Necessarily, Congress expected the President
to determine the·missing "specific dollar figure" of budget
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authority when exercising his cancellation authority/under 2
~
.
U.S. c. 691e (7) (A) ( i), and to identify that dollar a aunt
~
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"!
the spetial message.
Thus, in explaining the purpose of 2
u.s.c.
69le(7l CAl (i), the conferees on the Act said they "sought to·
provide the President the ability to rescind entire dollar
amounts, even.if not specified as a dollar amount in the law
itself, so long as the dollar amount can be clearly_
identified and is in an indivisible whole with which
Congress has previously agreed" (emphasis added).
H. Conf.
Rep. No. 104-491, 104th Conq. 2d Sess. 31 (1996).
The
conferees gave an example-of the task of estimating budget
authority that was given to the President under 2
---"691 e
u.s.c.
(7 ) (A l ( i ) :
[I]f the appropriation law does not include a specific
dollar amount, but does include a specific proviso that
requires the allocation of·a specific dollar amount,
then the President may rescind the entire dollar amount
that is required by the proviso. * * * [T]he conferees
note that the General Construction Account in Public
Law 104-46, the Energy and Water Development
Appropriations Act, 1996, states:
'$804,573,000 to remain available until
expended, • * * for one-half of the costs of
construction and rehabilitation of inland
waterways projects, .including rehabilitation
costs for the Lock and Dam 25, Mississippi
River, .Illinois and Missouri * * * '
In this example, the President could cancel the
entire $804,573,000 or could cancel an amount equal to
the entire dollar amount that would be required to fund
the rehabilitation costs of the Lock and Dam 25
project, noting in his message all information as
.-~
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required by [2 U.S.C. 69le].
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e~ample,
--1'
H. Conf. Rep. No. 104-4 91, .SlU?ra, at 32.
In the
the President would have been required to
determine~-~~~:~>'
entire dollar amount that would be required" to fund the
·
Lock and Dam 25 project.
2.
Estimating the Cost of Legislation.
Congress dealt
with the matter of estimating the cost of fiscal legislation
when it enacted the Budget Enforcement Act of 1990, Pub. L.
No. 101-508, 104 Stat. 1388-573 [the "BEA''], as an amendment
to the Balanced Budget and Emergency Deficit Control Act of
1985, 2
u.s.c.
900
~ ~-
·Prior to enactment of the BEA,
Congress attempted to-control federal spending through
"allocations" of discretionary·spending to the congressional
·--c:o~i ttees and subcommittees in the joint statement of
managers accompanying the annual concurrent resolution on
the budget.
See
H~
Sess. 1151 (1990).
Conf. Rep. No. 101-964, lOlst Cong., 2d
But the results were not completely
satisfactory, and Congress determined to strengthen its
effort to control federal spending by adding new estimating,
reporting, and enforcement requirements under the BEA.
~-
The BEA divided all fiscal legislation into two
categories: "discretionary appropriations" and "direct
spending and receipts."
2
2 U.s. C. 901, 902.
The term
"Budgetary resources" means "new budget authority,
unobligated balances, direct spending authority, and
2
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�DEC-15-1997
22:1b
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"discretionary appropriations" was defined in the (:BEA to
.
\/\
\~ '
mean "budgetary resources (except to fund direct-spending
:0
~~\
::ij
/!::
~--!.,§!!§./
programs) provided in appropriation Acts . . 2 U. s . C
900 (c) (7).
"Direct· spending" was defined to mean "(A)
budget authority provided by law other than appropriation
Acts; (B) entitlement authority; and (C) the food stamp
program."
2 U.S.C. 900(c) (8).
The BEA did not define the
term "receipts."
The principal mechanism for controlling discretionary
appropriations are the "discretionary spending limits," or
"caps, " established for each fiscal year.
2 U.S. C. 901.
The caps are overall ceilings for aggregate discretionary
"budget authority'' and total expenditures under that budget
··authority (''outlays") in each fiscal year.
665 (a) (2) (1994); 2 U.S.C .. 901 (c).
2 u.s.c.
If Congress enacts
legislation that results in budget authority or outlays
exceeding the caps (that is, causing a
11
breach 11 in the
caps), a "sequestration" is triggered which automatically
reduces spending in discretionary programs by a uniform
percentage to eliminate the.
b~each.
.rg.
The principal mechanism for controlling direct spending
and receipts legislation are the "pay-as-you-go'' [ "PAYGO"]
obligation limitations."· 2 U.S.C. 900 (c) (6). "Budget
authority" is defined as having the same meaning as in the
congressional Budget and Impoundment Contro·l Act of 1974, 2
u.s.c. 622(2) (A). 2 u.s.c. 900(c) (ll.
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.
rules, under which the combined net effect on the fedl£f~1
deficit of all direct. spending and receipts
zero.
2
u.s.c.
legisla~ion
is /1
\\\\
Direct spending and receipts
902.
·.~~~
%\
£)
legislation whose combined net effect increases the
triggers a sequestration.
ld.
To assist Congress in keeping track of the cost of
legislation and avoiding the serious consequence of a
sequestrati~n,
the BEA added estimating and reporting
requirements.
CBO is required to provide OMB, as. soon as
practicable after Cong·ress completes action on any
discretionary appropriation, "an estimate of the amount of
discretionary new budget authority and outlays" in the
legislation.
2 U.S~C.
901 (a) (7) (A).
Within,seven days
,.
.---a-:fter enactment of discretionary appropriation legislation,
OMB must transmit a report to Congress containing the CBO
estimate and "an OMB estimate of the amount of discretionary
hew budget authority and outlays" in that legislation,
together with "an explanation of any difference between the
2
estimates . "
2 U. s
.c .
9 01
{a) ( 7 )
(B) • 3
As between these
two estimates, "OMB shall use the OMB estima,tes transmitted
to the Congress' for purposes of implementing the BEA.
1
2
As originally enacted in the BEA, OMB was required to
transmit this report within five days afte~ enactment of the
legislation.· 2 U.S.C. 901 (a) (7) (1994). The period was
extended to seven days by the Budget Enforcement Act of
1997, Pub. L. No. 105-33, 111 Stat. 251, 698.
-9-
COPY
�DEC-16-1997
22:1?
u.s.c.
l..l V 1 L
90l(a)
(7)
JJ! V! :JUI'I .rr
CBO and OMB must make similar
(C).
estimates with respect to direct spending and recei ts
legislation.
2u.s.c. 902(d).
CBO and OMB must also prepare and submit to Cong
under a prescribed timetable, preview, updated, and final
sequestration reports.
u.s.c. 904.
2
These reports contain
estimates of discretionary new budget aut?oiity and outlays
:. . ..
'
..
: '· .: .~. . .' .. . : '
'
for the curxerit year and future years.
If the final OMB
sequestration report estimates that a sequestration is
·required, the President must implement it by issuing a
sequestration order.
2 u.s.c. 904.(g) (6).
Because of the difficulty in determining the 6ost of
legislation, and because of the potential consequences (such
·-a.'s
a sequestration), Congress has prescribed rules, called
"scorekeeping guidelines," and mandated that CBO and OMB use
them in making the estimates and reports required by 2
u.s.c. 901, 902, and 904.
Thus, 2 u.s.c. 90l(a) (7) (C)
requires that, with respect to the estimates of "the amount
of d~scretionary new budget authority and outlays" in
. discretionary appropriations legislation, "OMB and CBO shall
prepare estimates* **in conformance with scorekeepinq·
guidelines determined after consultation among the House and
Senate Committees on the Budget, CBO, and OMB" (emphasis
added) .
There is a similar provision mandating the use of
the prescribed scorekeeping guidelines with respect to the
-10-
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scorekeepin~
guidelines, Congress published them in the
to the BEA.
( 1990)
P;y
$"1.5'
2 U~S.C. ,.962 {d).
estimates of direct spending and receiptso
In light of the significance of the
ON
'0~\
\\~
conferenc~"'-:-- - ~
report·
~~
c/i./
' ,~-0//
17~·
H. Conf. Rep. No. 101-964,. supra, 1172-1176
/
{Attachment B) .
The conferees viewed them as a
constraint upon the substantial power vested in OMB to
estimate the.cost of. legislation.
ld., at 1172.
They were
re-published in the conference report to the Budget
Enforcement Act of 1997, Pub. L. No. 105-33, 111 Stat. 251,
677, which, among other things, made minor amendments to the
Line Item Veto Act (see 111 Stat. 696, 697).
Conf~
H.
No. 105-217, 105th Cong., 1st Sess. 1007,....1014 {1997).
Rep.
There
the conferees emphasized that the purpose of the
·---sco~ekeeping guidelines "is to ensure that the scorekeepers
measure the effects of legislation on the deficit consistent
with established scorekeeping conventions and with the
specific requirements in those Acts regarding discretionary
spending, direct spending, and receipts."
Thus, when it enacted the Line Item Veto
Id., at 1007.
Act~
Congress was
well aware of the importance of the scorekeeping guidelines
in estimating discretionary budget authority.
In fact, cancellations under the Line Item Veto Act are
implemented through the OMB estimates and reports which OMB
makes on the basis of the prescribed scorekeeping
gu'ide1ines.
Thus, under 2 U.S.C. 69lc(a) (1) (A),
OMB
is
-11-
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�.----------------------------------
DEC-lb-1'::1'::1'(
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required to reduce the estimate it must make under 2
I
901 (a)
~i
.
(7)
of the amount of discretionary new budget
j;l1..
r-
\\
.
!.
n
authority contained in a discretionary appropriation ~~the
~~·
.
.
.
.
.
exact dollar amount of canceled discretionary budget
authority. 4
·~
}~
.
·
·
Furthermore, under 2 U.S.C. 69lc(a) (1) (B),
known as the "lockbox" provision, OMB is required to include
a reduction to the caps.!or all applicable fiscal years by
.the exact dollar amount of the canceled discretionary budget
authority. 5
This ensures that the canceled amount will be
'
devoted to deficit reduction.
Ten days after the expiration
of the time period for expedited congressional consideration
of a disapproval bill, OMB makes the reduction to the caps
effective by including it in the next sequestration report.
·--z·u: s. c.
3.
691c (b) .
The CSRS/FERS Provision.
The. CSRS/FERS provision
authorized covered individuals, including members of
Congress, to switch from CSRS to FERS.
Such a switch has a
Similarly, OMB is required by 2 U.S.C. 69lc(a) (2) (A) to
the deficit decre~se taused by the cancellation of·
any item of new direct spending and limited tax benef~t, and
'include that decrease in the estimate it is required to make
under 2 U.S.C. 902(d).
·
estim~te
~ The parallel "lockbox" provision for items of new direct
spending and limited tax benefits is 2 U.S.C. 691c(a} (2) (B),
which instructs OMB not to include any change in the deficit
resulting from the cancellation of those items in the
sequestration reports it makes under 2 U.S.C. 902(b),_
904(d).
Thus, that deficit decrease cannot be used as an
offset against an increase in other direct spending.
-12-
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number of fiscal_ consequences, as can be seen from ,/the
.
.
. 10n o f the two systems:
.
f ol l ow1ng descrlp t.
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Employing federal agencies
\.
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withhold 7% of the basic pay of employees subject to CSRS1
and contribute an equal amount from the annual appropriation
available to pay the salaries of those employees.
8334(a).
5
u.s.c.
These amounts are deposited in the Treasury to the
credit of the CSRDF.
rct.
The CSRDF exists as a permanent
appropriation within the Treasury, and is dedicated t.o the
. payment of retirement annu-ities and other benefits to
covered individuals.
5 U.S.C. 8348(a).
The assets of the
CSRDF1 from which all payments are disbursed, consist of the
employee and employer contributions, donations, interest
··--e-a:r.nings, and other government payments designed to maintain
the solvency of the CSRDF.
5 U.S.C. 8348 (bl
1
(c),
(f)
I
(g).
The retirement annuity for a typical CSRS employee,
which is paid from the CSRDF, is computed by multiplying the
employee's highest average basic pay during any three
consecutive years of service [the "high three"] by different
percentages for each year of service.
. The "high three 11 is
multiplied by 1.5% per year of service for the first five
years of service; 1.75% per year for the next five years of
service; and 2% per year for each succeeding year of
service.
5 U.S.C. 8339(a).
CSRS employees may contribute up to 5% of basic pay to
-13-
COPY
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- the Thrift Savings Fund, which is the federal versio'n of
private sector "401 (k)" tax-deferred savings and inl
plans.
5
u.s.c.
~)
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l~
contribution is matched by the employing agency.
835l(b') (3).
~
es.tmen2~
However, no portion
8351 (b) (2).
0
(\
5
u.s.c.
~
/
CSRS employees also are not covered by Social
Security, and neither they nor their employing agencies pay
Social Security taxes.
26 U.S.C. 312l(b) (5);
42 U.S.C •.
410 (a) (5) •..
b.
~-
Employing agencies deduct and withhold.·
0.8% of the basic pay of employees subject to FERS, and
contribute t0.7% of the basic pay from the appropriation
available to pay the salaries of these employees, and these
amounts are deposited in the Treasury to the credit of the
---csR.oF.
5
u.s.c.-
8422 (al: see 62 Fed. Reg. 19,153
(1997).
FERS employees are covered by Social Security, and they and
their.employing agencies respectively pay Social Security
taxes of 6.2% of basic pay to the Social Security trust
fund.
26 U.S.C. 3121 (b) (5) (H)
.(i);
42 U.S.C.
410 (a) (5) ((H) (i}.
A FERS employee may contribute up to 10% of basic pay
to the Thrift Savings Fund.
5 U.S.C. 8432(a).
The
employing agency must contribute 1% of the employee's basic
pay to the Thrift Savings Fund, and also must match, up to
an additional 4% of basic pay (for a maximum agency
contribution of 5%) the employee's contributions to the
-14-
COPY
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Thrift Savings Fund.
5 U.S.C. B432(c).
/0
These contr.t'butions
I
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are paid from the. appropriation available to pay the\
salaries of these employees.
5 U.S.C. 8432 (e).
\\\ I
~
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);
-o"':;,
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The
retirement annuity for a FERS employee, which is also paid
from the CSRDF, is computed by multiplying the employee's
"high three" by 1% per year for each year of service, except
for employees who retire at age 62 or later with at least 20
years of service, for whom a factor of 1.1% is used.
u.s.c.
4.
5
8415.
OMB's Estimate for the CSRS/FERS Provision.
The
enactment of the CSRS/FERS provision in the Treasury and
General Government Appropriations Act, 1998, required CBO
and OMB to estimate and report on the fiscal costs of that
·--p-rovision.
OMB estimated the cost of the provision by
applying the prescribed "scorekeeping guidelines," as
required by 2
u.s.c.
901 (a) (7) (C).
-Under scoring rule 3 ("direct spending programs"),
"[s]ubstantive changes to or restrictions on entitlement law
or other mandatory spending law in appropriations bills will
be scored against the Appropriations Committee section
302(b) allocations in the House and the Senate** *
Attachment B, at 1008.
II
The "section 302(b) allocations" are
the allocations of "budget authority" and "outlays" under
section 302(b) of the Congressional Budget and Impoundment
Control Act of 1974, 2 U.S.C. 633(bl.
In other words,
-15-
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�DEC-16-1997
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changes to an entitlement or mandatory spending law that are
made by a provision enacted in an appropriations
la~s
are
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deemed by scoring rule 3 to be "discretionary new
bud~t
~-0Q5
l~
authority and outlays" under 2 u.s.c. 900.(c) (7).
The
'
.
purpose of scoring.rule 3 is to ensure that the budget costs
of "direct spending and receipts" legislation are addressed
when they are included in an appropriations bill.
Applying scoring rule 3 to the CSRS/FERS provision
(which made a substantive change to the law governing
eligibility for the retirement programs, which are an
entitlement)
1
OMB proceeded under 2 u.s.c. 901 (a) {7) (C) to
prepare for Congress an "estimate of the amount of
discretionary new budget authority and outlays." OMB
---e.St""'imated that, as authorized by the CSRS/FERS provision, 5%
of eligible CSRS employees would switch to FERS, and this.
would result in a loss of $854 million in employee
contributions to the CSRDF over the next five fiscal years.
Therefore, applying scoring rule 3, OMB estimated that the
CSRS/FERS provision contained $854 million in discretionary
new budget authority, and it reported this estimate to
Congress. 6
Attachment B.
CBO also prepared an estimate of the costs of the
CSRS/FERS provision, which was based on an interpretation of
scoring rule 3 that differed from OMB's. According to CBO's
interpretation, the CSRS/FERS provision contained both
"discretionary appropriations" subject to the caps and
"direct spending and receipts" subject to the PAYGO rules.
-16-
COPY
�.·~
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5.
Tile Can~:=ellat,ion.
0'-0~
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OMB provided to the Pre~ident \\(\
i.·
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its estimate that the CSRS/FERS provision contained
discretionary budget authority of $854 million over
five fiscal yeais, to assist him in the exercise of his
authority under the Line Item Veto Act.
The .President
decided to cancel the entire $854 million.
As required
by
2
u.s.c.
69la{b}, the President sent a
special message to Congress specifying that the dollar
amount·of discretionarybudget authority he was canceling
~as $854 million over the next five fiscal y•ars,
"due to
reductions in employee contributions to the Civil Service
Retirement and Disability Fund (CSRDF) ."
Attachment A.
In
the special message, the President explained that an
.--ers·t'lmated 5% of eligible CSRS employees would have switched
to FERS under the CSRS/FERS provision, reducing their
cont~ibutions to the CSRDF from 7% to O.S% of basic pay, and
that, among other things, this reduction "would require the
employing agencies to absorb increased retirement costs,
using funds that otherwise would be available for payroll
and other agency needs."
Attachment A.
Attachment E to NTEU Br. Based on the assumption that 1% of
eligible CSRS employees would switch to FERS under the .
provision, CEO est~mated that it contained $660 million in
discretionary budget authority over the next ten fiscal
years subject to the caps, $434 million in reduced direct
spending subject over the next ten years subject to PAYGO,
and $312 million in reduced receip~s over the next ten
·
fiscal years subject to PAYGO. .lQ.
-17-
COPY
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As required by 2 U.S. C. 691 a (b}
(1} (F) ,
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the Pres,:t'd'ent
(I
noted that the discretionary spending caps would bet lowered~\
\~
for the applicable fiscal years by $854 million, in
(B) ,
(b) .
This reduction in the caps became
.
,•
effective when OMB published them in its next sequestration
report, as provided
by 2 u.s.c.
691c(b).
6.· The Cancellatjon was Authorized.
Attachment
c.
Given the absence
of a specific dollar figure of budget authority in the ·
CSRS/FERS provision, the President relied upon the expertise
of his budgetary arm, OMB, to detsrmine whether the
CSRS/FERS provision contained discretionary budget authority
and the amount (if any) of that authority. ·OMB, applying
.
'
--the· scorekeeping guidelines prescribed by Congress and
mandated for use in this situation, determined that the
CSRS/fERS provision contained discretionary budget·
authority, and it "clearly identified" the amount of that
authority, namely, $854 million over the next five fiscal
years due to the anticipated loss of employee contributions
··:""·
·~
to the CSRDF.
