Professors Bohanon and Van Cott teach in the Department of Economics at Ball State University, Muncie. Indiana.
Many Americans, including us, are concerned about Federal spending. Except to hardened statists, it is clear that government spending is out of control. This situation prompts many, especially those in conservative circles, to argue that granting Presidents line-item veto authority would restore fiscal sanity. Line-item authority, goes the argument, means Congress could not blackmail Presidents into “supporting” its pork barrel schemes by attaching them to major legislative initiatives. Presidents are alleged to be less beholden to narrow special interests, and armed with a line-item scalpel, they could excise Congressional pandering to these interests.
The evidence to back up the argument is scanty. Some state governors possess line-item authority, and all recent Presidents have requested it. Line-item advocates offer anecdotes about what particular governors have done. They also fantasize about what various Presidents would have done.
We have no doubt that Harry Truman or Ronald Reagan, for example, might have eliminated some silly spending riders had they possessed the line-item veto. However, this does not persuade us that overall spending would have been lower, for we are equally persuaded that they would have had a strong incentive to avoid line-item vetoes in exchange for Congressional support for their own “pet” projects.
The only evidence that would make a convincing case for the veto’s efficacy would be data showing that governments which have the veto authority spend less than comparable governments which do not. This would require, of course, that other factors which affect spending be statistically controlled. Per capita government spending in California, for example, probably would be higher than in Mississippi even if California had the veto and Mississippi did not. Before concluding that the line-item veto increases spending, one would have to eliminate statistically the influence of other differences between California and Mississippi.
Fortunately, such a study is not only possible, it has already been done. Burton Abrams of the University of Delaware and William Dougan of Dartmouth College have compared states that allow governors a line-item veto with those that do not. If the line-item veto works as its advocates claim, spending will be less in states where the veto is present, controlling, of course, for other factors. Abrams and Dougan’s evidence indicates that the veto has no influence on state spending. The implications for the efficacy of a Presidential line-item veto are obvious.
We are not surprised by these implications. Our nation’s fiscal malady can be traced to a more fundamental source than Congressional blackmail. Indeed, the malady was avoided for many decades without the line-item veto. Ascribing the problem to the lack of the veto without understanding its root cause is analogous to a blindfolded man’s trying to pin the tail on the donkey.
In our view, the malady stems from a change in the implicit “Constitutional ethic” describing the relationship between private economic actions and the government. For the first century or so of our nation’s existence, there was a commonly held view which placed most private economic activity outside the domain of government policy. The implication of this ethic is profound. If no one believes that the government is (or should be) the guarantor of income security, government transfer payments do not inflate the budget. If government intervention in private markets is not considered appropriate, agricultural price support programs do not drain the treasury.
Government programs typically focus benefits on the few and spread their costs among the many. This, of course, skews lobbying effort in favor of the special-interest few, making such programs irresistible to politicians. The Founding Fathers were well aware of this and its implications for fiscal excess. Constitutional separation of powers among the three branches of government was intended to make it difficult for special interests to utilize government for their narrow purposes. The ethic placing most economic functions outside the realm of partisan politics reinforced the Constitutional separation of powers.
The New Constitutional Ethic
In the late 1800s this ethic began to erode. Government began interjecting itself into private economic relations. While any single interference might have been considered unimportant, the change in the ethic restricting government was significant. The ability of special interest groups to use government to capture the wealth of others increased. Our nation now finds itself in a situation where government wealth transfers have extended themselves into every nook and cranny of our economic life. Moreover, all social and economic ills, real or imagined, are viewed as a legitimate domain for a new government program. This is the new ethic.
The line-item veto does not arrest this process, let alone enable us to regain what we have lost. Regardless of protestations to the contrary, Presidents are political animals, indeed the most successful of the species. All members of the species find serving special-interest constituencies irresistible. This insures their survival. It is line-item proponent Ronald Reagan, for example, who has proposed yet another Cabinet level bureaucracy—the Department of Veteran Affairs.
In a world where egocentricity is epidemic, line-item advocates are hitching their fiscal reform wagon to the idea that good people will do good things if given the opportunity. The Founding Fathers, knowing the good people-good things link was fragile, opted for a system which limited government’s scope. Unfortunately, this wisdom continues to escape us.
It is instructive to note that Jimmy Carter’s attempt at fiscal reform collided with the same contradiction. For Carter it was “sunset laws” that would cut the fluff out of government. Continued existence of government agencies and their programs would be put on a scientific basis by requiring their periodic review by informed citizens. Like line-item advocates, Carter failed to understand the power of special interests in a setting where there is effectively no limit on government’s scope of activities. That is, the same special interest constituencies responsible for the government initiatives will prevail in any periodic review.
The only substantive thing the line-item veto would accomplish is to realign political clout away from Congress to the President. Lobbying efforts would focus on a single political animal rather than 535 of them. The President’s ability to reward his special interest constituencies would be enhanced while Congress’s ability would be diminished.
The expanded scope of government has made the Congressional-Presidential contest a high-stakes game. This is why recent Presidents have clamored for the veto, whereas Martin Van Buren, for example, ignored the issue. That is, it is not a desire by recent Presidents to limit government which explains their requests for line-item authority. Rather, when Federal spending accounts for 20 per cent of GNP, a line-item veto is more valuable to a President than if spending accounted for 5 per cent of GNP. Is it any wonder that Congress wants to continue playing the game by today’s rules?
The clamor for the veto has been wrapped in public-spiritedness. The colorful but contemptible spending riders Congress indulges in are only the tip of an iceberg, however. In a sense, the attention the riders generate is unfortunate because they divert attention from the new ethic responsible for the entire Federal iceberg. The evidence about state governors indicates that their line-item veto does not affect state icebergs. Why would Federal experience be any different? 
2. Dwight R. Lee persuasively argues that this erosion coincided with the failure of the judiciary to consistently uphold private property rights and the sanctity of private contracts. See his “Political Economy of the U.S. Constitution,” The Freeman, February 1987.