45 Pages Posted: 16 Jul 2004
Date Written: March 1988
Recent proposals assume that endowing the U.S. President with a line item veto will reduce spending. Analysis of a rich set of state budget data indicates that long run budgets are not altered by an item veto. In the short run, the item veto's potency is contingent upon the political setting. Governors with political incentives to use an item veto alter spending and revenues in a statistically significant and quantitatively important fashion. These results suggest that adoption of the line item veto, in general, is unlikely to reduce the size of the federal government.
Suggested Citation: Suggested Citation
Holtz-Eakin, Douglas, The Line Item Veto and Public Sector Budgets: Evidence from the States (March 1988). NBER Working Paper No. w2531. Available at SSRN: https://ssrn.com/abstract=425563
By Robert Inman