See H. Conf. Rep. No. 104-491, supra, at 31.
The President properly relied upon OMB's determination
and estimate in filling the gap left by Congress.
This
reliance is entitled to substantial judicial deference.
Nationsbank of North Caroljna v. Variabl~ Annuity Life Ins.,
115 S. Ct. 810, 813-814
(1995); Chevron U.S.A.
-18-
gl
. :::
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accordance with the "1ockbox" provisions, 2 U.S.C.
69lc (a l ( 1)
~\
Inc. v,
�/~
~
r-"r ~
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v
Natural Besources Defense Council, Inc., 467 U.S. 8~7, 844
u'O.'\,
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(1984).
Deference is particularly warranted here,
0
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.
because,\~ i)
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the President was required to make· a complex budgeta~ -o~,.·
.
'
'c:,-d :,/
determination under a new statute within a five day p.erio .· __..,..
Because the President properly determined that the
CSRS/FERS provision
requi~ed
the allocation of $854 million
in budget authority, he was authorized to cancel it by 2
U.S.C. 691eJ7) (A) (i).
Accord1ngly, NtEU has failed to state
a claim for relief against that cancellation.
B.
The President's Reliance Upon OMB's
Estimate of the Amount of Discretionary
Budget Authority in the CSRS/fERS Provision
was Not Inconsistent with 2 U.S. C. 622 ( 2) (A)
and Fulfilled the "Locl<box" Requirement of the Act
1.
NTEU challenges the President's cancellation of
---·-·· ·-
$854 million in discretionary budget authority contained in
the CSRS/FERS provision, as determined by OMB.
According to
NTEU, the President specified that what he was canceling was
reduced employee contributions to the CSRDf.
Complaint, SI20.
Amended
NTEU alleges and argues that "[e]mployee
contributions are not, however, correctly viewed as
involving a 'dollar.amount of discretionary budget.
authority' within the meaning of the Act," because they are
not "budget authority" within the meaning of the
Congressional Budget and Impoundment Control Act of 1974, 2
-19-
COPY
�~~Pi-..
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U.S.C. 622(2) (A), to which the Line Item Veto Act w,as added
by amendment.
ld.,
~21;
.
NTEU Br., pp. 14-15.
\~'\
'0_:.-.
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1!
Even though it challenges the President's
identification of "budget authority," NTEU freely
that the CSRS/FERS provision did, in fact, contain "budget
authority" within the meaning of 2 tr.s.c. 622 (2) (A), which
it identifies as the increased agency,contributions to the
.!it
··,
CSRDF that
~ould
have resulted from the switch of CSRS
employees to FERS under the CSRS/FERS provision.
p. 18 n. 18.
NTEU Br.,
NTEU refers to these agency contributions as
"offsetting receipts," which is "budget authority" under 2
U.S.C. 622(2) (A)
(iv).
l.Q.
NTEU also cites CB0
1
S
estimate
of the cost of the CSRS/FERS provision, which states that
.. --·the~· provision contained
~
6 60 million in budget authoritY
over the next ten fiscal years due to increased agency
contributions to the CSRDF and the Thrift Savings Fund.
Attachment E to NTEU Br.
Notwithstanding its recognition that the CSRS/FERS
provision contained "budget authority" within the meaning of
2 U.S.C. 622 (2) (A), NTEU challenges the President's
cancellation on the grounds that reduced receipts to the
government, such as reduced employee contributions to the
CSRDF, are not "budget authority" within the meaning of 2
U.S.C. 622(2) (A).
NTEU Br., pp. 16-21.
Therefore, NTEU
contends.that the President's cancellation was not valid.
-20-
COPY
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I..d.; Amended Comp1aint, SI24.
2.
NTEU's allegations and arguments are
merit.
·"'
at he d~~~ /
The President clearly stated in his special message
•b'\1
was canceling $854 million in discretionary budget authori
over the next five fiscal years contained in the CSRS/FERS
provision
"~ ~
reductions in employee contributions"
(emphasis added) to the CSRDF caused by that provision.
.::!c:
words
11
The
•,
due to" demonstrate that the President's
·.· .. ·
cancellation, and the OMB estimate upon which the President
relied, were using the dollar amount of lost employee
coritributions to the CSRDF as a yardstick to measure the
· fiscal effects of the CSRS/FERS provision.
One of those
effects, which is expressly mentioned in the President's
---special message, is an increase in agency retirement costs,
which NTEU and CBO say
meaning of 2
ar~
"budget authority" within the
u.s.c. 622(2) (A).
It was appropriate to use the lost employee
contributions to the CSRDF as a yardstick, because the
assets of the CSRDF, which consist of employee and
government payments and their earnings, are required by law
to be available for the payment of benefits.
Any reduction
in employee contributions to the CSRDF, unaccompanied by a
commensurate reduction in the payment of benefits, requires
a like increase in government payments and, if needed,
earnings withdrawals.
-21-
COPY
�I
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CEO's estimate of the amount of discretionary qu&get
u~
If
("\'\
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authority in the CSRS/FERS provision was IlQ.t rneasu ·ed by the
z
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.
amount of reduced employee contributions to the CSR' F, which
_;....:
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,t._
CBO estimated at $312 million over the next ten
years. _ Attachment E. to 'NTEU Br.
The reason for that,
however, is not because·CBO construed 2
u.s.c. 622(2) (A)
differently from OMB. ;·:.:.\~:~:~:··;·· ... it is because CBO interpreted
,~ather,
.
.
'
· ..~-·
scoring
rul~
:--•.·,·:'•',•1:
3 differently from· OMB-•. According to CBO' s
interpretation, that part of the CSRS/FERS provision which
would ·have resulted in the loss of $312 million in employee
contributions to the CSRDF over the next five fiscal years
was "direct spending and receipts" ·legislation, subject to
the PAYGO rules, and not "discretionary appropriations"
.--sub] ect to the discretionary spending caps.
In accordance with 2 U.S.C. 90l{a) (7) (C), which gives
statutory preference to OMB's estimates of the dollar amount
of discretionary budget authority over CEO's estimates, the
President properly relied upon OMB's interpretation of
scoring rule 3 and its estimate of discretionary budget
'·
authority, and not CBO's contrary interpretation and
estimate.
OMB's estimate was consistent with 2
u.s.c.
622 (2) (A) because it took into account the increase in
agency contributions to the CSRDF, which NTEU and CBO
identify as "budget authority'' under 2 U.s. C. 622 ( 2) (A) .
Therefore, it is indisputable that the President
-22-
COPY
�DEC 16 1997
l..l V l L JJ 1 V J ~UI'I r r
22:21
. '..Civ\00N PI?(:'
canceled "budget authority" withi~ the meaning of 2 U.~.C.
'I
62212! (A}:
It is also indisputable that the Presidett' s
~~
cancellat1on reduced the federal def1c1t, as the ?res1dent
determined and as CBO concluded in its report on the
cancellation.
Attachment E to NTEU Br.
~
0
i)
~
1
~~/
NTEU's challenge to
the President's cancellation must be rejected.
3.
Furthermore, the President's reliance on OMB's
estimate that the CSRS/FERS provision contained $854 million
in discretionary budget autho~ity over the n~xt five fiscal
years, in place of CBO's estimate that the provision
contained S660 million in discretionary budget authority
over the next ten fiscal years, was essential for
~mplementation of the "lockbox'' requirements of the Line
Item Veto Act.
The reasons are as follows:
Under the Line Item Veto Act/ 2 U.S
.c.
69lc(a) (1), once
'the President canceled the dollar amount of discretionary
budget authority in the CSRS/FERS provision, OMB was
required to reduce the estimates it reported to Congress of
the amount of discretionary new budget authority in the
Treasury and General Government Appropriations Act, 1998, by
the exact dollar amount of discretionary budget authority
canceled by the President.
691c (a) (1) (B),
Similarly, under 2 U.S.C.
(b), OMB was required to reduce the
discretionary spendi?g caps for all applicable tiscal years
-23-
COPY
�.-----------------------------------
. DEC-16-1997
22:21
-
CIUIL DIUISON FP
f/~
/v"' .
by the exact dollar amount of discretionary budget authority
!i
canceled by the President.
Thus, under this "lockbo)• ·.
\\\\
~i\
O\
\II \
~
provision, the amount of canceled discretionary budget
authority must be exactly
~ ~
as
the amount of
estimated discretionary budget.authority.
If the amount
placed in the "lockbox" were less than the estimated amount
of discretionary budget authority, the remainder would not
be devoted to deficit reduction, contrary to Congress'
intent·in enacting the Line Item Veto Act.
In other. words,
.•
the treatment of the CSRS/FERS provision under the BEA had
to mirror its treatment under the Line Item Veto Act.
Here, OMB determined, in accordance with the prescribed
scorekeeping guidelines and as required by 2 U.S.C.
·---s·ol (a) {7 J (C), that the CSRS/FERS provision contained
discretionary budget authority, and it estimated that the
amount of that authority was
fiscal years.
~854
million over the next five
Under 2 U.S.C. 90l(a) (7) (C), OMB's estimate
of $854 million over the n:ext five fiscal y·ears ·was required
to be used for purpoies of the BEA, rather than CBO's
estimate of $660 million over the next ten fiscal years.
In
other words, OMB's estimate was the only legally sanctioned
estimate of the amount of discretionary budget authority in
the CSRS/FERS provision, under 2
U.s. c.
901 (a)
(7) (C) • 7
The statutory preference for OHB's esti~ates is an
outgrowth of the Supreme Court's decision in Bowsher
~
y •
..,.24-
COPY
�DEC-16-1997
22:22
202 616 8470
CIUIL DIVISON FP
1
I
P.26/27
~\
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fG
Consequently, to comply with the "lockbox" · provi~ ion it I\
·
II
·
' \
()
'-i\
~~
~\ !;·
the~/
was essential for the President to rely upon OMB' s es\imate
of the amount of discretionary budget authority in
·CSRS/FERS provision, namely $854 million over the next five
fiscal years, for cancellation purposes.
Unless the amount
· the President canceled was exactly the same as the amount
o:MB, estimated, ~he "lockbox.~\: P~'?;r~sio~ could not have been
M .
.
implemented .. as· required by 2 u.s.c. 69lc(a) (1) (B), (b).
In sum, the President's reliance on OMB 1 s indisputable
determination that the CSRS/FERS_provision contained
discretionary budget ~uthority, and his reliance on OMB s
1
estimate of.the amount of that authority, was essential to
the implementation of the key "lockbox" provisions in the
.---L-ine Item Veto Act and was consistent with 2
622 (2) (A) .
u.s.c.
Accordingly, NTEU' s challenge to the President's
cancellation cannot stand.
Synar, 478 u.s. 714 (1986). In that case the Supreme Court
struck provisions of the Balanced Budget and Emergency
Deficit Control Act.of 1985, under which the sequestration
process was triggered by a report to the President from the
Comptr6ller General, who .considered estimates ~repared by
CBO and OMB. The Supreme Court held that_the Comptrolier
General is part of the Legislative Branch, and Congress
constitutionally could not assign to the Comptroller General
Executive Branch functions. 478 u.s. at 732-734. In the·
wake of this decision, Congress amended the Balanced Budget
and Emergency Deficit Control Act of 1985 by having the
sequestration process triggered by a report from the
1
Director of OMB, after giving due regard to CB0 S report.
Puq. L. No. 100-119, 101 Stat. 754; H. Conf. Rep. No. 100313, lOOth Cong., 2d Sess. 746-747 (1987).
-25-.
PHOTOCOPY
PRESERVATION
c0 py
�~~
<5'0\
.tCJ
1\
<"\
( ·:_
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,;\>""
. ·
.
Certificate of Service
.
.
li
I hereby certify that on November 26, 1997, I arranged to have a copy ofth~ foregoing
,..._ 1,
Statement of Material Facts as to Which Snake River Potato Growers, Inc., et al. Co'n~nd There, ..<J-oo:;)·
1
is No Genuine Issue by hand on the foregoing:
-...._____;_.'2;_,./
Gregory O'Duden, Esq.
National Treasury Employees Union
901 E Street, N.W., Suite 600
Washington, D.C. 20004 ·
· M: Sean Laane, Esq.
Arnold & Porter
555 12th Street~ N.W.
Washington, D.C. 20004
Charles J. Cooper, Esq.
Cooper & Carvin; PLLC
2000 K Street, N.W.
Washington,D.C. 20006
Neil Koslowe,'Esq. ·
David Anderson, Esq.
U.S. Department of Justice
.Civil Division
901 E Street, N.W.
?,D.
4
3~z{=
Lawrence A. Kasten
PHOTOCOPY
. PRESERVATION
COPY
�Withdrawal/Redaction She.et
Clinton Library
DOCUMENT NO.
AND TYPE
001. memo
SUBJECTffiTLE
DATE
For Bernard Nussbaum from Larry Simms. Subject: Some Legal and
Policy Implications for the President's Seeking "Line-Item-Veto"
Authority. (16 pages)
01/25/1993
RESTRICTION
P5
l[ f
J
COLLECTION:
Clinton Presidential Records
Counsel's Office
Steve Neuwirth
OA/Box Number: CF 384
FOLDER TITLE:
Line Item Veto
2007-0624-F
vzl220
RESTRICTION CODES
Presidential Records Act- 144 U.S.C. 2204(a)l
. PI
P2
PJ
P4
National Security Classified Information l(a)(l) of the PRAI
Relating to the appointment to Federal office l(a)(2) of the PRAI
Release would violate a Federal statute l(a)(J) of the PRAI
Release would disclose trade secrets or confidential commercial or
financial information l(a)(4) of the PRAI
PS Release would disclose confidential advice between the President
and his advisors, or between such advisors la)(S) of the PRAI
P6 Release would constitute a clearly unwarranted invasion of
personal privacy l(a)(6) of the PRAI
C. Closed in accordance with restrictions contained in donor's deed
of gift.
PRM. Personal record misfile defined in accordance with 44 U.S.C.
2201(3).
RR. Document will be reviewed upon request.
Freedom of Information Act- 15 U.S.C. 552(b)l
b(l) National security classified information l(b)(l) of the FOIAI
b(2) Release would disclose internal personnel rules and practices of
an agency l(b)(2) of the FOIAI
b(J) Release would violate a Federal statute l(b)(J) of the FOIAI
b(4) Release would disclose trade secrets or confidential or financial
information l(b)(4) of the FOIAI
b(6) Release would constitute a clearly unwarranted invasion of
personal privacy l(b)(6) of the FOIAI
b(7) Release would disclose information compiled for law enforcement
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b(9) Release would disclose geological or geophysical information
concerning wells l(b)(9) of the FOIAI
�..
January
TO:
Bernard Nussbaum
FROM:
La{~Y imms
RE:
Some Legal and Policy Implications for the President's
Seeking "Line-Item-Veto" Authority
Because the debate whether to seek additional statutory
authority to cut unnecessary expenditures from appropriated funds
will presumably take place within the senior staff in the
relatively near future, I wanted you to have ·a copy of a
memorandum that I prepared as a member of the Budget Policy Group
during transition addressing some of the legal and policy
implications of various proposals that were, at least at the
time, under active consideration.
The most important reason for you to review the
attached memorandum is that other legal analyses of these issues
prepared during the campaign and then during Transition that
actually went to the President are either incomplete, confusing
or just plain wrong on the constitutional point.
One of those
analyses that went to Little Rock from Transition was a
memorandum from the Budget Policy Group to which I declined to
have my name affixed because it was thoroughly confused.
I point
that out because that memorandum may be the most recent attempt
to treat this subject and therefore might be relied upon by the
decisionmakers.
Of secondary importance is the view expressed in the
attached memorandum (as well as the attached editorial from The
New Republic) that the President should aggressively seek what is
commonly referred to as "enhanced rescission authority"--t;he
functional equivalent of a line-item veto.
I personally hold
this view very strongly; the PrE?sident is going to be held
responsible for the bud~et deficit, and I believe it would .border
on the irresponsible for his advisers not to lay out for him the
full range of constitutional options that is available so that
fully informed political judgment can be exercised.
LLS/dmc
Attachments
cc:
Vince Foster (wjattchs.)
Steve Neuwirth (wjattchs.)
WL930250.004
COPY
�Dec.ernber 9 ,
TO:
FROM:
RE:
Political, Legal and Practical Aspects of Securing
Additional Presidential Authority To Control the Deficit
Through Impoundment of Appropriated Funds
This memorandum assumes that the Administration will
seek, as part of an overall deficit reduction legislative package
to be submitted to Congress during the first. 100 days, some form
of additiorial Executive authority to c6ntrol the deficit by
t .
rescinding--refusing to spend--appropriated funds.
The use of
such authority would be primarily aimed at "pork" projects that
the Administration has been unable to keep out of appropriations
bills during the legislative process.
It should .be recognized,
however, that there is no limiting legal definition of "pork" and
that additional rescission authority could be applied to any
appropriations unless other legal constraints prevented
rescission (as with certain entitlement programs).
This subject
raises substantial political issues because the most useful and
powerful addition to existing rescission authority involves a
transfer of significant power from Congress to the Executive.
Under the present rescission authority contained in the
Impoundment Control Act of 1974 (discussed more fully below), .the
Executive can rescind appropriated funds- only if Congress passes
COPY
�legislation, signed into law by the President,
authorizing that rescission.
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specific~~ly
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legislatio~are \\\_u~~~
The internal procedures
the Senate and House consider such proposed
{
~y which
designed to expedite Congress's consideration_of that
le~~
and ensure a relatively quick vote on the legislation.
1
.There are
two generic types of additional rescission authority that are on
the table for
discussion~
One type, commonly referred to as
"expedited" rescission authority, generally seeks to speed up the
process by which Congress considers a proposed rescission bill
and to guarantee, within limits, that there will be an up-or-down
vote on every rescission bill proposed by the Executive.
The other type, .commonly referred to as "enhanced"
rescission authority, generally seeks to reverse the burden by
making
th~
Executive's decision to rescind funds final unless
Congress affirm~tively acts to override the Executive's otherwise
final decision.
Enhanced authority affects the balance of power
between the Executive and Legislative Branches in two ways.
First, if Congress does not act to block a rescission, that
inaction leaves the Executive's decision in place.
This negates
the use of clever parliamentary tactics by opponents of a
particular rescission.
Second, and more importantly, actiori by
Congress to block an Executive decision to rescind must, as
discussed more fully below, come in the form of legislation
subject to the President's veto power which can be overridden
only by a two-thirds vote of the Senate and House.
The contrast is stark.
It defies common sense to
believe that the same Congress that recently appropriated funds
2
COPY
�"oN
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would readily enact legislation to undo that appropriatr6-h~
And
because appropriated funds frequently start becoming ob\igated
near the beginning of a fiscal year; Congress's repeal o
a
~
~.
