President Obama has submitted a newer version of the line-item veto act to Congress. This one may be constitutional.
Yesterday the President sent to Congress a bill - the Reduce Unnecessary Spending Act of 2010 - that would revive the President's power to exercise a form of the line-item veto. Here are links to sources describing the proposal:
1. A statement from OMB Director Peter Orszag describing the proposed legislation;
2. A statement from the President containing the language of the bill as well as a section-by-section summary of its contents;
3. A post by Meredith Shiner at Politico describing congressional reaction to the bill.
In 1996 the Republican Congress adopted the Line Item Veto Act, but in 1998 the Supreme Court declared that law unconstitutional in the case of Clinton v. New York. The new law differs from the Line Item Veto Act in one important respect: the Line Item Veto Act provided that when the President rescinded a spending item the recission became effective unless Congress disapproved of the President's decision, while the Reduce Unnecessary Spending Act of 2010 provides that the recission does not become effective unless Congress approves of the reduction. Kathy Gill of About.com authored this informative essay describing the 1996 Act.
The Supreme Court's objection to the Line Item Veto Act was that it permitted the President to make law; under the doctrine of Separation of Powers, only Congress is permitted to make law. That problem is corrected by the new law. Under the Reduce Unnecessary Spending Act of 2010 the President's decision to reduce spending has no legal effect in and of itself; instead, the reduction becomes legally effective only if Congress acts to approve it following procedures that are consistent with the Constitution.
Shiner's post quotes Senator Russ Feingold as stating that the proposed law "appears to be constitutional." I agree that the new law appears to be constitutional, but I wonder if Congress will adopt it? The standard justification for this kind of law is that the President can use this procedure to eliminate unnecessary earmarks, but the bill goes way beyond that. Imagine a conversation between the President and a member of Congress after the bill is adopted:
President Jones: Senator Smith, I need your vote for the health care reform legislation; I need it badly.
Senator Smith: Madame President, my conscience won't let me vote for that bill; it represents a massive takeover of one-sixth of the nation's economy.
President Jones: Well, Smith, if we don't reform health care I don't see how the country can continue to afford that NASA Research Center in your state!