Clinton Advisors Narrow Line-Item List

White House targets three tax breaks for possible veto

By Wolf Blitzer/CNN

WASHINGTON (AllPolitics, Aug. 7) -- Before Monday, President Bill Clinton must decide whether to use his new line-item veto authority to kill some special interest tax breaks contained in the new balanced budget agreement.

It looks as though Clinton is ready to move on three possible targets. If you make hard cider in Vermont, process beets in South Dakota, or sell dog licenses in Mississippi, don't count your money yet from the special tax advantages included in the budget deal.

Clinton has an opportunity to do what no other president has ever been able to do: use the line-item veto to kill special interest legislation.

In all, Clinton could chop 79 tax breaks, though White House and congressional sources say most of them were agreed to in the budget negotiations.

At his Wednesday news conference, Clinton said, "I cannot use the line-item veto on anything that our negotiators agreed to let go through."

But White House negotiators did not sign off on at least three provisions:

• Taxing Vermont and New York State hard cider as beer rather than as higher taxed wine. The cost to taxpayers is an estimated $7 million over 10 years.
• Easing capital gains taxes on the sale of beet and other food processing plants to farm cooperatives, mostly in the Dakotas. Cost to taxpayers: $104 million over 10 years.
• Exempting sheriffs and other local officials from taxes on extra money they earn collecting fees for dog, fishing and other licenses. Cost to taxpayers: $58 million over 10 years.

This last tax break has been dubbed the "Dukes of Hazzard" provision, referring to the old TV comedy that featured an entrepreneurial sheriff. Thirty-four states allow government employees to moonlight and to pocket the profits.

All three present political risks for Clinton. New York's Daniel Patrick Moynihan and Vermont's Patrick Leahy support the cider tax break. Senate Minority Leader Tom Daschle of South Dakota supports the food processing tax break. And Senate Majority Leader Trent Lott of Mississippi supports the "Dukes of Hazzard" provision.

In the big scheme of a trillion-dollar budget, the savings would be tiny. But the president's aides say he is determined to show he's serious about using the line-item veto as a deterrent to pork-barrel spending.

Others industries benefiting from special tax breaks include pharmaceutical companies, gas station owners and U.S. software companies.

If Clinton decides to use the line-item veto authority, aides say he is likely to make the announcement in his Saturday radio address.

If Clinton pencils out individual line items in the budget legislation or any new law, Congress has the chance to try to veto the veto.

Within 30 days, the House and Senate can pass a "joint resolution of disapproval," repudiating the president's particular line-item vetoes. That resolution requires only a simple majority. If it passes, however, the president must sign it for the line-item to be overturned. That would be unlikely.

In a more probable scenario, the president would veto that resolution. Congress then has the normal ability to override his veto. That requires a two-thirds majority vote.

CNN's John King and Bob Franken contributed to this report.