House and Senate Republicans are advancing legislation that would establish some sort of quasi-line item veto, empowering the President to identify targeted tax and spending provisions and propose their rescission. Congress would vote yes or no on the package as a whole.
The motivation appears to be providing a fig leaf for the Republicans because they are rejecting Democratic calls to restore the pay-as-you-go rules that, for a while, were actually fairly effective. (They ceased being so when Congress started playing ridiculous games with them, such as calling the need to pay for the 2000 census an unanticipated "emergency" that was outside of the rules.) Pay as you go they denounce as a secret plot to prevent extension of the tax cuts. Well, if you want to add trillions to the fiscal gap, it figures that a rule impeding fiscal irresponsibility would get in the way.
It's unclear that the line item veto being proposed makes any difference. The up or down vote on the whole package means that Congress can easily reject it if the stench of bad publicity isn't too strong. Indeed, one obvious game to play is to have Bush posture by pretending to strike down a bunch of items, knowing that Congress will restore them anyway. Also, while the Senate bill would have the Joint Committee on Taxation decide which items are "targeted tax benefits" subject to the rules, based on an objective definition, the House bill would include only the items that were identified by the House Ways & Means and Senate Finance chairs, making it entirely a silly exercise as they could exclude whatever they liked. Even if they tried to include everything that meets the definition (and why should they if they are cutting deals), the definition is still absurdly narrow. "Targeted tax benefits" are those with only one beneficiary. So far as I can tell from my source (the June 19 Tax Notes), the Senate bill may have the same absurdly narrow definition of a targeted tax benefit.
Even a more genuine line item veto has ambiguous effects on deficits and fiscal gaps. What it basically does to the legislative process is shift a bit more power to the President. So, if the President wants to use it to attack earmarks and targeted tax rules, it gives him an extra tool. But if the President wants to use it as a bludgeon, to trade for votes in favor of his own tax cut and spending proposals, he can do that as well. Gee, I wonder which way the current President would be more likely to use it.
The House bill has a provision expressing the sense of Congress that the President should not use his rescission authority as a bargaining tool to secure votes on other legislation. Yeah, right.