Veto Possible for Budget, Tax Bill Items

WASHINGTON — Taking a meticulous look at new special-interest tax breaks, President Clinton and his advisors have come up with five measures that could be targets for a first-ever line-item veto, congressional sources said Thursday.

In an hourlong meeting with top advisors, Clinton also identified a handful of spending items for potential veto, a White House official said.

Except for one, the tax items are small-ticket provisions in the $152-billion tax cut bill. But each presents its own political peril. As a result, the White House remained undecided Thursday on which ones, if any, to veto, according to two sources, who spoke on condition of anonymity.

Of the 79 items vulnerable to the president’s line-item veto authority, one of the sources said the only five with potential to be vetoed are:

* Lower taxes for hard cider. The provision, supported by Sen. Daniel Patrick Moynihan (D-N.Y.), would reduce the tax on alcoholic, or hard, cider from the current rate for wine to the lower rate for beer. The provision would cost $3 million over five years.

* Sugar beet processor. This item, which would cost $84 million over five years, allows for deferral of taxes on the sale of a sugar-beet processing facility owned by Texas businessman Harold Simmons to a farmer-owned cooperative.

* Stock donations to employee stock-ownership plans. Allows heirs to Sammons Enterprises to avoid estate taxes by donating the late owner’s stock to an ESOP. Sponsored by Rep. Sam Johnson (R-Texas), the provision has a $23-million five-year cost to the Treasury.

* County employees’ expenses. Supported by Senate Majority Leader Trent Lott (R-Miss.), this item permits county offices in 34 states more favorable tax treatment for expenses after they pay their employees. Five-year cost: $27 million.

* Amtrak rescue. A rescue plan provides the Amtrak passenger rail system with more favorable treatment of net operating losses at a cost to the Treasury of $2.3 billion over five years.

The second source confirmed that the cider and sugar-beet plant provisions were under consideration but didn’t have direct knowledge of the others, although he said they would be likely candidates.

Before Clinton signed the tax bill Tuesday, the Joint Committee on Taxation released a list of 79 items in the legislation that could be subject to line-item veto.

In a series of top-level staff meetings, Treasury Secretary Robert E. Rubin, White House Chief of Staff Erskine Bowles, National Economic Council Chairman Gene Sperling and other officials pared the list of 79 eligible veto targets--from both the tax and spending bills--to fewer than 10, White House spokesman Mike McCurry said.

The rest of the 79 are proposals the administration supports, agreed to as concessions to the GOP in budget negotiations, or sees as reasonable corrections for unintended consequences affecting a small number of taxpayers.

House Speaker Newt Gingrich and other GOP leaders warned that any veto on the negotiated deal would darken prospects for future cooperation.

Sen. John McCain (R-Ariz.), wrote Clinton urging that “for the sake of comity between the Congress and the White House, I hope you will not use the line-item veto to strike items from the deal.”