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particular appropriation may, in many instances; have to come
virtually on the heels of the appropriation itself if the
appropriation is enacted towards the end of the preceding fiscal
year.
on the other hand, it may be assured, at least generally,
that the President could always put together a one-third plus one
·coalition in either the House or Senate to sustain his expected
veto of a bill designed to overturn a decision to rescind
appropriated funds.
Some :key members of Congress, including Chairman Robert
Byrd; have very strongly held views antagonistic towards such a
transfer of power.
As a general rule, greater opposition to
enhanced rescission authority can be expected to come from more
senior Democrats in the Senate and House who forced the
Impoundment Control Act of 1974 on a shattered Nixon
Administration two weeks before . President Nixon's resignation.
This subject also raises legal issues because several
of the proposals recently or currently being suggested by wellmeaning_Members of Congress present substantial, disqualifying
constitutional problems.
These proposals generally try to find a
middle ground to bridge the gap between "expedited" and
"enhanced" rescission authority.
Finally, this subject raises practical issues because
constitutional proposals that stand the best chance of passing
i
Congress..:-expedited rescission--m'ay provide only marginally
3
COPY
�,"\ uN PR.t.s;
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enhanced rescission authority that may prove to be of little
.
utility in a serious effort to cut the pork from the
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fe~eral ~
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budget and achieve the kind of deficit control that
the Administration's long-term economic plan.
I.
Background
The Commitment
In Putting People First, as well as during the
campaign, President-elect Clinton proposed some form of line-item
v~to as a means for cutting as much as $9.8 billion in spending
for "pork barrel" projects over the next four years.
For
purposes ofthis memorandum; the concepts of "line-item veto" and
"rescission authority" are fungible and the latter term will be
used because the former carries some extra baggage by
engendering, in some of its forms, the need for amending the
Constitution.
A rescission approach to deficit control differs
substantially from a mandatory "balance-the-budget" approach to
curbing the deficit (such as Gramm-Rudman or a constitutional
"balance-the-budget" amendment).
The latter focuses primarily on
the budget process within Congress and essentially attempts to
put front-end constraints on appropriations bills.
.least in theory, mandatory.
It is, at
The former focuses on the outcome of
the appropriations process and provides a mechanism for the
Executive to. refuse to spend appropriations for programs deemed
to be wasteful without any reference to the size of the budget
deficit at any particular time.
In short, a decision to rescind
appropriated funds is discretionary.
4
COPY
�The "balance-the.:.budget" approach
has been pushed very hard by Republicans in
have succeeded in the last Congress but for
by Speaker Foley, Chairman Byrd and other Democrats.
fairly characterized as sheer gimmickry and totally unworkable,
but the Republican minority has indicated that it will attempt to
attach a "balance-the budget" rider to the federal debt ceiling
bill that will need to be passed and signed into law by the
President in February or March 1993.
The Republican minority
clearly intends to press this issue and, by doing so, to create
the impression that its ~ot the Clinton Administration, is
seriously committed to deficit control.
The Republican minority
cannot be allowed to seize the initiative on this issue.
Existing Impoundment Authority
In the waning and fractious days of the Nixon
Administration, Congress passed the Impoundment Control Act of
1974.
The significant substantive featur~ 6f the 1974 Act was to
place on the Executive Branch for the first time in our Nation's
history a broad, mandatory requirement that all funds
appropriated be expended.
Relief from this unprecedented
requirement could be had in two ways.
First, if the Executive
desired to defer the expenditure (or obligation) of
appropriations to a later time within a fiscal year, a ''deferral"
message could be transmitted to the Senate and House.
Either the
Senate or House could then, by a simple resolution passed by a
majority, "veto" that deferral within a set time frame.
Second,
if the Executive decided that appropriated funds should never be
5
COPY
�...-.·\oN PRE:s
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obligated, it could transmit to the Senate and House a
"rescission message."
Such rescission messages had to l:j>e enacted rl
!:
into positive law by passage of a Joint Resolution by
and House and the President's signing that Joint
law.
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Resolut~
·.
As with the deferral mechanism, the 1974 Act contained
procedures designed to get rescission messages to votes on the
fl6ors of the Senate and House and to prevent their being bottled
up in committees.
The 1974 Act remained essentially unchanged until its
amendment in 1987 in response to the Supreme Court's decision in
Immigration and Naturalization Service v. Chadha, 462 U.S. 919
(1983).
In Chadha, the Court held unconstitutional a provision
in the Immigration and Nationality Act under which either the
House or Senate, acting through passage of a simple one-House
resolution, could disapprove--veto--a final decision of the
Attorney General to suspend the deportation of otherwise
deportable aliens.
In Chadha, the Court wrote broadly, effectively
striking down as unconstitutional all varieties of "legislative
veto" devices found at that time in more than two hundred federal
statutes.
Those devices ranged from statutes authorizing veto by
a simple committee vote (or even a subcommittee chair) to twoHouse veto devices.
The bright-line principle for which Chadha
stands is that if the Executive has either inherent
constitutional power or statutory power (or a combination of the
two) to take a certain action in execution of the law, Congress
cannot override ·the Executive's decision to take that action
6
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nt under 0\.
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~if vetoed, ~l
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other than by passage of a bill submitted to .·the Presid1
.
the Presentation Clauses for his approval or veto and,
repassed by a two-thirds vote of each House.
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The constitutional principle announced
'
Chadha was subsequently applied to invalidate the one-House veto
provision pursuant to which the 1974 Act (prior to its amendment
in 1987), provided for a one-House veto of the President's
exercise of so-called "policy" deferral authority conferred by
that Act--the power defer the expenditure of appropriated funds
for a period not to exceed the end of the pertinent fiscal year.
City of New Haven v. United States, 809 F.2d 900 (D.C. Cir.
1987).
In 1987, Congress finally responded to Chadha by
stripping the Executive of its power to engag~ in so-called
"policy" deferrals (deferrals based on the Executive's dislike
for a particular program expenditure), thereby eliminating the
need for an unconstitutional legislative veto device.
The
rescission procedure went untouched because it complied fully
with Chadha.
The absence of "policy" deferral authority has
apparently not been viewed as a problem and will not be
considered herein.
current Proposals
Although a number of proposals to provide either
"enhanced''. or "expedited" rescission authority have been
discussed over the past few years, two examples will illustrate
the basic options available to the Administration in negotiating
with Congress on ~his issue.
Speaker Foley has suggested that
7
COPY
�.'\uN PRt:s
the 1974 Act be amended to provide "enhanced" rescission 00'\...
I
authority to the Executive.
Under the Speaker's
c.{ 00:
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propo~al, the~
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President could rescind appropriated funds subject to a\\.--- or \-<:,.:o/1
"veto" -!:::':
override of any Presidential rescission decision by a sim~
maiority vote of both Houses.
That majority vote in each House
would apparently be on a concurrent resolution that would not be
subject to the President's veto power under Article I, § 7 of the
COnstitution.
The exercise of such a two-House "veto" would be
flatly unconstitutional under Chadha.
Speaker Foley's proposal
would enhance existing rescission authority by requiring Congress
to act, but it is designed to ameliorate the transfer of power to
the Executive by negating the President's veto power.
Representative Carper offered and the House passed on
October 2, 1992 a substitute for H.R. 2164 which would have
provided rescission authority to the Executive by strengthening
the procedures by which the Joint Resolution mechanism in the
1974 Act attempts to guarantee an early vote in the Senate and
House on a rescission bill.
As' passed by the House, however, the
Carper bill contains a provision effectively allowing continued
rescission by the Executive until either the
Senat~
or House
defeats, on a floor vote, a specific rescission bill.
By
attempting to give legal force to the vote of a single House, the
carper bill as passed also violates Chadha.
city of New Haven is important to keep in mind at this
point not merely for the result it reaches but because it
illustrates how quickly a successful constitutional challenge
could be mounted in the federal district court in the District of
8
COPY
�d' oN P tr("s/.
Columbia to a s.tatute such as that proposed by Speaker Fp~~y or
.'
the substitute for H.R. 2194 offered by Representative 9arper.
Under Judge Edward's
~nalysis, ·.any
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person affected
adver'~ly
the Executive's decision to rescind an appropriation
.
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by
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waul~
entitled to an immediate declaratory judgment prohibiting the
rescission (assuming, as we do, that the rescission power
attached to the two-House veto were held to be inseverable from
that veto device).
We raise this point lest anyone believe that
a consensual arrangement with Congress putting an
unconstitutional legislative veto device into place could achieve
the stat~d policy objective, which is to provide enhanced
authority to the Executive to control the deficit through lawful
impoundment of appropriate funds.
There are, however, some constitutional alternatives to
the current version of the 1974 Act that should be considered
from a policy perspective as possible counteroffers.
II.
Constitutional Alternatives to Speaker Foley's Proposal
A.
Enhanced Rescission Authority
If Speaker Foley's proposal were to be modified in
order to his avoid the constitutional flaw, the Executive would
receive an extremely powerful tooL
That modification would
involve requiring that Congress disapprove a rescission decision
by a Joint, rather than Concurrent~ Resolution to be submitted to
the President pursuant to the Presentation Clauses and therefore
to be subject to his veto and the two-thirds override
requirement.
That adjustment, however, requires the very cession
of congressional authority that Speaker Foley-has indicated he is
9
COPY
�extremely reluctant to see Congress cede--effectively
requ~g
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Congress to act by a two-thirds majority of each House t,p
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override the Executive's d.ecision to rescind
.
appropriated~funds.
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such a congressional check would, at least in theory and
.
.
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.
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certainly in Speaker Foley's mind, be minimal if we assume a
President willing to exercise his veto power on a regular basis
in this context.
It should be noted in this regard that such a
provision would not set up a •igovernment-by-veto" situation that
the Administration would want to avoid.
·This is so because in
enacting such a bill, all sides would assume that the President
would back up rescission decisions with his veto power.
There are, however, ways to make such a procedure more
~aiatable
to Congress:
(1)
Include, as have several proposals already
considered by Congress, a "sunset" provision
with the Joint Resolution "veto" procedure,
perhaps two years in length; during that
period, the President's actual use, if any,
of his veto power could be assessed by
Congress in determining whether to renew the
joint resolution procedure.
(2)
Convert Speaker Foley's procedure into one
utilizing a "sense of the Congress"
resolution having no legally binding force on
the President; this procedure could also
proVide for the President to transmit to each
House a written explanation for his decision
not to follow the. "advice" embodied in
particular resolutions that the President
determined not to honor. Like the Joint
Resolution procedure, this arrangement could
be put under a sunset provision.
10
COPY
�.
( 3)
·
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Same as ( 2) above, but provide for one-Hou~'>\resolutions of disapproval as sufficient fo~
d
the President to issue a written explanat,ion \\D
if he determined not to follow the advice'~ of \\
one Houses regarding a particular rescission.
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(Not included in these altern'atives is a "joint resolution ~
procedur~
under which the President would agree, formally or
informally, not to exercise his veto power except under certain
specified circumstances~
The President cannot legally bind
himself not to use his veto power in the future in any particular
circumstance, and the appearance of his doing so, even
"informally," could cause considerable damage to the Presidency.)
Of these three alternatives, the first seems less
desirable. because it creates the potential for the President's
having to use hiS veto power, perhaps more often than any of us
would hope, in order to constrain a possibly undiscipiined
Congress.
The second and third alternatives blunt the sharpness
of the confrontation between the Executive and Congress that any
veto, even if preordained, creates.
(The media will jump on a
veto; they will pay much less attention to the President's
rejection of "advice" communicated by Congress or one House
thereof in a "sense of the Congress" resolution.)
The second
alternative might produce less "confrontation" than the-third
because one-House resolutions expressing disagreement would be
more likely to be passed than two-House resolutions.
At the same
time, the confrontation under the third alternative would be less
intense where one House defeated the "disapproval" resolution.
11
COPY
�/~
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B.
Expedited Rescission Authority
\\\~ ~\\
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The substitute for H.R. 2194 that passed the ~ouse in
\
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October 1992 could easily serve as a model for expedited\.,
rescission authority.
The unconstitutional feature
):>
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could~
cured by requiring funds proposed for rescission to be relea~ed
by OMB unless both Houses have passed and the President has
signed into law a rescission bill within a specified number of
days following submission of a rescission message.
III. Recommen.dations
A high-level approach to Chairman Byrd also should be
made.
The constitutional difficulty with Speaker Foley's
proposal should be surfaced with the Speaker before that proposal
gains additional momentum.
Putting one or more alternative
enhanced rescission proposals forward at the same time might well
be desirable to avoid a break in the dialog over this important
issue.
The following points should guide negotiations:
12
COPY
�/"~
(1)
This matter should, at least for the rnomei).4'\oN Pft~s>-,
0
not be discussed with the media but shoul~_i'"be
"'\
addressed in very private discussions with
cl..
'~·,
ap~ropriate Members of Congress. Preci~(ely \\\U
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whl.ch Members and the sequence of contadts
\
.
should be decided separately by those
\:cf./
involved with congressional relations.
\~)!
(2)
Only general principles need be discussed.
Working out the details of any proposal can
easily be done at the staff level once a
basic approach is agreed to.
(3)
In negotiations with the Democratic side,
emphasis should be put on:
(1) the need, in
the face of likely Republican tactics, to
enact truly powerful rescission authority to
counter demands for a coristitutional
"balance-the-budget" amendment or other less
workable alternatives to enhanced rescission
authority; (2) the fact that the current
system under the 1974 Act was an attack by a
justifiably furious Congress on a lawless
Presidency that should not he allowed to
dictate the relationship between t~e Clinton
Administration and Congress in an era where
deficit reduction has become critical to
long-term growth of the economy; and {3) the
acceptance of a sunset provision.
(4)
In negotiations with the Republican side,
points (2) and (3) above should be made,
along ~ith an appeal for bipartisanship on
this fundamental issue. Any linkage between
Republican support for enhanced rescission
authority and the Republicans' "balance-thebudget" approach should, however, be avoided.
At most, the Administration's negotiators
should agree to consider other alternatives
if enhanced rescission authority is enacted
but, at the end of the sunset period it has
not, in combination with other existing
tools, succeeded in meet the Administration's
deficit-reduction goals.
We would add that many current Members of Congress who
served in Congress ~rior to 1983 when Chadha was decided
believed, in good faith, that legislative veto devices are the
quintessential vehicle for achieving cooperation between the two
political Branches.
It may· therefore be wise for the President13
COPY
�~-~.·
v(1_\
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(
elect and his top advisers to be made aware of this
constit~tional
~
limitation on the Executive's authority td
"cooperate" with Congress, because it is predictable
.
\\\~
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~:
~/
that\~
devices will be put on the bargaining table in other contexts by
other well-intentioned Members of Congress seeking accommodation
with the Administration.
LLS/dmc
WL923440.005
14
COPY
�. . . . _ .. .. . . . .'···-·····
N:J;.:W.1~~~r1l!3.~!~. 7,,~~,
C' ·S·
'- '-"--
DECEMBER 14, 1992
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BrLes BLUE PENCIL
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For the first time in twelve years we have an undivided
government, and with it the opportunity to put to an
end the legislative cold war that has crippled the country. As Bill Clinton has discovered in the weeks since the
election, however, there are limits to the cooperation he
can expect even from a politically sympathetic Congress. Already he has been put upon by Democratic
leaders to relax or retreat from several of his campaign
pledges, chief among which is Clinton's request for a
line-item veto. Senator Robert Byrd is unalterably
opposed, and majority leader George Mitchell will only
say the subject is "appropriate to discuss." And though
Clinton and House Speaker Thomas Foley have tentatively proposed a compromise.version of the line-item
veto, a recent congressional letter in support of the
measure garnered just two Democratic signatures.
• Clinton should resist the opposition and stick to his
original promise. His new Democratic agenda depends
entirely for its public support on the notion that it can
keep effective government within reasonable limits. An
enhanced veto power as Cliriton and forty-two other
governors currently enjoy would enable him to gut bits
of frivolous legislation from vast spending bills while
abolishing the offensive congressional practice of "vote
swapping" for pet programs. Clinton, in short, would
have the power to hold Congress accountable for the ·
work it does; and government for the waste it generates.
That same power would, of course, hold Clinton to
stricter standards of accountability as well. As Michael
Kinsley suggested in these pages three years ago (see
"Let Him Have It," TRB, November 20, 1989), the lineitem veto would rid the presidency of one of its cynical
inclinations: blaming Congress. Clinton will find that
since more than half of the federal budget is consumed by entitlement programs and debt payments,
"lining out" pork alone won't significantly restrain
spending. Real deficit reduction will require cutting
meat, not fat. But unlike Reagan and Bush, should a
veto-armed Clinton fail to make those cuts, he won't
be able speciously to finger a spendthrift Congress.
Nor could he argue, as his predecessors have, that
Congress "forced, him to pass legislation he opposed
by embedding it in legislation he favored.
Foley calls his proposed compromise an "enhanced
recission." Under the current system, the president recommends specific cuts in spending bills, and Congress,
which isn't required to act on them, usually ignores the
suggestions. Under Foley's proposal, the president's
recissions would have the force of law unless Congress
overrode them by a simple majority vote. But there is a
problem with Foley's proposal: it is unconstitutional
under the Supreme Court's 1983 decision in INS v.
Chadha. The Supreme Court ruled that legislation must
be passed by both houses and presented to the president, whose vetoes can be overridden only by a twothirds vote of both houses. It is unsettling that Foley and
former law professor Clinton are so cavalier about basic
constitutional requirements.
There is a way to enact a line-item veto without
amending the Constitution. Congress can choose
among several versions that would satisfy the Supreme
Court. The best solution is, unfortunately, also the most
cumbersome: Congress could simply resist passing the
omnibus spending bills that have robbed the president of his deliberative powers. ln the mid-'70s
Congress began the now standard- practice of
sending the president one enormous spending resolution each year instead of several
small ones, forcing the president to vote up. or
down on hundreds of disparate pieces of legislation at once. Instead, Congress could vote on all
appropriations, item by item, and present each to the
president as a separate bill. Alternatively, Congress
could change the definition of a bill by changing the .
rules of both houses to declare that 200 appropriations
bills will be put to a single vote, but that each will be
presented separately to the president for his signature
or veto. Probably the most durable solution, however,
would be to amend the U.S. Code's "Dictionary Act" so
that any individual appropriation contained within a
bill would be treated as a separate bill. That should be
strict enough to satisfy even Justice Scalia-and, with
some coaxing from a Democratic president, perhaps
Foley and Mitchell as well. •
••cEM•ERGePY
�Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
AND TYPE
DATE
SUBJECT/TITLE
RESTRICTION
001. memo
For Erskine Bowles from Charles Ruff, William Marshall, Lisa
Hertzer. Subject: Line Item Veto Negotiation. (3 pages)
11/03/1997
P5
Ill q
002.letter
From Janet Reno to the President: Subject: Use of Line Item Veto. (5
pages)
12/16/1997
P5
l LZ-D
003. memo
For the Attorney General from the Solicitor General. Subject: NTEU
Line Item Veto Case. (4 pages)
12/15/1997
P5
IlL-I
COLLECTION:
Clinton Presidential Records
Counsel's Office
Charles Ruff
OA/Box Number: 13213
FOLDER TITLE:
Line Item Veto
Van Zbinden
2007-0624-F
vz1221
RESTRICTION CODES
Presidential Records Act- [44 U.S.C. 2204(a)]
Pl National Security Classified Information [(a)(l) of the PRA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
P3 Release would violate a Federal statute [(a)(3) of the PRA]
P4 Release would disclose trade secrets or confidential commercial or
financial information [(a)(4) of the PRA]
. PS Release would disclose confidential advice between the President
and his advisors, or between such advisors [a)(S) of the PRA]
P6 Release would constitute clearly unwarranted invasion of
personal privacy [(a)(6) of the PRA]
a
C. Closed in accordance with restrictions contained in donor's deed
of gift.
