Clinton's first-ever line-item veto invites court challenges
Aug. 12, 1997
WASHINGTON (AP) _ President Clinton hopes Congress will think twice about helping special interests now that he has, for the first time, used his line-item veto power, killing budget provisions that would have helped some farm co-ops, U.S. financial firms with overseas arms and New York state.
``When you know the president is prepared to use the line-item veto, that tends to operate as a deterrent against the most egregious kinds of projects,'' Clinton said Monday as he went on national television to veto the three provisions.
For now, it seems unlikely that Clinton's historic action will be overturned by lawmakers when they return from their summer recess in September.
But use of the veto sets the stage for the Supreme Court to decide the broader question of whether Congress had the right to give the president the power to veto individual items in tax and spending bills.
Though senior Republican aides said they had not yet forged a strategy for dealing with the vetoes, they said one option was to negotiate new, acceptable language with the White House, rather than seeking the two-thirds House and Senate majorities needed to reverse the president.
The vetoes were to items within two bills Clinton signed five days earlier. The bills were aimed at balancing the budget by 2002 and trimming taxes. Clinton had until Monday to use his line-item veto on the signed bills.
A spokeswoman for House Speaker Newt Gingrich, R-Ga., said administration officials had not objected to the provisions during weeks of budget talks and said the vetoes ``may have less to do with sound policy and more to do with petty politics.''
And predictably, those directly affected by the vetoes were upset and already mapping their next steps. Included was Gov. George Pataki, R-New York. One vetoed provision would have let New York qualify for extra federal Medicaid funds by imposing a tax on hospitals.
Clinton's veto, if not overridden, would be a ``body blow'' to New York's health-care network, and the state will ``fight in Congress and in the courts to protect our children and needy families,'' Pataki said in a written statement.
Kenneth Vest of the American Council of Life Insurance said his group might go to court over Clinton's veto of language that would have let American insurance companies and other financial firms defer taxes on income from overseas operations. U.S. manufacturers can do that for their foreign arms, Vest said.
``We see this as a simple matter of tax fairness, new business and jobs,'' said Vest, the council's media relations director.
Among the companies that sought the language was Citicorp, the New York-based banking giant, participants said.
The third vetoed provision would have trimmed capital gains taxes _ ``possibly forever,'' Clinton said _ for some agribusinesses that sell food refineries and other assets to farmer-owned cooperatives.
White House aides had hoped the agribusiness veto would be easy to defend by arguing the provision was inserted by Republicans to help GOP campaign contributor Harold Simmons of Texas. Simmons said in a statement Monday that the veto is irrelevant to him because the sale of his sugar refineries is structured in such a way that he won't pay capital gains taxes for about 30 years.
Many farm-belt lawmakers of both parties _ including Senate Minority Leader Tom Daschle, D-S.D. _ supported similar legislation helping farm cooperatives. So in announcing that veto, Clinton called the provision ``well-intentioned'' but too broadly written and pledged to work with Congress ``to redesign this effort so that it is better targeted and not susceptible to abuse.''
The White House said the three vetoed provisions would save taxpayers $600 million over the next five years _ a tiny fraction of the nearly $9 trillion the government expects to spend over that period.
At stake is the much broader question of whether Congress can legally give the line-item veto power to presidents as it did in a law passed in 1996. The law took effect this year, and this was Clinton's first chance to use it.
The high court rejected a challenge to the line-item veto in June for technical reasons, saying the lawmakers who brought the case had no legal standing. The justices have yet to rule on the measure's constitutionality.