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The Line Item Veto and Public Sector Budgets: Evidence from the States

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  • Douglas Holtz-Eakin

Abstract

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.

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  • Douglas Holtz-Eakin, 1988. "The Line Item Veto and Public Sector Budgets: Evidence from the States," NBER Working Papers 2531, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2531
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    1. Steven Craig & Robert P. Inman, 1986. "Education, Welfare and the "New" Federalism: State Budgeting in a Federalist Public Economy," NBER Chapters, in: Studies in State and Local Public Finance, pages 187-228, National Bureau of Economic Research, Inc.
    2. Dennis Mueller & Peter Murrell, 1986. "Interest groups and the size of government," Public Choice, Springer, vol. 48(2), pages 125-145, January.
    3. Feenberg, Daniel R. & Rosen, Harvey S., 1987. "Tax structure and public sector growth," Journal of Public Economics, Elsevier, vol. 32(2), pages 185-201, March.
    4. Burton Abrams & William Dougan, 1986. "The effects of constitutional restraints on governmental spending," Public Choice, Springer, vol. 49(2), pages 101-116, January.
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