PRM. Personal record misf.Lie defined in accordance with 44 U.S. C.
2201(3).
RR. Document will be reviewed upon request.
Freedom of Information Act- [5 U.S.C. 552(b )]
b(l) National security classified information [(b)(l) ofthe FOIA]
b(2) Release would disclose internal personnel rules and practi~es of
an agency [(b)(2) of the FOIA]
b(3) Release would violate a Federal statute [(b )(3) of the FOIA]
b(4) Release would disclose trade secrets or confidential or financial
information [(b)(4) of the FOIA]
b(6) Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
b(8) Release would disclose information concerning the regulation of
financial institutions [(b)(8) ofthe FOIA]
b(9) Release would disclose geological or l(e~lphysic:Mii~lrm
concerning wells [(b)(9) of the FOIA]
�r.l
THE WHITE HOUSE
WASHINGTON
\\\\
November 3, 1997
I
\._
MEMORANDUM FOR ERSKINE BOWLES
FROM:
~ARLES_E.C. RUFF
·
~~SHALL.
LISAHERTZER
SUBJECT:
LINE ITEM VETO LITIGATION
On Friday, we met with attorneys from the Department of Justice and the Office of
Management and Budget reganiing whether the President's cancellation of Section 642 of the
"Treasury and General Appropriation Act, 1998" exceeded his statutory authority under the Line
Item Veto Act (Act). This statutory question has been joined with the constitutional challenges
to the line item veto that have been brought in the consolidated cases currently before Judge
Hogan. OMB strongly asserts that the cancellation is permissible under the Act. The
Department of Justice has serious reservations. Senate and House Counsel are also reviewing
this issue and are considering whether to file on the side of the plaintiffs, contending that this
particular cancellation exceeds the President's authority under the Act. This memorandum
briefly outlines the issues involved.
A.
BACKGROUND
Section 642 would have allowed federal employees to switch retirement coverage to the
Federal Employees Retirement System'(FERS) from enrollment in the Civil Service Retirement
System (CSRS). OMB estimated that the budgetary effect of Section 642 would be a cost of
.
$854,000 thousand dollars (over five years) in lost federfc!.l receipts from employee contributions,
and this figure was cited in the President's Special Message to Congress announcing the
cancellation of this provision. Section 642 also would have increased federal outlays in future
years based upon the need for added federal agency contributions to the federal employee trust
funds. Significantly, on Friday the Congressional Budget Office relied on this fact (and not upon
the reduction of employee receipts) in its report concluding that the cancellation ·of Section 642
would constitute a reduction in budget authority that would reduce the deficit as required by the
Act. The cost in increased outlays, however, was not included in the President's Special
Message to Congress.
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The statutory question raised by this cancellation is whether the Act au~horiz~ the \\\~ ~\
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President to cancel a pr?vision (other than a limited tax benefit) whose budgetar: efr~ct consists
of a loss of federal rece1pts rather than an outlay of federal funds. A secondary 1ssu~ 1s whether
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this cancellation can be defended on the grounds that the effect of Section 642 would'-be to
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increase federal outlays even though that rationale was not presented to the Congress iri
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President's Special Message.
B.
THE STATUTORY ISSUE
1.
The Concerns Raised by DOJ
DOJ raises two separate concerns; The first is that they are not persuaded that the
cancellation of Section 642 was permissible under the Act. As they point out, the Act allows
cancellations based upon lost receipts only in very narrow and highly specified circumstances
(limited tax benefits). The fact that Congress was so specific and narrow in its explicit grantto
the President of authority to cancel lost-receipt provisions would argue against the position that
Congress, at the same time, implicitly intended to grant the President a broad authority to cancel
such provisions outside the limited tax benefit context.
Second, and perhaps more significantly, DOJ is concerned that a broad reading of the
President's statutory powers to cancel receipt-reducing provisions would weaken their
constitutional defense of the Act.· Throughout the·line item veto litigation, DOJ has taken the
position that the Act grants only very modest powers to the President and that the powers granted
to him under the Act are within the range of actions that have historically been within the
prerogative of the President. For example, DOJ's briefs are replete with examples of the
President's historical right not to spend monies that have been allocated to the Executive.' At the
sanie time, DOJ has acknowledged in its briefs that the Act's allowance of cancellation of tax
benefits is on less firm historical ground because the voiding of tax benefits is not the same as
·the simple refusal of the President to spend allocated funds. Accordingly, DOJ has attempted to
defend the Act's provisions granting the President the power to cancel limited tax benefits as
being very narrow and circumscribed. They are therefore concerned that reading the Act to
authorize a broad power for the President to cancel receipt-reducing provisions would be
inconsistent with their constitutional position.
2.
· The Position of OMB
. OMB believes that the cancellation was on firm statutory footing. UnderOMB's reading,
the Act allows the President to cancel a dollar amount of discretionary budget authority -defined in the Act as "the entire dollar amount of budget authority required to be allocated by a
specific proviso in an appropriation law for which a specific dollar figure was not included."
"Budget authority," in tum, is defined in the Congressional Budget Act as including offsetting
receipts as negative budget authority and the reduction of receipts as positive budget authority.
2
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Accordingly, OMB concludes that the reduction of receipts created by Section 642
budget authority subject to cancellation.
.
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RE-CHARACTERIZING THE CANCELLATION
During our discussions, the question was also raised as to whether the line item veto of
Section 642 could be re-characterized as a cancellation of outlays in order to avoid the question
of whether the Act allows for the cancellation of lost receipts. As noted previously, allowing
federal employees to switch enrollment from CSRS to FERS will lead to additional outlays in
future years. Accordingly, both DOJ and OMB seem to agree that the cancellation could have
been properly effectuated if the Special Message submitting the cancellation to the Congress set
forth these estimated future outlays rather than the lost receipts as the items to be canceled. It is
up.clear, however, whether this theory could prevail in court. First, the Act does not provide for
amending the Special Message and the five day time period for sending the message to Congress
would appear to militate against any claim that a message could be changed, or re-characterized,
substantively after its submission. Second, DOJ argues that, technically speaking (and consistent
with its constitutional theory), a line item veto does not cancel a provision. It cancels the funds
to be expended under that provision. If this is true, then the item that was canceled in this case
was the $854,000 thousand in lost receipts. Substituting a new dollar amount based upon
amounts of future outlays, therefore, would not "amend" the previous cancellation; it would
constitute an entirely new cancellation. OMB, on the other hand, argues that it is the item and
not only the funds that are canceled by a line item veto. They also point out that the
Congressional Budget Office, in concluding that the cancellation of Section 642 would reduce
outlays, was not limited by the characterization contained in the Special Message.
D.
RECOMMENDATION
Seth Waxman feels strongly that our already delicate position on the line item veto will
be weakened by having to defend the broader interpretation of the Act necessary to encompass
the Section 642 cancellation. We are sensitive to the concerns of the Solicitor General as our
expert on Supreme Court matters but are hesitant to put the President in the position of having to
abandon a position he took on considered advice of OMB and his advisors. We are inclined to
suggest that we defend the cancellation on the narrow grounds that the line item veto of Section
642 was permissible under the Act as a reduction in out!~ys and that if any error occurred, it was
only in the form of the Special Message. We believe, however, that you should hear from Seth
before making a decision.
Because DOJ attorneys will be meeting with Senate Counsel to discuss this issue in the
next few days and because the.line item veto cases are on an expedited briefing schedule, we will
need to internally resolve this issue as soon as possible. We recommend meeting with you to
discuss this issue at your earliest convynience.
3
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December 16, 1997
The President
The White House· .
Washington, DC 20500
Dear Mr. President:
This letter outlines the issues related to the defense of
your exercise of the Line Item Veto Act to cancel the budget
authority contained in Section 642 of the Treasury and General
Government Appropriations Act of 1998, enacted October 10, 1997.
The Department of Justice believes that defense of this · .
cancellation would be a mistake for several reasons, ·including
the following:
•
The Solicitor General has advised me that
defense of this cancellation would severely
undermine our constitutional defense of the
Act.
•
The defense of this cancellation will require
us to advance an extremely broad
interpretation of the Line Item Veto Act,
which finds very little support in the
statutory text.
•
Defense of this cancellation will undermine
the inter-branch unity we have enjoyed with
the Congress on issues concerning the Act
because the Senate will file a brief against
us.
We have had extensive consultations with the Office of
Management and Budget ("OMB") concerning this cancellation. As a
result of those discussions, we h~ve formulated an argument that
comports with OMB's theory.
If directed, we will defend the
cancellation on this basis in the district court. We believe,
however, that such a defense is not legally correct~ and is not
in the best interests of the Executive Branch, and thus we
believe that the United States should accept a consent judgment
that the cancellation was invalid.
Overview of the Case
·Section 642 allows individuals subject to the Civil Service
Retirement System ("CSRS") to switch to the Federal Employee
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Retirement System ("FERS") during an open season to be ~onducted
by the Office of Personnel Management ( "OPW') in 1998.
~n the
cancellation message transmitted to Congress pursuant t:o the Line
Item Veto Act, you specified you were cancelling $854 milll
of
"discretionary budget authority" contained in that provision "due
to reductions in employee contributions to the Civil Service
Retirement and Disability Fund" over the next five years.
The
message also explained that you had made the findings required by
the Line Ite~ Veto Act. The report attached to the special
message explained how the $854 million in reduced employee
contributions was calculated.
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.
The National Treasury Employees Union ( "NTEU") and two of
its members have challenged the cancellation. National Treasury
Employees Union v. United States, Civ. Act. No. 1:97CV02399
(D.D.C.).
They claim that reduced employee contributions are not
"discretionary budget authority" under the Line Item Veto Act,
or, in the alternative, that the Line Iteci Veto Act is
unconstitutional.
Overview of the Line Item Veto Act
The Line Item Veto Act authorizes the President to "cancel,"
as prescribed by the Act, "any dollar amount of discretionary
budget authority," "any item of new direct spending," or "any
limited tax benefit."
2 U.S.C. ·§ 691(a).
Each of those terms
has a distinct meaning. The term "dollar amount of discretionary
budget authority" is defined, among other things, to include "the
entire dollar amount of bu?get authority .
. specified in an
appropriation law, or the eritire dollar amount of budget
authority required to be allocated by a specific proviso in an
appropriation law for which a specific dollar figure was not
included." 2 U.S.C. § 691e(7) (A) (i).
In making a cancellation under the Act, the President must
make express findings that the cancellation will reduce the
federal deficit, not impair any essential government functions,
and not harm the national interest. The President must, within
five days of signing the law, transmit a "special message" to
Congress that specifies, among other things, the "dollar amount
of discretionary budget authority,
. . which has been
canceled," the "account, department, or establishment of the
Government for which such budget authority was to have been
available for obligation and the specific project or governmental
functions involved," and adjustments to be made to the federal
government's discretionary spending limits.
2 U,S.C. § 691a.
Cancellation of a dollar amount of discretionary budget
authority acts to "rescind" that authority.
2 U.S.C.
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§ 69le(4) (A).
Pursuant to the Act, the caps establishe~ by the
Budget Enforcement Act are reduced by the canceled dolla~amount
so that the funds may not be spent on other projects.
2 U . . C.
§ 69lc (a) (1) (B).
----
Defending the Cancellation
If so directed, we propose to defend the cancellation on two
grounds.
First, applying OMB's interpretation of the scoring
rules that Congress has adopted for purposes of the Budget
.Enforcement Act, we will argue that reductions in governmental
receipts, such as the lost employee contributions to the
~etirement fund in this case, are "discretionary budget
authority" within the meaning of the Line Item Veto Act if the
reductions are the result of substantive provisions of law
inserted into an appropriations law. We will argue that OMB's
interpretation of the Act is entitled to deference, and that OMB
properly followed the scoring rules.
Second, we will argue that, irrespective of what the
cancellation did or what OMB did, Section 642 does contain budget
authority because employees who switch retirement programs
trigger a series of government out'lays, including permanent
appropriations td cover the fund's unfunded liability and
additional agency contributions to the CSRS/FERS fund.
Moreover,
both.NTEU and the Congressional Budget Office ("CBO") have
admitted that there is budget authority triggered by Section 642.
Although CBO's estimate of the financial impact of the
cancellation is different from the figure given in your
cancellation message to Congress, we will argue that this
discrepancy does not invalidate the cancellation.
Reasons Why This Cancellation Is Unlikely to Stand
Although we believe that this argument is not altogether
unreasonable -- and that it is the best that can be made under
the statute -- we believe that it is legally incorrect and has
little chance of ultimate success. To defend this cancellation,
we must argue either that reductions in income are "budget
authority" or that the cancellation should be upheld even if the
special message identified the wrong "budget authority 11 and the
wrong 11 dollar amount. 11 Neither approach is promising .
. With respect to .the first argument, the statute was plainly
designed to apply to legislated spending (and "limited tax
benefits 11 ) .
To argue that it permits cancellation of a reduction
in income gives every appearance of unjustifiably expanding the
Pr~sident's powers under the Act.
The plain language of the Act
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"budget authority,
and Scoring Rule 3 does not, by its pl"ai~..c..:O'
terms, support the broader construction of "budget authorit'y11
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that OMB favors. Moreover, Section 642 is significantly
different from the examples of cancelable provisions discussed in
the legislative history of the Act.
It would also be problematic to rely on scoring rules
developed under the Budget Enforcement Act to control
interpretation of the Line Item Veto Act. The scoring rules are
subject to frequent change and are ihte~preted differently by OMB
and CBO; in this situation, one would not expect the Line Item
Veto to be subject to such variations.
Significantly, any
argument relying on OMB's· interpretation of the scoring rules
will provoke a sharp response from Congress; the Senate Legal
Counsel has informed us that he will file a brief against us if
we pursue this argument.
·
The second possible argument -- that Section 642 contains
budge.t authority because it triggers additional government
payments -- is flawed because such payments are not directly
mentioned in your special message to Congress concerning the
cancellation. There is no evidence to indicate that the findings
required by the Line Item Veto Act were made with respect to
those payments, and it is clear that the.$854 million identified
in the message does not correlate with those payments.
Cancellation of Section 642 raises other, very thorny
problems.
For example, under the Act, cancellation of
discretionary budget authority operates to "rescind" the funds
allocated; it does not repeal the provision of law. This
cancellation, however, .does not purport to rescind any funds
allocated; it effectively seeks to repeal the provision of law.
Nevertheless; there is a strong argument that, even though the
lost employee contributionswere "canceled," OPM will still have
to run the open season because some employees. may want to switch
programs.
Defense of This Lawsuit Will Jeopardize Our Defense of the
Constitutionality of the Line Item Veto Act
The single most important reason not to defend this
cancellation is the impact that it is likely to have on a defense
of the constitutionality of the Line Item Veto Act. As the·
Solicitor General explains in the enclosed memorandum to me,
defense of this cancellation will. jeopardize our constitutional
arguments in several ways:
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Page 5
•
Our best chance to defend the
constitutionality of the Act is by arguing
that the President's cancellation authority
is narrow and closely analogous to his
·
historic discretion to decline to spend
appropriated funds.
This cancellation cannot
be defended on that narrow basis, because it
involves reductions in receipts.·
•
Our best chance to d~fend the
constitutionality of the Act depends on the
support of the Congress, who can argue to the
Court that their power is not infringed by
the Act. They will oppose the lawfulness of
this cancellation~
•
Defense of this cancellation will leave us
susceptible to the. argument that the
President's cancellation authority is being
exercised without consideration of all of the
effects of the canceled provisions.
This
will undermine our central argument that the
Act's requirements of formal presidential
findings and a special message place
meaningful constraints on the President's
discretion.
Conclusion
In sum, we believe that the chances of winning this lawsuit
are slim because the Line Item Veto Act should not be read to
extend to cancellation of provisions such as Section 642.
Moreover, the expansive reading that we will be forced to give
the Act in defense of this cancellation will make the Solicitor
General's efforts to defend the constitutionality of the Act
dramatically more difficult, and could cost us critical votes in
the Supreme Court.
For these reasons, we strongly urge that the
United States not defend the cancellation of Section 642, and
instead submit to a consent judgment in the district court.
/
/
Janet Reno
Enclosure
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Office of the Solicitor General$
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December 15, 1997
MEMORANDUM TO THE ATTORNEY GENERAL
GENERAL~
FROM:
THE SOLICITOR
Re:
NTEU Lil}.e· Item Veto Case
I understand that the Civil Division and OMB have concluded that a statutory defense
in the NTEU line item veto case is at least theoretically possible. For the reasons that
follow, however, I urge you and the President not to defend this cancellation --even in the
district court:-- but, instead, to accept a consent judgment. I frrmly believe that attempting
to justify.the NTEU cancellation as a proper exercise of the President's authority would
. seriously undermine our ability to defend the Line Item Veto Act against constitutional
challenge.
The Theory of Defense
This case involves the President's effort, pursuant to his authority under the Line Item
Veto Act; to cancel a provision of law that would have established an "open season" during
which certain federal employees could have switched their retirement coverage from CSRS to
FERS. The President's special message stated that he was cancelling a "dollar amount of
discretionary budget authority" totalling $854 million. That amount represented the
reduction in employee contributions to the retirement fund that was expected to occur during
the five-year period following the cancellation if the option to switch from CSRS to FERS
became available. The cancellation message itself did not make clear whether the President
intended to cancel the entire open season provision or only the reduction in employee
contributions. We know from OMB, however, that the intent was to prevent the open season
from going forward.
·
To understand the theory of defense, it is necessary to understand something about
"scoring rules" OMB uses to carry out its responsibilities under a different statute, the
·Budget Enforcement Act (BEA). Under that Act, OMB is required to provide an "estimate
of the amount of discretionary new budget authority and outlays" contained in an
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appropri~tions law.
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interpretation of "Scoring Rule 3 ").is that a substantive provision of law that i&' inserted into
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an appropriations law to reduce the government's income will. be "scored" as "~iscretionary
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new budget authority. "2 Consistent with its general practice, OMB "scored" thevoss of
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employee contributions that was expected to result from the CSRS/FERS open seas~/
provision as "discretionary new budget authority. "
/,
'
The Civil Division has prepared a draft brief that attempts to defend the cancellation
at issue on two alternative theories .. The draft argues, first, that because Congress was aware
of OMB's s~oring practices when it enacted the Line Item Veto Act, therefore since OMB
"scored" the reduced employee contributions as "discretionary new budget authority" for
B~A purposes, the reduced contributions should likewise be regarded as "discretionary
budget authority" subject to cancellation under the Line Item Veto Act. Significantly, the
draft brief does not argue that .the reduced contributions satisfy the definition of "budget
authority" contained in 2 U.S. C. 622(2)(A)(i) --a provision that expressly applies to the Line
Item Veto Act. The draft brief does contend, however, as an alternative theory, that because
certain outlays that would result from the open season provision do fall within the Section
622 defmition, the cancellation may be upheld on that basis if the court concludes that the
Section 622 defmition of "budget.authority" is controlling.
Reasons Not To Defend the CSRS/FERS Cancellation
The theory of defense reflected in the draft brief is extremely weak, even as a
statutory matter. What is more, the defense rests upon an expansive interpretation of
presidential power under the Line Item Veto Act that is inconsistent with the arguments we
have made in favor of the Act's constitutionality. At this critical stage, establishing the
constitutionality of the President's cancellation authority under the Line Item Veto Act is
simply too important a goal to jeopardize with a dubious and immoderate assertion of
statutory authority.
1.
· Cancellation of the CSRS/FERS provision cannot credibly be analogized to
any power the President has historically exercised.
Opponents of the Line Item Veto Act have contended, inter alia, that it results in an
unconstitutional delegation by Congress to the President of legislative power because the
President's cancellation authority is broad and standardless. Our brief in Raines v. Byrd
responded to that constitutional attack by arguing that the President's authority under the Act
(at least as applied to spending items) is closely analogous to the discretion Executive Branch
officials have historically possessed with respect to the decision whether or not to spend
appropriated sums. Indeed, our brief essentially equated the cancellation of "discretionary
1
Such estimates might ultimately trigger a "sequestration" under the BEA if discretionary spending
caps for the fiscal year are exceeded.
2
The Congressional Budget Office does not agree with that interpretation of Scoring Rule 3.
2
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bu.dget authority" --the category invoked by the President's cancellation messag{~ this case
-- with decisions historically made by Presidents (in the nature of impoundmenci;) not to
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That analogy will be wholly undercut if we construe the Act (and particulk-ly its
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provision for cancelling "discretionary budget authority") as permitting the President
·
invalidate an entire substantive provision of law simply by identifying some form of "budget ·
authority" contained in or affected by the provision. The reduction in employee
contributions to the retirement fund is only one of a number of substantive provisions of law
that are triggered by the special open season Congress enacted, and it is only one of many
fmancial consequences that follow from an employee's decision to switch from CSRS to
FERS. The authority to cancel the open season provision therefore cannot plausibly be
compared to any power the President has traditionally exercised to decline to spend the full
amount of funds that Congress has appropriated to a particular agency, or for a particular
purpose, for a fiscal year. Rather, our defense of the cancellation will (necessarily) blur the
line between the refusal to spend appropriated funds and the invalidation of sub~tantive
provisions of law. 3
.
2.
Defending the CSRS/FERS cancellation will jeopardize our alliance with
Congress in the constitutional defense.
In defending the Line Item Veto Act against the claim that the Act violates separation
_ of powers principles by authorizing the President to "repeal" Acts of Congress, it will be
very important to have the full support of the Senate and House as amici curiae, arguing that
Congress does not regard the Act as an infringement on its constitutional prerogatives. If we
defend the cancellation on the theory described above, the Senate Legal Counsel is expected
··to flle an amicus brief arguing that the cancellation was improper. (Such an argument would
be consistent with the Congressional Budget Office's longstanding view that reductions in
governmental income resulting from provisions contained in appropriations laws should not
be scored as "discretionary new budget authority.") Such a filing would impair the image of
· interbranch unity we need to project, and might lead the Supreme Court to conclude that if
the Act is sustained, the judiciary will be required (in the course of ruling on challenges to
individual cancellations) to resolve disputes between the political branches concerning arcane
budgetary matters.
3
Cancellation of iimited tax benefits is also concededly different from the authority that the President
has historically possessed to decline to spend appropriated funds. The President's authority to cancel tax
provisions, however, is subject to limitations of its own-- most obviously, the requirement that no more
than 100 taxpayers be affected. The President's power to cancel limited tax benefits, moreover, is clear
on the face of the Line Item Veto Act, while the contention that the President may cancel entire
provisions of law based on relatively modest .budget impacts has no apparent textual basis (and no
apparent stopping point): Finally, invalidation of the President's authority to cancel limited tax benefits
would (assuming that authority to be severable) leave the core of the Line Item Veto Act intact. The
.·provisions governing discretionary budget authority, by contrast, have always been regarded as the most
important and most defensible feature of the Act.
3
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The President has tried, in a variety of ways, to convey the message that
the cancellation authority under the Line Item Veto Act as an especially important
presidential prerogative, to be exerCised· with particular care and circumspection. It is quite
important that we do all we can to persuade the Court that the Act is in fact being
administered on that basis. The Supreme Court's decisions during the last Term suggest a
particular aversion to anything that smacks of. symbolic legislation, and we should make
every effort to prevent the Court from regarding the Line Item· Veto Act in that light.
II
II
To defend the CSRS/FERS cancellation -- .even in the district court -- would
significantly undermine that effort. The draft brief does not contend that the reduction in
employee contributions that the President's special message identified as the cancelled item
falls within the definition of "budget authority" contained in 2 U.S.C. 622(2)(A)(i). Instead,
the draft brief argues (in essence) that established OMB scoring practices can be used to .
replace rather than to elucidate the statutory definition. OMB sincerely regards the various
scoring rules (and its own construction of them) as substantial constraints on its own
discretion. The contention that the President's cancellation authority extends beyond items
covered by the statutory definition, however, is likely to strike the Supreme Court as an
·
extraordinary ·assertion of executive power.
Similarly, to defend the cancellation on the alternative theory that the "open season"
provision of the Treasury Appropriations Act triggers certain· provisions of other laws that
might fit the definition of "budget authority" in 2 U.S. C. 622(2) would require us to offer a
rationale that is not set forth in the President's cancellation message -- suggesting that the
President may rely on statutory provisions and fuiancial .consequences that are far afield from
the appropriations provision that he purported to cancel. That. alternative would undermine
another important point we made in Raines v. Byrd in defense of the Act: that the President
is subject to important procedural limitations on the exercise of his cancellation authority by
the requirements that he (a) make specific determinations and (b) include particular
information about the cancellation in his cancellation message, both of which ar~ lacking here
with respect to the suggested alternative rationale.
At worst, a defense of the cancellation along the lines set forth in the draft brief may
suggest to the Court that the President's authority is being exercised cavalierly or carelessly.
Even if the Court does not regard our position as wholly unreasonable, however, it will
surely conclude that the President is intent on construing his own cancellation authority under
the Line Item Veto Act in the broadest possible manner. That perception cannot help but
lessen the Court's willingness to sustain the Act against constitutional challenge.
4
COPY
�I
:
I
I
i"•>
Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
AND TYPE
DATE
SUBJECT/TITLE
RESTRICTION
IIZ-L
01/03/1997
P5
For Jack Quinn and Kathy Wallman from Elena Kagan. Subject: Line
·Item Veto. [with Jack Quinn and Elena Kagan annotations] (2 pages)
03/1811996
P5
ll"l.-~
003. memo
For Jack Quinn and Kathy Wallman from Elena Kagan. Subject: Line
Item Veto. [with Jack Quinn annotations] (2 pages)
03/1811996
P5
l 12-4
004. memo
For Jack Quinn and Kathy Wallman from Elena Kagan. Subject: Line
Item Veto Update. (2 pages)
03/12/1996
P5
\ILS
005. memo
For Abner Mikva and Alice Rivlin from Walter Dellinger. Subject:
Line Item Veto Legislation!H.R.2. (4 pages)
06/1311995
P5
\ \'2-{e
006. memo
For Jack Quinn and Kathy Whalen from Elena Kagan. Subject: Line
Item Veto. (2 pages)
12/05/1995
P5
j\I-1
007a. memo
For Jack Quinn and Kathy Whalen from Elena Kagan. Subject: Line
Item Veto Memo. (1 page)
12/05/1995
P5
ll'lg
007b. memo
For Chuck Konigsberg from Richard Shiffrin. Subject: Line Item Veto
Legislation/House Conference Offer. (4 pages)
12/04/1995
P5
(I z_q
008a. memo
For Abner Mikva and Alice Riv1in from Walter Dellinger. Subject:
Senate-Passed Separate Enrollment Line Item Veto/S.4. (4 pages)
03/27/1995
P5
1130
008b. memo
For Abner Mikva and Alice Rivlin from Walter Dellinger. Subject:
Line Item Veto Proposed Changes to H.R.2. (12 pages)
03/27/1995
P5 113.
009. memo
For Abner Mikva and Alice Riv1in from Walter Dellinger. Subject:
Line Item Veto Proposals/SA, S.14, and S.l37. (5 pages)
03/1611995
P5
001. memo
002. memo ·
For Jack Quinn and Kathy Wallman from Trey Schroeder. Subject:
Line Item Veto Hearing. (1 page)
I
1132...-
COLLECTION:
Clinton Presidential Records
Counsel's Office
Charles Ruff
OA/Box Number:· 17983
FOLDER TITLE:
Line Item Veto
Van Zbinden
2007-0624-F
vzl222
RESTRICTION CODES
Presidential Records Act- [44 U.S.C. 2204(a)]
Freedom of Information Act- [5 U.S.C. 552(b)]
PI National Security Classified Information [(a)(l) of the PRA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
P3 Release would violate a Federal statute [(a)(3) of the PRA]
P4 Release would disclose trade secrets or confidential commercial or
financial information [(a)(4) of the PRA]
PS Release would disclose confidential advice between the President
and his advisors, or between such advisors [a)(S) of the PRA]
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(a)(6) of the PRA]
b(l) National security classified information [(b)(l) ofthe FOIA]
b(2) Release would disclose internal personnel rules and practices of
an agency [(b)(2) ofthe FOIA]
b(3) Release would violate_ a Federal statute [(b)(3) of the FOIA]
b(4) Release would disclose trade secrets or confidential or fmancial
information [(b)(4) of the FOIA]
b(6) Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
b(S) Release would disclose information concerning the regulation of
financial institutions [(b)(S) of the FOIA]
b(9) Release would disclose geological or geopb~rsir.;~lltor·m
concerning wells [(b)(9) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
of gift.
PRM. Personal record misfile defined in accordance with 44 U.S.C.
2201(3).
RR. Document will be reviewed upon request. ·
�I
'
I
I
•
~.>(
.._, ~
•:i
Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
AND TYPE
DATE
SUBJECT/TITLE
RESTRICTION
010. memo
Duplicate of009. (5 pages)
03/16/1995
P5
011. memo
Duplicate of009. (5 pages)
03/16/1995
P5
1133.
ol,r ,,3~
tl3'-f 0~--p) t3?.-
COLLECTION:
Clinton Presidential Records
Counsel's Office
Charles Ruff
OA/Box Number: 17983
FOLDER TITLE:
Line Item Veto
Van Zbinden
2007-0624-F
vzl222
RESTRICTION CODES
Presidential Records Act- [44 U.S.C. 2204(a)]
Freedom of Information Act- [5 U.S.C. 552(b)]
PI National Security Classified Information [(a)(l) ofthe PRA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
P3 Release would violate a Federal statute [(a){3) ofthe PRA]
P4 Release would disclose trade secrets or confidential commercial or
financial information [(a){4) of the PRA]
PS Release would disclose confidential advice between the President
and his advisors, or between such advisors [a)(S) of the PRA]
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(a)(6) of the PRA]
b(l) National security classified information [(b){l) ofthe FOIA]
b(2) Release would disclose internal personnel rules and practices of
an agency [(b)(2) of the FOIA]
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
b(4) Release would disclose trade secrets or confidential or fmancial
information [{b)(4) of the FOIA]
b(6) Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b){7) ofthe FOIA]
b(S) Release would disclose information concerning the regulation of
financial institutions [(b){S) of the FOIA]
b(9) Release would disclose geological or 2eo•ph:ysic:Miillt)>rntllii...
concer~ng wells [(b)(9) of the FOIA].
C. Closed in accordance with restrictions contained in donor's deed
of gift.
PRM. Personal record misfile defined in accordance with 44 U.S.C.
2201{3).
RR. Document will be reviewed upon request.
�January 3, 1997
Memorandum· for J,®k Quinn
K.athy Wallman
From:
Hearing
Subject:
I spoke with Gary Grindler this morning regarding the position the Department of Justice
intends to take in Monday aftem.oon•s scheduling conference on the sutt filed yesterday by six
Members of Congress challenging the lim:~-item veto thAt became effective J~~nwuy 1. Oary is
preparing a response to a motion to expedite he expects the plaintiffs will file today. He expects
the plaintiffs to propose a simultaneous briefing scheduling with briefs due January 22. Justice
will oppose the motion, arguing that plaintiffs may file a motion for summary judgment anytime
1
between now and January 22 but that Justice should be allowed. 30 days' time after sucll motion
! is filed in which to prepare a response. Because the statute provides for expedited review by the
··district court, however, the likelihood of success is unclear.
The statute expressly provides standing to Members of Congress or nany individual
adversely affected[.]" The statute notwithstanding, Justice plans to argue that the case is not
justiciable under Article Ill requirements: ttJ.e case isn't ripe since there are no bills pending, no
annormcement by the President that be will exercise the authority on any given legislation, and,
of course) no_exc:rcisc:
this fi(;W :suthority by the President. Justice will argue tlui.t there's no
case or controversy arid, because thct'e's no injury, no standing.
of
Justice will also seek a bifureat.ed briefing schedule, separating the merits from the
justiciability issues. In last year's National Treasury Employees Union case, Judge Riehey
agreed to a bifurcation of the issues and. as you may recall, having found that the union failed to
show any injury, never reached the merits of the case.
The statute also empowers the House of Representatives with the right to intervene.
Justice will argue that this right of intervention is one reason the briefing schedule should not be
expedited since the House is not expected to move swiftly.
COPY
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1
~ n~HITE HOUSE
.
~
M
c,);."stJ~ • ~\(.A. ~ti
~arch 1~, 1996
~ J. L.t..
MEMORANDUM FOR JACK QUINN
KATHY WALLMAN
0<::_
FROM:
ELENA KAGAN
SUBJECT:
1
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LINE ITEM VETO
(<y-~~ ~
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·~IN~
Republican conferees on the line-it m veto have arrivedYr~~·
an agreement on all but one or two subjects. The current
Republican strategy is to add the line-item veto to the debt
ceiling bill in the last week of March.
1,. ~fi'M..._II
Problems we have with the agreement are as follows:
The conferees decided to stick with the lockbox mechanism,
'
· which requires a reduction in discretionary spending caps
-~
(or PAYGO balances) whenever the President strikes a
sp~nding it. em. _ ~his creates a signific~nt ~is incentive fo.l_ ·_
~s1ng the author1ty.
Conferees are say1ng 1n·defense of~
lockbox mechanis.m ·that the. purpose of the item veto is to
·
save money -- not to permit a President to shift prioritft. _
·
.J-,
L
The conferees decided to limit the President's authorit~~~
cancelin. g provisions "in whole,". ra.ther .than '~in. wh~le or i~n
part." The agreement, however, 1s supposed to perm1t theauthority to apply down to the level of any project
specified in the· joint statement of managers, committee
·
report, or authorizing legislation. I haven't yet seen the ____,
language effecting this agreement.
d
•
The conferees reiained the provisions on targeted tax
beriefits to which-we had objected. The definition of such a
benefit still turns on whether ~ provision affects fewer
than 100. beneficiaries. In addition, Congress has sole
pow~r (the.Presi~e~t.has none) to identify what provisions
~
satJ.sfy thJ.s defJ.nJ.t1on. L) 1'-. ~ ~w_ 61'-"/"",.c.... C'v-/~' 1 .
"7-W ?""'!. v~y ~ ~,T!,d ?---ve-t A, ,·c/c-..~,.(1
The President will have up to five calendar days to submit ~Y/.~
cancellations. We had asked for 20 days, but we probably 6~n/7.
should count ourselves lucky with five: House conferees had
wanted a provision requiring the President to submit
cancellations on the date of enactment.
r .·
•
•
The effective date of the statute is still open, but the
likelihood is that the President will not immediately gain
veto authority. Some reports say the effective date will be
t er reports say
e e ectJ.ve date will.be the
~('¢-1/l'f'(f.
earlier of 1997 or enactment of a balanced budget.
· /;
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DOJ has a newfound const.itutional concern about the 0~,--_
statute' s definition of 11 cancellation. 11 The latest i,!~nguage
-::p\
talks about cancellation as preventing a provision "ifrom
r ).
taking legal force or effect. 11 DOJ would prefer the: phrase rf-.] r:1
11
from having· legal force or effect. 11 DOJ thinks tha its
~~~
phrasing suggests a suspension, rather than a straigh
~~
and thus will aid the argument for constitutionality.
·
have passed on this concern to Republican staff members; we
do not know yet if they will change the language.
\\"1
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Note that the non-severability provision to which we
previously objected has been dropped ..
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··
COPY
�THE WHITE HOUSE
WASHINGTON
March 18, 1996
MEMORANDUM FOR JACK QUINN
KATHY WALLMAN
FROM:
ELENA KAGAN ~
SUBJECT:
LINE ITEM VETO
Republican conferees on the line-item veto have .arrived at
an agreement on all but one or two subjects. The current
Republican strategy is to add the line-item veto to the debt
ceiling bill in the last week of March.
Problems we have with the agreement are as follows:
The conferees decided to stick with the lockbox mechanism,
which requires a reduction in discretionary spending caps
(or PAYGO balances) whenever the President strikes a
spending item.
This creates a significant disincentive for
using the authority. Conferees are saying in defense of the
lockbox mechanism that the purpose of the item veto is.to
save money -- not to permit a President to shift priorities.
.
.
The conferees decided to limit the President's authority to
canceling provisions "in whole," rather than "in whole or ·in
part." The agreement, however, is supposed to permit the
authority to apply down to the level of any project
specified in the joint statement of managers, committee
report, or authorizing legislation.
I haven't yet seen the
language effecting this agreement.
The conferees retained the provisions on targeted tax
benefits to whi6h we had objected. The definition of such a
benefit still turns on whether a provision affects fewer
than 100 beneficiaries.
In addition, Congress has sole
power (the President has none) to identify what provisions
satisfy this definition.
•
The Pr~sident will have up to five calendar dayi to submit
cancellations. We had asked for 20 days, but we probably
should count ourselves lucky with five; House conferees had
wanted a provision requiring the President to submit
cancellations on the date of enactment.
•
The effective date of the statute is still open, but the
likelihood is that the President will not immediately gain
veto authority.
Some reports say the effective date will be
1997. Other reports say the effective date will be the
earlier of 1997 or enactment of a balanced budget.
COPY
�,'\ON Pf?!:_
•
DOJ has a newfound constitutional concern about the
s0
00~
statute's definition of "cancellation." The latest 1 nguage
~ ~
tal~s about cancellation as preventing a provision "fpom
\\~
~)
tak1ng legal force or effect." DOJ would prefer the hrase
,... "/
"from having legal force or effect." DOJ thinks that its
z::/
phrasing suggests a suspension, rather than a straight veto,
~0~
and thus will aid the argument for constitutionality.
:~
have passed on this concern to Republican staff members;
do not know yet if they will change the language.
Note that the non-severability provision to which we
eviously objected has been dropped.
COPY
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I
I
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\)~
THE WHITE HOUSE
WASHINGTON
March 12, 1996
MEMORANDUM FOR JACK QUINN
KATHY WALLMAN
~
FROM:
ELENA KAGAN
SUBJECT:
LINE ITEM VETO UPDATE
The House made an offer to the Senate last week on line item
veto language. We have heard that Republican staff are trying to
conclude an agreement ASAP.
We submitted comments on the House offer to the Republican
Senate staffers with whom we have been dealing. The most
important comments are as follows:
1. We once again object. ed to so-called~ language, which
requires a reduction in discretionary sp~ps (or PAYGO
balances) whenever the President strikes a spending item. We
have said that this provision would make it difficult to enact
supplemental appropriations later in the year. We have proposed,
as an alternative, the crea~ion of an "emergency reserve fund."
When the President strikes a spending item, the amount would be
credited to these accounts; Congress could tap the accounts to
pay for emergency supplementals and other emergency legislation.
So far, Senate staff have rejected this suggestion; they probably
will decide to maintain the lockbox mechanism.
2.
We objected to a provision making the Act ~~
upon enactment of a seveq-year balanced budget and sunsetting the
Act in 2002. We urged Congress Eo grant lmmediate and permanent
authority to eliminate wasteful spending.
3.
We objected to a provision requiring the President to cancel
a spending item on the very day Con~iess enacts the legislation.
.>,)
Earlier versions of the bill gave the President 10 days to
identify items for cancellation; the Administration had
·
recommended~ as a more realistic time frame.
The time
frame provide~specially unworkable given the detailed
findings that must accompany cancellations. We urged that if
less than 20 days is provided, Congress either pare down the
bill's current reporting requirements or permit the President to
issue and transmit the required f~ndings at a later date.
4.
We objected to the way the House offer defines and
identifies targeted tax benefits, which are subject to the
President's rescission authority~
The House offer defines such a
benefit as "any revenue-losing provision which provides a federal
income tax deduction, credit, exclusion, or preference to 100 or
fewer beneficiaries." The offer further provides that nothing
COPY
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will count as a targeted tax benefit unless it is spec;:ifically
~
identified as such in the relevant bill, based on findings made / ~
by the Joint Committee on Taxation (JCT). We urged t at the
.~
definition is impracticable because. in most cases, no ne can
,..._;
accurately determine the number of persons affected by
tax
:-6ciJ'/
provision. We also proposed that Congress delegate autfi i ty ,tb-<.
the President to identify targeted tax benefits .on his
\\tS
5.
We objected to a nonseverability ptovision, which will
invalidate the entire bill if any part is held unconstitutional.
The House offer cures two con~titutional problems we
previously had raised.
First, this version uses the word
"cancel" instead of "veto," as OLC had requested.
(We do,
however,· think that the definition of "cancel" is too vague.)
Second, this version provides that the JCT's identification of
targeted tax benefits be written into law, thus removing our
complaint that Congress cannot delegate power to one of its
committees.
·
COPY
�U.S~
Department of Justice
Office of Legal Counsel
Office of the
Assistant Attorney General
Washington, D.C. 20530
June 13, 1995
MEMORANDUM FOR
ABNER J. l\1IKVA
COUNSEL TO THE PRESIDENT
ALICE M. RIVLIN
DIRECTOR, OFFICE
From: Walter Dellinger
Assistant Attorney
Re:
Line Item Veto Legislation/H.R. 2
This. memorandum summarizes our views on the line item veto legislation that has
passed the House of Representatives, H.R. 2, the Line Item.Veto Act. In our view, the
provisions of the bill that grant the President the power to "rescind" discretionary budget
authority are constitutional. However, the provisions that grant the President the power to
"veto" targeted tax benefits, thus resulting in the "repeal" of those benefits, raise significant
constitutional concerns. We believe that those concerns can be alleviated through drafting
changes that we propose below.
I.
Overview of H.R. 2
H.R. 2 would authorize the President to "rescind all or part of any dollar amount of
any discretionary budget authority .. ; or veto any targeted tax benefit which is subject to
the terms of [the] Act]." § 2(a). H.R. 2 further provides that this authority can only be
exercised if the President makes certain determinations regarding the impact of the rescission
or veto (§2(a){l)), and notifies Congress of the rescission or veto by a "special message" not
later than ten calendar days after the enactment of the law containing the discretionary budget
authority or targeted tax benefit at issue. § 2(a)(2).
Section 3(a) of the bill describes the effect of the exercise of the President's
".rescission" and "veto" power. Section 3(a)(l) states that "[a]ny amount of discretionary
budget authority rescinded under this Act shall be deemed cancelled," unless a bill
disapproving the President's rescission is enacted. A parallel provision, Section 3(a)(2),
COPY
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states that any targeted tax benefit that is vetoed under the Act "shall be deem~d /epealed," ·
I!
{
unless a bill disapproving the President's veto is enacted.
10
d
II.
\
Discussion
A.
!'}
~/
Discretionary Budget Authority
At bottom, the provisions of H.R. 2 granting the President power to rescind
discretionary budget authority give the President discretion to decline to spend funds that
previously have been appropriated. We believe that these provisions constitute a pennissible
delegation to the President. It is well-established that Congress may delegate broad powers
to the President, including powers that affect the nation's fisc. In addition, H.R. 2 sets forth
discernible standards that serve to guide_the exercise of the delegated power: the President
may rescind budget authority only when he makes specific determinations, and only during a
fixed, limited time period. Furthermore, the type of rescission power conferred on the
President under H.R. 2 is not entirely unprecedented, as prior statutes have given the
President some modicum of control over the outlay of appropriated funds.
In short, H.R. 2 provides the President with a recognizable tool -- a delegation of
power -- to cut government spending. As such, it stands on far more secure constitutional
footing than the novel approach to curbing spending that is contained in the line item veto
legislation that has passed the Senate. Under that legislation, individual items of spending in
an appropriation bill that has passed· both Houses of Congress would be disaggreagated from
one another, enrolled as separate bills, and then voted on en bloc by both Houses.
·
Thereafter, each separately enrolled bill would be presented to the President, who could then
veto any of the separate bills. In our view, the separate enrollrnent procedure ofthe Senate
legislation raises complex questions under the Presentment Clause of the Constitution (Article
I, section 7 clause 2) that simply are not posed by the delegation of power to the President in
H. R. 2 to rescind discretionary budget authority.
B.
Targeted Tax Benefits
The constitutional concerns posed by the targeted tax benefit provisions of H.R. 2 can
be cured through two drafting changes.
l.
Replacing the Word "Veto"
The first change entails replacing the word "veto" in the provision that describes the
nature of the power that the President would exercise over targeted tax benefits. The change
is needed because the Presentment Clause provides that the President only can exercise his
"veto" power before a provision becomes law, i.e., when a bill is presented to him for his
approval or disapproval. As drafted, however, H.R. 2 purports to authorize the President to
veto targeted tax benefits after they have become law.
One possible alternative would be to change the word "veto" to "rescind," which is
the same word that is used in H.R. 2 to describe the nature of the power that the President
COPY
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H.J
,~/;cind"
~
would exercise over dis. cretionary budget authority. But therein lies the mb.:
is an
1
accepted tenn of art in the spending setting, but seems out of place in the tax s tting. A
~J
better alternative might be to replace "veto" with "deny the availability of."
at
rA'{J ,.... 1
formulation makes clear that, aft~r a targeted tax benefit has become law, the Pre ·dent ·
-..o.-Y>~'
would have discretion to decline to permit persons to claim the benefit. This woul
t the.l~
targeted tax benefit provisions of H.R. 2 on a parallel track with the discretionary budget
authority provisions of the bill, which give the President discretion: to decline to spend
appropriated funds.
l
2.
(I(
A.
Replacing the Word "Repealed" ·
The second change to the targeted tax benefit- provisions of H.R. 2 entails replacing
the word "repealed" in the section that describes the effect bf the exercise of the President's
authority to "veto" targeted tax benefits. The change is needed because the word "repealed"
intimates that the President is being given the unilateral power to amend existing law. This
presents two substantial constitutional problems. First, it would seem to violate the
commands of the Presentment Clause, which specifies the only manner in which federal laws
may be made, modified, or annulled: through passage of a bill by both Houses of Congress;
presentment of the bill to the President; and approval of the bill by the President (or if the
bill is disapproved, passage of a bill overriding the President's action by 2/3 of the members
of both Houses of Congress). Second, it arguably would amount to an unconstitutional
delegation of power to the President, i.e., the power to make and "unmake" laws. Together, .
the twin problems reflect the flip side of the same coin: a federal law cannot be eliminated
altogether by the President, acting on.his own accord. For constitutional reasons, therefore,
the language that replaces "repealed" in H.R. 2 should steer clear of that mark.
~
Replacing "repealed" with "cancelled" is problematic because the thesaums expressly'
equates "cancelled" with "repealed." To be sure, H.R. 2 uses the term "cancelled" to
describe what happens to discretionary budget authority that is rescinded. It therefore could
be argued that the discretionary budget authority provisions are also at risk. In our view,
however, that contention does not stand up to close scrutiny. While "cancelled" and
"repealed" may mean the same thing in some contexts, we do not believe that is the case
when it comes to characterizing the effect of a rescission of discretionary budget authority.
Put another way, the word "cancelled" does not have the same connotations on the
discretionary budget authority side that it does on the tax benefit side. For one, if the
President "cancels" all or a portion of discretionary budget authority, the underlying
appropriations law remains in place; all that has changed is the dollar amount specified
therein. However, if the President "cancels" a targetedtax ben~fit, nothing remains of the
law. Moreover, discretionary budget authority tends to be short-lived. It is typically
provided in appropriations laws that cover limited periods of time, ~. one or two fiscal
years. See 2 U.S. C. § 900(c)(3),(7) (defining discretionary budget authority as resources
provided in appropriations acts, other than resources for mandatory spending). Thus, if the
President rescinds discretionary budget authority, thereby "cancelling" it, the President's
action only affects spending for the particular time period in question: By contrast, targeted
tax benefits generally are not enacted for just a limited time. They are intended as lasting
fixtures in the U.S. Code, unless and until removed therefrom by a subsequent law. Hence,
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if the President "cancels" a targeted tax benefit, the effect is pennanent in a
that is not
~ay
true of the cancellation of discretionary budget authority.
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We believe that the word "suspended" is the most suitable replacement for
:-0Co'J
"repealed." The Supreme Court has long upheld the constitutionality of statutes at delegat't/
to the President the power to suspend the operation of particular laws, see Field v.
143 U.S. 649 (1892), and there are scores of examples of such statutes in the U.S. Code.
Furthennore, "suspended" would dovetail neatly with the phrase ''deny the availability,"
which we proposed above as the best replacement for "veto." If the targeted tax benefit
provisions of H.R. 2 are revised along the lines of our suggestions, the upshot would be the
following formulation: " Any targeted tax benefit, the availability of which is denied,
·shall be deemed suspended. "
The use of the word "suspended" need not give rise to a state of affairs in which
targeted tax benefits are denied, only to be made available again whenever the President sees
fit. This scenario easily can be avoided through language that sets forth very precise and
stringent conditions that must be met before the President can lift the suspension. Another
way to cabin the exercise of the President's power would be to provide that a suspension
must remain in place for a specified period of time. All of this is to say that there are ample
ways to draft the bill to make a "suspension" of a targeted tax benefit enduring-- indeed, to
make it something that approaches the permanence that is contemplated by the use of the
word "repealed" in H.R. 2 as it stands now, but without setting off the constitutional alann
bells that are triggered by that term.
Finally, we note that "suspended" is not the only possible word that could be used in
lieu of "repealed." Other alternatives include "stayed" or "held in abeyance." An
alternative that sounds more permanent is the phrase "not in effect." If that language is used
along with our suggested substitute for "veto," the bill would read: "Any targeted tax
benefit, the availability of which is denied, shall be deemed not in effect."
COPY
�THE WHITE HOUSE
WASHINGTON
December 5, 1995
MEMORANDUM FOR JACK QUINN
KATHY WHALEN
~~
FROM:
ELENA KAGAN
SUBJECT:
LINE ITEM VETO
OMB's statement on the latest House offer regarding the line
item veto is generally on target. OLC has reviewed and approved
the OMB statement. In this memo, I describe the most important
of OMB's proposed changes to the House offer, all of which seem
sensible, and suggest two further minor revisions.
It should be noted first that the House's version of the
line item veto (the "enhanced rescissions" model), which is
retained in the House offer, is much superior to the Senate's
version(the "separate enrollment" mechanism). The House version
essentially allows the President to rescind or suspend part of a
bill he has just signed into law; the Senate versi6n splits up a
bill into many different bills and then provides for the
President to sign or veto each of them. OLC has opined that the
House version raises fewer constitutional difficulties and
creates less of an administrative burden.
The most significant concerns, raised by OMB, relating to
the House offer are as follows:
1. Lockbox language. The House offer incorporates a Senate
provision that would require the President to reduce statut6ry
discretionary spending caps to reflect presidential rescissions
(the so-called lockbox provision) . OMB points out that this
-provision would make supplemental appropriations very difficult.
It prefers a provision (included in the original House bill) that
would authorize the President to propose reductions in the
discretionary caps. .This seems a sensible proposal.
2. JCT determination of targeted tax benefits. The House offer
provides that the Joint Committee of Taxation (JCT) will
determine whether a tax provision is a "targeted tax benefit,"
such that the President can suspend it. OMBis statement notes
that this provision is unconstitutional because Congress cannot
delegate power to one of its own comrni ttees.
(Congress could·
cure this defect by the relatively easy means of incorporating
the JCT's determination in the revenue bill at issue.) OMB
suggests leaving this determination to the President. This
solution is obviously preferable on policy, as well as
constitutional, bases.
·
3.
Use of term "veto."
The House offer provides that the
COPY
�President may "Veto" spending items or tax
suggests changing this term to "suspend."
that use of the term "veto" will raise red
constitutionality. This is probably right
remedy.
{l ') f
benefits. OMB i(
The reasoning ~ere J.S
,
flags as to the\ bill's
J;/
and should be. ea.,~
4. Emergency spending point of order . . The House offer accepts a
Senate provision that prohibits the inclusion of non-emergency
items in an emergency bill (except for rescissions and reductions
to pay for the emergency provisions) and provides a point of
order against legislation that includes such items. OMB suggests
removing this provision on the· ground that it would impair an
Administration's ability to develop appropriations packages that
include both supplemental and emergency spending. Of course,
such a provision also would prevent Congress from inserting non~
emergency items that the President does not want into emergency
legislation. But presumably, the President could use his new
rescissions power to remove these items anyway. The OMB proposal
thus seems a good one.
Two
follows:
f~rthe~
minor changes that should be considered ate as
1. Remove Section 7(c). This change relates to the change #2
noted above. For some reason, OMB has left in (though amended
slightly) a provision referring to the JCT's views on whether
legislation contains a targeted tax benefit. This provision
should be taken out. We should not want a mechanism by which the
JCT issues views contrary to the President's.
2. Presidential messages. OLC recommends adding the phrase "to
the maximum extent practicable" to the provision that requires
the President, in a message to Congress, to list "facts,
circumstances, and considerations" relating to a rescission. OLC
says that this amendment prevents the provision from constituting
an "encroachment on executive authority." OLC itself admits that
this is only a minor matter.. If there is no harm in suggesting
the change, we should do so; if there is any harm, we should not.
COPY
�0
December 5, 1995
MEMORANDUM FOR JACK QUINN
KATHY WALLMAN
FROM:
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THE WHITE HOUSE
WASHINGTON
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LINE ITEM VETO MEMO
Another issue has reared its head relating to OMB's
statement on the latest line item veto proposal.
In a memo to
OMB dated yesterday, OLC utged OMB to propose that new language
be inserted authorizing the President to lift suspensions of
direct spending and targeted tax benefits.
I am attaching this
memo; see pp. 2-4.
In brief, OLC is concerned that the
suspension power could be held unconstitutional on the ground
that it is tantamount to a power to repeal laws unilaterally; and
for some reason (which doe~ not strike me as intuitively
bbvious), OLC believes that a further power to lift suspensions
would mitigate the possible constitutional problem. OLC saw a
very recent statement of the OMB statement that addressed this
issue to OLC's satisfaction; the language doing so must have been
very recently deleted.
(I have a call in to Chuck Konigsberg to
find out why OMB made this deletion.)
OLC now wants the language
reinserted.
·
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Decembe~~4·,
Date
Line Item veto Legislation/House Conference
.' '0~ )/
Offer
~~hard
To
Chuck KonigsbergLegislative Affairs
1995
Shiffrin C\~
Deputy Assistant \~
Attorney General
OLC
OMB
This memorandum sets forth our comments on (i) the offer that
has b~en made by .the House of Representatives in connection with
the House-senate conference on line item veto legislation, and (11)
the draft OMB letter responding to the House offer.
1.
The House conference offer would use the general approach of
the line item veto legislation that passed the House earlier this
year.
This approach would enable the President, within certain
parameters, to "rescind" all or part of any dollar amount of any
discretionary budget authority after the enactment of an
appropriations . measure containing that budget authority.
As
pt'eviously stated in our comments on the House legislation, we
believe that granting such power to the President would constitute
a permissible delegation of authority. It is well-established that
· the legislative branch may delegate broad powers to the executive
branch, including powers that affect the ·nation· s fisc. 1
In
addition, the House conference offer,_like the legislation passed
by the House; comports with Supreme Court requirements governing
delegations to the executive, because it sets forth "intelligible"
standards that serve to guide the exercise of the delegated power. 2
Furthermore, the type of rescission authority that would be
conferred on the
~resident
by the House conference offer
is not
entirely unprecedented, as prior statutes have given the President
some modicum of control over the outlay of appropriated funds.
l
See Lichter v. United States, 334
u.s.
742
{l948); uTiited
S,t.,S!.t....es v. Rock Rqyal Co- o:rierat;i.veg_,_ Inc., 307 U.S. 53 3 ( J.939) ; J. W.
Hampton & co. v. · United States, 276 u.s. 394 (1928); FielQ. y.
Clark, 143 U.S. 649 (1892).
2
See Mist:t:ettg, v. :U::o..i.ted.,___S_tg,_tS§., 4.89 u.s.
36~, 372
(1989) ~
Specifically, under the House conference cffer, the President may
rescind discretionary budget authority only when he makes specific
determinations, and only during a limited time period after
enactment of
authority.
the
al_:):propriations
rnea::;;ure
containing' the
budget
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In ·short, the House conference offer prov ides the PreS:ldent
1
with a recognizable. tool · -- a delegation of\( power -- tct:l cut
government ·spending.
AS SUCh,
it stands 0~ far more ~€cure
constitutional footing than the novel approaoh ~~curbing sp~ding
that is contained in the line item veto legislatio,that J::l~_,Pass~d
the Senate. Under that legislation, individual it~ending
in an appropriations bill that has passed both Houses of Congress
·would be , d!saggreagated from one another, enrolled as separate
bills, and then voted on en bloc by both Houses. Thereafter,.each
separately enrolled bill would be presented to the President, who
could then veto any of the separate bills.
In our view, this
procedure raises complex questions under the Presentment Clause of
the Constitution (Article I, section 7 clause 2) that simply are
not posed by the delegation of power to the Presid~nt in the House
conference offer. Therefore, consistent with the views expressed
in the draft OMB letter, we strongly recommend that conferees adopt
the approach or the House conference offer, and not opt for the
Senate's separate enrollment mechanism.
2.
The House conference offer also would authorize the President
to ~veto·· target~d tax benefits contained in a revenue (or other)
act. ·The use of the term "veto" raises constitutional concerns. ·
The Presentment Clause provides that the President only can
exercise his "veto" power before a provision becomes law, i.e.,
when a bill is presented to him for his approval or disapproval.
However, as was the case with 'the legislation that passed the
House, the House conference offer purports to authori2e the
President to veto targeted tax benefits after they have become law.
Thus, as stated in our comments on the House legislation, we urge
t.hat the word "veto" not be used in the provision that describes
the power that the President would eKercise over targeted taK
benefits. 3 The draft OMB letter suggests replacing "veto" with
"suspend." We support that suggestion, and believe that it would
be constitutional.
The Supreme Court has long upheld the
constitutionality of.provisions that delegate to the P~esident the
power to suspend the operation of particular laws, ~ Field v.
Clark, 143 u.S. 649 ( 1892), and there are many examples of such
provisions in the u.s. code today.
The House conference offer also would enable the President to
"veto" any i tern of "direct spending". (which is distinct from
spending contained in discre.tionary budget authority .that the.
President could "rescind"}. Here too, the word "suspend"' should be
used instead of "veto."
3.
Assuming
that
the
term
"suspension"
is
used,
one
constitutional question remains: if a suspension is permanent, it
could be attacked as tantamount to unilateral repeal or laws by the
3 we do not believe.that it is necessary to eliminate the word
"veto
11
tram the title of the legislation.
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President -- the same constitutional flaw that we identir 1:ed in the ~\
line item veto legislation that passed the House. 4 To( avoid this ~\;
potential shoal, we recommend that the OMB letter propqse that the r- ;;'
President be granted the authority to lift suspensions bf targeted· & I
tax bE-nefits and direct spending.
we understand th'at such a_~-?>
proposal might prompt concerns that it would allow for t
casua·E
reinstatement of suspended targeted tax: benefits or direct sp
· g
whenever the President sees fit. To address those concerns, the
authority to lift suspensions could be restricted.
One possible restriction would he to · require . that any
suspension remain in place for a particular period of time before
it could be lifted (~, until the end of the current fiscal year;
or the end of the next fiscal year). In addition, the President
could be required to make findings that certain conditions have
been met in order to lift a suspension. 5 Finally, procedures could
4
A provision. in tha House ~egielation stated that any
targeted tax benefit "vetoed" by the President would be deemed
"repealed." In our comments on the legislation, we indicated that
the u:se of the term "repealedn · raised constitutional concerns.
because it intimated that the President was :Oeing g-iven the power
to amend existing law on his own. The grant of such power would
violate the commands of the Presentment Clause. which specifies the
only manner in which federal laws may be made, modified, or
annulled: through passa~e of a bill by both Houses of Congress;
presentment of the bill to the President; and approval ot the bill
by the President (or it the bill is disapproved,· passage o~ a bill
overriding the President's action by 2/3 of the members of both
Houaes of Congress) . ThiS constitutional problem is eliminated by
the House conference offer, which does not include a provision
describing the effect of a president.:i_al veto of targeted tax
benefits.
5 For example, the President could be required to determine:
(A) that such action W'ould advance the national interest,
and that the suspension is no longer necessary to help
reduce the Federal budget deficit; and (B) notify
Congress of the determination to li!t the suspension by
a special message specifying, to the maximum extent
practicable, (1) the reasons and justifications for the
detemtination t:o lift the suspension;· {2) the estimated
fisca.1,
economi.c,
and
budgetary
effect
of
the
determination to lift che suspension; and (3) all
actions, circumstances, and considerations relating to or
·bearing upon the determination to lift the suspension~
Such a requirAment would essentially track provisions in the House
conference offer·that cabin the President's discretion to "veto"
targeted tax benefits or direct spending in the first place_ In
~
3
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established whereby the President's decision
lift ~a '""%\
sus pens ion could be reversed through the enactment of "d.if!sapproval"
-::::! 1
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legislation (or, if the President vetoes such legislatiqn, through
~~
an override by 2/3 ?f t~e members of both Houses)~
\his would r::-,
parallel the mechan1sm 1n the House conference offer \by which -oQ5/
Congress could disapprove (or override) the P~esident·s~
decision to hveto• a targeted tax benefit or direct spending.
be
4. ·Section 4 of the House· conference offer defines targeted tax
benefit as any "revenue-losing provision" in a tax (or other) bill,
and that has certain specified characteristics. Under. the House
conference offer, the task of id~ntifying such provisions would go
to the congressional Joint committee on Taxation (JCT). In turn,
the JCT determinations would be made in committee reports
accompanying bills.
l
Significantly, the House conference offer does not state that
the JCT determinations would be incorporated into bills -- either
directly or indirectly through reference to a committee report. As
a result, the scope of the President's "veto .. authority would be
established by the JCT ~loneA
In short, law would be made by a
committee of Congress in a report, not by Congress as a whole in
legislation.
This violates the '"(e]xplicit and unambiguous·
provisionsH of the Constitution that prescribe "a single, finely
wrought and exhaustively considered, procedure" by which laws are
to be made: b icamera1 passage t>y both Houses ·of Congress followed
by presentment to the President .for his approval. INS y. Chadha,
462 U.S. 9~9~ 945 ( 1983).
See Metroeo1i7an Washin9Jon Airports
Ayth. v. C1t1zens for the Abatement Of A1rcraft No1_e, SOl u.s.
252, 275 (1991) ("Congress may not delegate the power to legislate
to its ovm agents or to its own Members ... }.
The draft OMB letter proposes to charge the President, not the
with the role of determining which provisions in a bill
constitute targeted tax benefits_ Like the House conference offer,
the letter sets forth specific cha4acteristics that a provision
would have to meet in order to b~ considered a targeted tax
benefit. These characteristics reflect the intelligible standards
that are constitutionally required to guide the delegation of power
to the President to determine what ls a targeted tax benefit.
JCT,
any event, a requirement of this sort probably would be necessary
in order to ensure that the delegation of authoricy co lift the.
sus-pension satisfies the constitutional rulJe that d~legations
contain intelligible :principles that guide executive action.
- 4 -
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�U. S. Department of Justice
Office of Legal Counsel
!'/
~--------------------------------------------------------~~--------~
Washington, D. C. 20530
Office of the
Assistant Attorney General
~/
March 27, 1995
MEMORANDUM FOR ABNER J. :MIKVA
COUNSEL TO THE PRESIDENT
ALICE M. RIVLIN
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Dellinger~
· From: Walter
Assistant Attorney General
Re:
Senate-Passed Separate Enrollment Line Item Veto/S.4
This is to provide you with our views on S.4, "The Separate Enrollment and Line
Item Veto Act of 1995," as passed by the Senate, see 141 Cong. Rec. S4484-85 (daily ed.
Mar. 23, 1995). We have commented on prior versions of this legislation, and more
generally on the constitutionality of "separate enrollment" provisions in line item veto
proposals. See Memorandum for Abner J. Mikva, Counsel to the President, and Alice M.
Rivlin, Director, Office of Management and Budget, from Walter Dellinger, Assistant
Attorney General, Office of Legal Counsel, re: Line Item Veto Proposals/SA. S.14 and
S.137 (Mar. 16, 1995) (the March 16 OLC Memo). As passed by the Senate, S.4
incorporates an amendment, introduced by Senator Spencer Abraham, that addresses one of
the constitutional concerns we identified in that memorandum. Although the bill, as so
amended, is distinctly improved from a constitutional standpoint, we continue to believe that
it may fail to survive judicial review. Accordingly, in the interest of ensuring that Congress
passes a line item veto measure that has the greatest chance of being sustained, we
recommend that the House-Senate Conference report out a measure that does not include a
separate enrollment provision.
In prior versions, S.4 provided only that, after a covered bill had been passed in the
same form by both Houses, the enrolling clerk of the House in which the measure originated
was to disaggregate the various items in the measure for presentment, as separate "bills," to
the President. Under Senator Abraham's amendment to SA, after the clerk has
disaggregated the bill into items that are to be considered separate bills,
[t]he new bills resulting from the disaggregation ... shall be immediately
placed on the appropriate calendar in the· House of origination, and upon
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t~e app~opriate
1
passage, placed on
calendar in the other House .. They shall. be
1
the next order of busmess m each House and they shall be considered and .
voted on en bloc and shall not be subject to amendment.
\
15',-: \
II
1{J70
Sec. 4(b) (emphasis added) .. If passed by both Houses in this manner,
presented to the President.
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In the March 16 OLe- Memo, we advised you that the separate enrollment procedure
envisaged in earlier bills-- which did not contemplate another vote by both Houses after the
enrolling clerk had disaggregated the bill-- would "raiseD very difficult questions" under
the Presentment Clause, U.S. Const. art. I, § 7, cl. 2, and might well not be sustained.
March 16 OLC Memo at 4. Specifically, we stated that
[o]n what seems to us to be the best reading of the Presentment Clause,
what must be presented to the President is the "bill" in ·exactly the form in
which it was voted on and passed by both the House of Representatives and
the Senate, rather than a measure or a series of measures that subsequently has
been abstracted from that bill by the clerk of the relevant House.
March 16 OLC Memo at 4. In fmding such separate em-ollment procedures to be
constitutionally dubious, we reached the same conclusion that our Office had expressed ten
years earlier, see Constitutionality of Line-Item Veto Proposal, 9 Op. O.L.C. 28, 30 (1985).
The Abraham amendment attempts to address this difficulty by requiring that, after
the enrolling clerk of the originating House has disaggregated a covered bill, both Houses
vote on the disaggregated bills en bloc. The evident putpose of the amendment is to ensure
that both Houses have voted on the bills that are presented to the President in exactly the
same form as they are presented to him. As we pointed out in our earlier memorandum, the
amendment improves the chances thatS.4 will be sustained. See March 16 OLC Memo at·4.
Nevertheless, we continue to believe that there is a serious litigation risk that a ·
separate enrollment procedure, even as found in amend,ed S.4, would be held to be
unconstitutional. If nothing else, the procedure of passing a large number of "bills" in a
single, en bloc vote represents a significant departure from what has been the ordinary
congressional practice under the Presentment Clause for over two hundred years. In this
area, the courts have given considerable weight to past practice in deciding what the
Constitution permits or requires. See,~. The Pocket Veto Case, 279 U.S. 655, 689-90
(1929). 1 Second, the scope of Congress' authority-- if any --to determine what shall.
constitute a "bill" for putposes of the Presentment Clause appears to be wholly untested.
Third, the language of the Abraham amendment could be construed as attempting to require,
1
We are aware that Congress' practice has not been absolutely unvarying, and that in particular
circumstances a single vote may be deemed to apply to two distinct bills. See 141 Cong. Rec. S4084 (daily ed.
Mar. 16, 1995) (remarks of Sen. Coats) (citing Rule XLIX of the Rules of the House of Representatives).
N:\UDD\DELAHUNT\S40MB
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by statute, that each House follow certain procedural rules~. that amendme4ts not be
permitted when the disaggregated bills are being voted on en bloc). However, is
(
~
questionable whether an Act of Congress could impose internal procedures on tfe Houses.
~j
See March 16 OLC Memo at 5, .n.1; Laurence H. Tribe, American Constitutioilal Law § 4,"- /
13 at 267 (2d ed. 1988). 2 Finally, as a practical matter, under any separate enro ent
B'·f~>
procedure, the President could not be expected physically to sign each and every one ~ ·
numerous separate "bills" that were presented to him. While we believe that the President
can comply with the "signing" requirement of article I, § 7 even if he does not affix his
signature at the end of every single, disaggregated bill, cf. Hill v. United States, 288 F. 192,
193 (7th Cir, 1923); Signature of Secretary of the Treasury, 1 Op. Att'y Gen. 670 (1824),
the practical necessity of en bloc Presidential signing -- as well as en bloc congressional
voting-- would raise another constitutional issue for the courts.
fit
(JO
\
Accordingly, we believe that if Congress enacted a "separate enrollment" form of the
line item veto -- such as the Senate-passed S. 4 -- there would be a serious risk that the
measure would not survive judicial review. By contrast, line item veto measures -- such as
the House-passed bill, H.R. 2 --that delegate to the President the authority to withhold the
· expenditure of appropriated funds in certain circumstances are, in our judgment, very likely
to be upheld. To the extent that such measures pose constitutional questions, they do so in
two main areas -- the delegation of congressional power to the President, and separation of
powers doctrine. These are areas, however, in which the Court has well-settled
jurisprudence. We have carefully reviewed such proposals in light of the Court's decisions,
and have concluded that they would very likely survive judicial review. See Statement of
Walter Dellinger, Assistant Attorney Geneial, Office of Legal Counsel, Before the
Subcomm. on the Constitution, Federalism, and Property Rights, Senate Judiciary Comm.,
Line Item Veto Hearing (Jan. 24, 1995) (the January 24 Statement).
·
a
We note, however, that H.R. 2 itself poses a constitutional problem that can, and
should, be cured. As explained in the January 24 Sta~ement, the language of the targeted tax
provisions of that bill is objectionable as drafted. The use of the terms "veto" and "repeal"
in those provisions raises constitutional concerns that are not posed by the budget authority
provisions of the bill. .Article I, § 7, cl. 2 provides that the President only can exercise his
"veto" power before a provision becomes law, i.e., when a bill is presented to him for his
approval or disapproval. But H.R. 2 purports to authorize the President to veto targeted tax
benefits after they have become law. As for the use of the word "repeal," it suggests that
the President is being given the unilateral power to change existing law. A court might well
·
. conclude that this would amount to an unconstitutional delegation of authority to the
President, and a violation of the plain textual provisions of article I, § 7, cl. 2 governing the
manner in which laws are to be changed (specifically, through passage of amending
legislation by both Houses of Congress and presentment to the President for his approval).
2
If, contrary to our advice, the House-Senate Conference adopts a separate enrollment procedure, we would
recommend that it add a provision clarifying that each House reserves the right to alter the procedure that it is
to follow.
N:\UDD\DELAHUNT\S40MB
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To cure this and other flaws, we attach proposed mark-ups of H.R. 2 that reflect
3
we would recommend in that bill.
t6~ changes
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It is clearly in the interests of the Administration and of congressional prop ents of
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the line item veto alike to enact legislation that has the greatest possible chance of be
,. cf'\1-oR>> .·
. sustained in the courts. We recommend, therefore, that the House-Senate Conference rep
out a line item veto bill that does not include a separate enrollment procedure.
(Attachments).
The mark-ups also include several other suggestions for improving H.R. 2: · first, a subsection reserving to
each House the right to alter the procedural rules adopted in the bill; second, language slightly modifying the
elements of what must be set forth in the Presidential Special Message reporting the rescission of a budget
authority or targeted tax benefit; and, third, a severability clause.
3
N:\UDD\DELAHUNT\S40MB
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�U. S. Department of Justice .
Office of Legal Counsel
Office of the
Assistant Attorney General
Washington, D. C. 20530
March 27, 1995
MEMORANDUM FOR ABNER J. :MIKVA
COUNSEL TO THE PRESIDENT
ALICE M. RIVLIN
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Dellinger~
From: Walter
Assistant Attorney General
Re:
Line Item Veto\Proposed Changes to H.R. 2
I am attaching two proposed mark-ups of H.R. 2 that reflect our suggested changes to
the bill. Most significantly, in an effort to cure potential constitutional problems with the
targeted tax benefit provisions of the existing bill, both proposals would eliminate the words
"veto" and "repeal" from those provisions.
The proposed mark-ups are identical except in one critical respect. The first proposal
would give the President the power to "rescind" targeted tax benefits, the effect of which
would be to "cancel" such benefits. The terms "rescind" and cancelled" are used in the bill
to describe the President's power on the budget authority side. The second proposal would
give the President the power to "suspend" targeted tax benefits; the suspension subsequently
could be lifted if the President made certain fmdings. ·From a litigation risk standpoint,
presidential "suspension" of targeted tax benefits is clearly preferable, because the courts
have long upheld acts of Congress that give the President the authority to suspend provisions
of the law. By contrast, to say that the President has the power to "rescind" a targeted tax
benefit is more susceptible to constitutional attack on the grounds that it appears to give the
President the unilateral power to "repeal" a provision of law --the very problem with the
existing version of H.R. 2 that we are trying to avoid.
'
In reviewing both proposed mark-ups, please note the following:
•
Existing provisions of the bill are denoted in regular type-face.
•
Suggested new words and provisions are denoted in bold.
·•
Suggested deletions are [bracketed and underlined].
COPY
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The mark-ups do not include all sections of the bill, only the most relevCJ.D.t 0
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sections. If our suggestions are accepted, parallel changes (~, "resci~sion"
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of targeted tax benefits, rather than "veto" of such benefits, and "rescis~~on
3)1
disapproval bill," rather than "rescission\receipts disapproval bill") wou~ need
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to be made in the sections that are not set forth in the mark-up.
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PROPOSAL # 1: "RESCISSION" OF TARGETED TAX BENEFITS
Sec. 2
(a)
LINE ITEM VETO AUTHORITY
\
In General-- Notwithstanding. the provisions of part B
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title X of the Congressional Budget and Impoundment Control Act
of 1974, and subject to the provisions of this section, the
President may rescind all or part of any dollar amount of any
discretionary budget authority specified in an appropriation Act·
or conference report or joint explanatory statement accompanying
a conference report on the Act, or rescind [veto] any targeted
tax benefit which is subject to the terms of this Act if the
President
(1)
determines that -(A)
such rescission [or veto] would help reduce the
Federal budget deficit;
(B)
such rescission [or veto] will not impair any
essential Government functions; and
(C)
such rescission [or veto] will not harm the
national interest; and
(2)
notifies the Congress of such rescission [or veto] by a
special message not later than ten calendar days (not including
Sundays) after the date of enactment of an appropriation Act
providing such budget authority or a revenue or reconciliation
ACt containing a targeted tax benefit.
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LINE . ITEM VETO EFFECTIVE UNLESS DISAPPROVED/·(>-' ·
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Sec. 3
(a) (1)
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Any amount of budget authority rescinded under this Act
as set forth in a special message by the President shall. · e
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deemed canceled unless, during the period described in subs ction.1 '0~-oci>'
(b), a rescission[/receipts] disapproval bill making available
all of the amount rescinded is enacted into law.
Any targeted tax benefit rescinded [provision of law
(2)
vetoed] under this Act as set forth in a special message by the
President shall be deemed canceled [repealed] .unless, during the
period described in subsection (b), a rescission[/receipts]
disapproval bill restoring the benefit [provision] is enacted
into law.
SEC. 4
DEFINITIONS
As used in this Act:
(1)
The term
11
rescission[/receipts] disapproval bill" means
a bill or joint resolution which only disapproves, in whole,
rescissions of discretionary budget authority or only disapproves
rescissions [vetoes] of targeted tax benefits in a special
message transmitted by the President under this Act and -(A)
which does not have a preamble;
(B) (i) in the case of a special message regarding
rescissions of discretionary·budget authority, the matter after
the enacting clause of which is as follows:
11
That Congress
disapproves each rescission of discretionary budget authority of
the President as submitted by the President in a special message
- 2 -
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" the blank space being filled in with the aapnpdropr11.ate dl.la~e~
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(ii) in the case of a special message regarding resc · ssions · _'\.Co"/i
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[vetoes] of targeted tax benefits, the matter
clause of which is as follows: "That Congress disapproves each
rescission [veto] of targeted tax benefits of the President as
submit:ted by the President in a special message on __
·_," the
blank space being filled in with the appropriate date and the
public law to which the message relates; and
(C)
the title of which is as follows: "A.bill disapproving
the recommendation submitted by the President on __ ," the blank
space being filled in with the date of submission of the relevant
special message and the public law to which the message relates.
SEC. 5
(a)
CONGRESSIONAL CONSIDERATION OF LINE ITEM VETOES
Presidential Special Message -- Whenever the President
rescinds any budget authority or targeted tax benefit as provided
in this Act [or vetoes any provision of law as provided in this
Act], the President shall transmit to both Houses of Congress a
special message specifying -(1)
the amount of budget authority [rescinded] or the
targeted tax benefit [provision] rescinded
[vetoed]
(2)
any account, department, or establishment of the
Government to which such budget authority is
- 3 -
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available for obligation, and the specific projp'~
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the reasons and justifications for the
determination
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to rescind budget authority or
any targeted tax
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[provision] pursuant to this
Act;
(4)
to the maximum extent practicable, the estimated
fiscal, economic, and budgetary effect of the
rescission [or veto] ; and
(5)
to the maximum extent practicable, all actions,
circumstances, and
considerations relating to or
bearing upon the rescission [or veto] and
the decision to effect the rescission [or veto] , and to
the maximum extent practicable, the estimated effect of
the rescission upon the objects, purposes, and programs
for which the budget authority is provided.
(g)
This section is enacted by the Congress--
(1) as an exercise of the rulemaking power of the House
of Representatives and the Senate, respectively, and as
such it is deemed a part of the rules of each House,
respectively, but applicable only with respect to the
procedure to be followed in that House in the case of
rescission bills as defined in section 4(1}-of this
Act; and it supersedes other rules only to the extent
that they are inconsistent therewith; and
- 4 -
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(2)
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with full recognition of the constitutiona t right
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of either House to change the rules (so far re ating to
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the procedure of that House) at any time, in th
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manner and to the same extent as in the case of any
other rule of that House.
SEC. 8
·SEVERABILITY
If any particular provision of this Act, or the application
thereof to any person or circumstance, is held invalid, the
remainder of the Act and the application of such provision to
other persons or circumstances shall not be affected thereby.
- 5 - .
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:0'PROPOSAL # 2: nsusPENSION" OF TARGETED TAX BENEFI(S
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Section 2
[lgl)
LINE ITEM VETO
AUTHORITY/~
1/3
IN GENERAL-- Notwithstanding the provisions of
I
art B
of title X of The Congressional Budget and Impoundment Cont
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Act of 1974, and subject to the provisions of this section, the
President may rescind all or part of any discretionary budget
authority or suspend [veto] any targeted tax benefit, which is
subject to the terms of this Act if the President (1)
determines that -(A)
such rescission or suspension [veto] would help
reduce the Federal budget deficit;
)
(B)
such rescission or suspension [veto] will not
impair any essential Government functions; and
(C)
such rescission or suspension [veto] will not harm
the national interest; and
(2)
notifies the Congress of such rescission or suspension
[veto] by a special message not later than twenty
calendar days (not including Saturdays, Sundays, or
holidays) after the enactment of a regular or
supplemental appropriation Act or a j,oint resolution
making continuing appropriations providing such budget
authority or a revenue Act containing a targeted tax
benefit.
The President shall submit a separate rescission or suspension
message for each appropriation Act and for each revenue Act under
this paragraph.
COPY
�Sec. 3.
LINE ITEM VETO EFFECTIVE UNLESS DISAPPROVED OR
LIFTED
(a) [lll]
Any amount of budget authority rescinded under
as set forth in a special message by the President shall
[deemed] cancelled unless, during the period described in
subsection (b) of this section, a rescission/receipts disapproval
bill making available all of. the amount rescinded is enacted into
law.
(b)
[(a) (2)]
Any suspension of a targeted tax benefit
[provision of law vetoed] under this Act as set forth. in a
special message by the President shall be effective unless
(1)
during the period described in subsection (c)
UQlJ of·
this section, a rescission/receipts disapproval bill restoring
that benefit [provision] is enacted into law; or
(2)
that the
the suspension is lifted by the President, provided
President
(A)
determines that such action would advance the
national interest, and that the suspension is no longer
necessary to help reduce the Federal budget deficit;
and
(B)
notifies the Congress of the determination to lift
the
suspension by a special message specifying, to the
maximum extent practicable,
(1)
the reasons and justifications for the
determination to lift the suspension;
- 2 -
COPY
�{2)
the estimated fiscal,
budgetary effect of the deter.minati n to
the suspension; and
{3)
all actions, circumstances, and
considerations relating to or bearing upon
the determination to lift the suspension.
SEC. 5
(a}
CONGRESSIONAL CONSIDERATION OF LINE ITEM VETOES
PRESIDENTIAL SPECIAL MESSAGE -- Whenever the President
rescinds any budget authority as provided in this Act or suspends
[vetoes] any targeted tax benefit [provision of law] as provided
in this Act, the President shall transmit to both Houses of
Congress a special message specifying -(1)
the amount of budget authority rescinded or the
targeted taX benefit [provision] suspended [vetoed] ;
(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 reasons and justifications for the
determination to rescind budget authority or suspend
[veto] any targeted tax benefit [provision] pursuant to
this Act;
(4)
to the maximum extent practicable, the estimated
fiscal, economic, and budgetary effect of the
rescission or suspension [veto] ; and
- 3 -
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(5)
to the maximum extent practicable, all
act~'vons,
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circumstances, and
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considerations relating
bearing upon the rescission or suspension
[veto] and the decision to ef.fect the
suspension [veto] , and to the maximum extent
practicable, the estimated effect of the
rescission upon the objects, purposes, and programs for
.which the budget authority is provided.
(g)
This section is enacted by the Congress-(1) as an exercise of the rulemaking power of the House
of Representatives_and the Senate, respectively, and as
such
1t
is deemed a part of the rules of each House,
respectively, but applicable only with respect to the
procedure to be followed in that House in the case of
rescission bills as defined in section-4(1) of this
Act; and it supersedes other rules only to the extent
that they are inconsistent therewith; and
(2) with full recognition of the constitutional right
of either House to change the rules (so far relating to
the procedure of that House} at any time, in the same
manner and .to the same extent as in the case of any
other rule of that House.
- 4 -
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�SEC. 8
l
SEVERABILITY
If any particular provision of this Act, or the
. \\1\
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thereof to any person or circumstance, is held invalid,
remainder of the Act and the application of such provision to
other persons or circumstances shall not be affected thereby.
- 5 -
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�.•.
U. S. Department of Justice
Office of Legal Counsel
of
Washington, D. C. 20530
Office
the
Assistant Attorney GenenJ .
March 16, 1995
MEMORANDUM FOR ABNER J. MIKVA
COUNSEL TO THE PRESIDENT
ALICE M. RIVLIN
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
From: Walter Dellinger~
Assistant Attorney Genefal
Re: ·
Line Item Veto Pioposals/S.4, S.14 and. S.l37
This memorandum responds to your request for advice on two matters arising from
line item veto proposals pending before the Senate. First, you have asked us to compare. two
bills, S.4 and S.l4, in actual operation and effect. Second, you have asked for our views on
S. 13 7, a bill introduced by Senator Bradley, that ~ttempts to provide the President with
effective line-item veto authority by requiring that items in appropriations bills and tax
expenditure provisions in revenue bills be separately enrolled and presented to the President.
S.4 and S.l4
We have previously reviewed both S.4 and S.14, and have concluded that both
proposals.likely would survive constitutional challenge. See Statement of Walter Dellinger,·
Assistant Attorney General, Office ofl..egal Counsel, Department of Justice, Before the
Subcomm. on the Constitution, Federalism, and Property Rights, Senate Judiciary Comm.,
January 24, 1995 (the "Dellinger Statement"). Briefly, S.4,. which has been introduced by
.Senate Majority Leader Dole and Senator McCain, would amend the Congressional Budget
and Impoundment Control Act of 1974 so as to authorize the President to rescind all or part
of any· budget authority. (In order to exercise this rescission authority, ·the President must
make ce~ findings.) Further, any amount of budget authority rescinded is to be deemed
cancelled unless, during a specified period, a majority of each House of Congress passes
II rescission disapproval II legislation that would make available the rescinded budget authority I
and the !>resident signs that legislation into law. Should the President veto the rescission
disapproval legislation, that veto may be overriden by two-thirds of the members of both
Houses. Because it is likely that the President will in fact veto any legislation that
disapproves of an earlier exercise of his rescission authority, it can be expected that S. 4 will
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in practice ordinarily require a supennajority of each House of Congress to oveflide a
Presidential rescission.
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Under S.l4, which has been introduced by Senator Domenici and Senr.t " f'!XOD, the
" 1.
President may propose .to Congress the cancellation of budget items provided in
Act.
--c,i~
Within prescribed time limits, the President may transmit a special message to Con
;B'-\l / '
proposing such a cancellation and submitting a bill to effect that cancellation. The
President's bill would be afforded expedited consideration by Congress. Either House of
Congress may reject the President's bill. During the period in which Congress is considering
the President's bill, the budget item in question is effectively suspended, i.e., the funds that
the President has targeted for cancellation remain frozen until one House has rejected the
·President's bill.
In actual practice, the chief difference between S .4 and S .14 is that under S.4, it
would ordinarily require a two-thirds vote of each House of Congress to reinstate a spending
item that the President has targeted for elimination, whileunder S.l4, it would require only a
·majority vote of a single House to reinstate the item. Nonetheless, the requirement of a
visible majority vote for reinstatement would heighten the accountability of individual
members of Congress for supporting such spending. Accordingly, we have previously
concluded that
S .14 is not as expansive as the rescission power granted to the President
under S.4 --which would in practice require two-thirds of each House to force
an expenditure to be made .if the President backed up his rescission decision
with a veto of any legislation cancelling his rescission. Nevertheless, S.14 is
still a powerful tool for subjecting to public scrutiny government spending that
the President believes should be cut.
Dellinger Statement at 9.
Further, S.4 would not. diminish Congress' control over federal spending as
significantly as some of the bill's opponents appear to believe. Congress would retain the
power to exempt any particular appropriation bill (or particular item within an appropriations
bill) from the coverage of S.4 (as Congress, of course, also would under S.l4). That is,
Congress could explicitly provide, with respect to any particular appropriation bill, that the·
President could J!Qt exercise his statutory authority to rescind spending items in that bill. To
be sure, a clear statement in the appropriations bill of Congress' intent to deprive the
President of his otherwise general rescission authority would probably be necessary to
accomplish that objective. Nonetheless, if S.4 becomes law, it will be within Congress'
power, by simple majority votes of both Houses, to present the President with an
appropriations bill as to which he would have no (or restricted) line-item rescission authority.
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S.l37
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j
You have also asked for our views on S.137, a bill "[t]o create a legis! tive item veto
by requiring separate enrollment of items in appropriations bills and tax expen
re
.A- 1
. provisions on revenue bills." ·
,~ 2J~-oCO>
S.137 would amend the Congressional Budget and Impoundment Control Act of 1974 ·
by adding a new title XI, the substance of which is as follows. Whenever any general or
special appropriation bill, any supplemental, deficiency, or continuing appropriation bill or ·
joint resolution, or any revenue bill containing a tax expenditure provision passes both
Houses of Congress, the enrolling clerk of the House in which the bill originated "shall
enroll each item of appropriation or tax expenditure provision of such bill or joint resolution ·
as a separate bill or joint resolution. II Proposed section llOl(a)(l). Further, "[a] bill or
joint resolution enrolled" in the prescribed fashion "with respect to an item of appropriation
or tax expenditure provision shall be deemed to be a bill under clauses 2 and 3 of section 7
of article 1 of the Constitution of the United States and shall be signed by the presiding
officers of both Houses of Congress and presented to the President for approval or
disapproval (and otherwise treated for all purposes) in the manner provided for bills and joint
resolutions generally." Secticm 2(b). The terms "item of appropriation" and "taxexpenditure provision" are both defmed. Section 2(c).
Clause 2 of article I, § 7 of the Constitution governs the procedure by which a bill or
joint resolution becomes law. It declares in relevant part that:
Every Bill which shall have passed the House of Representatives and the
Senate, shall, before it become a Law, be presented to the President of the
United States; if he approve he shan sign it, but if not he shall return it, with
his Objections to that House in which it shall have originated, who shall enter
the Objections at large on their Journal and proceed to reconsider it. If after
s"!ch Reconsideration two thirds of that House shall agree to pass the Bill, it
shall be sent, together with the Objections, to the other House, by which it
shall likewise be reconsidered, and if approved by two thirds of that House, it
shall become a Law.
As our Office has consistently maintained, "[t]his Language mandates a fairly
straightfmward procedure: after both houses of Congress have passed a 'Bill,' they must
present it to the President, who can either 'approve ... it' (by signing it) or 'not' (by
returning it).i In either event, the 'Bill' is to be treated as a single unit; nothing in the text
permits the President to approve and sign one portion of a 'Bill' while diSapproving and
returning another portion." Statement of Walter Dellinger, Assistant Attorney General,
Office of Legal Counsel, Before the Subcomm. on the Constitution of the Comm. on the
. Judiciary, United States Senate, Concerning Line-Item Veto: The President's Constitutional
-3-
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Authority, at 1-2 (June 15, 1994). See also Constitutionality of Line-Item Veto Proposal, 9
~%\\.
Op. O.L.C. 28, 29 (1985).
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ll
atte~pts
constitution~ diffic1~lty
g\
~~
S .137
to avoid this
I
in the President's ex rcising lineitein veto authority by requiring each individual item of appropriation or tax expe iture
--oiS·/
provision in a single bill passed by both Houses of Congress to be separately enroll
d\ ·d\1 >·
separately presented to the President. The President would then be able to veto any of these
individual "bills." S.137 seeks to achieve this outcome by "deeming" each line item that is
separately enrolled in the prescribed manner to be a "bill" in the constitutional sense.
We have not been convinced of the constitutionality of this approach in the past, see
Constitutionality of Line-Item Veto Proposal, 9 Op. O.L.C. at 30, and we continue to
question its validity. On what seems to us to be the best reading of the Presentment Clause,·
·what must be presented to the President is the "bill" in exactly the form in which it was
voted on and passed by both the House of Representatives and the Senate, rather than a
measure or a series of measures that subsequently has been abstracted from that bill by the
clerk of the relevant House. ·
.
Nevertheless, the question is not free from doubt. The argument in favor of the
constitutionality of this device is that Congress has the authority to determirie, under its own
procedural rules, what does and what does not constitute a separate "bill" to be enrolled and
presented to the President .. The courts might defer to Congress' judgment as to what
constitutes a bill as long as that judgment was not an unreasonable one. A court might
conclude that, for reasons of efficiency or convenience, each House may pass, in a single
·vote, an entire "package" of what will become separately enrolled bills.
Furthermore, there appear to· be ways to refme S.137 so as to avoid the objection that
what must be presented to the President is the "bill" in exactly the form voted on by each
House. So long as the Houses of Congress have treated each bill subsequently presented to
the President as a bill at the time of each of their respective fmal votes, this objection would
not arise. Thus, fot example, internal House and Senate procedures that provided for
disaggregating an appropriations bill into separate bills and then for voting en bloc on those
bills would result in the President's being presented with exactly the bill(s) that was (were)
voted on by each House. The chances of S .13 7' s being sustained would be improved were
the bill amended to inoorporn.te such refmements.
Congress should be aware, however, of the very significant difference in the litigation
prospects of S.4 and S.14 on the one hand, and S.l37 on the other. S.4 and S.l4 are bills
that would e~sentially delegate to the President authority not· to· spend money under legislation
that he had signed into faw. · We are confident that the courts would sustain either version
(S.4 or S.l4) against a non-delegation challenge. S.l37, however, raises very difficult
questions under the "fmely wrought" textual provisions of the Presentment Clause. INS v.
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Chadha, 462 U.S. 919, 951 (1983). The chances of judicial invalidationof S.l3·f~e thus
(
substantially greater than they are in the case of the other two proposals. 1
.
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One further constitUtional difficulty in S.l37 should be noted. As drafted, S.137 appears to prescribe,
by legislation, the procedures that each House of Congress is to follow for enrolling a covered bill. (The ·
provision in question, section 1101, relates to the responsibility of the clerk of the appropriate House to
unbundle a cov~-bill after it has been voted on.) As we have pointed out before, ~Dellinger Statement at
4, n. 7, such a provi.lion would raise a constitutional issue were it understood to preclude either House from
subsequently a4opting procedural rules that differed from those set out in the statute. The Constitution vests in
the Houses of Congress the power to "determine the ·Rules of [their] Proceedings." U.S. Const. art. I, § 5, cl.
2. It is generally understood that "[e]ach House has the power to act alone in determining specified internal
matters." INS v. Chadha, 462 U.S. at 955-56 n.21. We remain doubtful that an Act of Congress can deprive
either House of its power to control that House's internal procedural rules through its own independent action.
Accordingly, construing S.137 to make the procedures set forth in the bill unalterable by the unilateral action of
either House would raise a constitutional difficulty. To avoid this difficulty, we would recommend that S.137
be aniended to make clear that each House reserves the right to alter the procedure it is to follow.
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�
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2007-0624-F - Line Item Veto [Part 5]
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William J. Clinton Presidential Library & Museum
Medium
The material or physical carrier of the resource.
Reproduction-Reference