U.S. Presidents have been asking Congress for line-time veto power for a long time. The line-item veto was first brought before Congress in 1876 during President Grant’s term of office. After repeated requests, Congress passed the Line Item Veto Act of 1996. This is how the Act worked:

• Congress passes a piece legislation that includes taxes or spending appropriations.
• The President lines out the specific items that he opposes and then signs the modified bill.

• The President sends the lined-out items to Congress, which has 30 days to disapprove of the line item veto. This requires a simple majority vote in both chambers.
• If both the Senate and House disapproved, Congress sends a "bill of disapproval" back to the President. Otherwise, the line item vetoes are implemented as law. Prior to this Act, Congress had to approve any Presidential move to cancel funds; absent Congressional action, the legislation remained intact as passed by Congress.
• However, the President could then veto the disapproval bill. To override this veto, Congress would need a two-thirds majority.

Presidential Spending Authority
According to the Congressional Research Service, Congress has periodically given the President statutory authority not to spend appropriated funds.

Title X of The Impoundment Control Act of 1974 gave the President the power to both delay the expenditure of funds (deferral authority) and to cancel funds (rescission authority). However, to rescind funds, the President needed Congressional concurrence within 45 days.

However, Congress is not required to vote on these proposals and has ignored most Presidential requests to cancel funds.

The Line Item Veto Act of 1996 (Public Law 104-130, 110 Stat. 1200) changed that rescission authority.

The Line Item Veto Act put the burden on Congress to disapprove rather than approve presidential appropriations cancellations (aka, line item vetoes). In other words, a failure to act would mean the funds would be canceled rather than the President's decision being canceled.

Under the 1996 Act, Congress had 30 days to override a presidential line-item veto. Any such Congressional resolution of disapproval, however, would itself be subject to a presidential veto. Thus Congress would need a two-thirds majority in each chamber to override the Presidential rescission (line item veto).

This Act was controversial: it delegated new powers to the President, affected the balance between the legislative and executive branches, and changed the budget process.

Line Item Veto Act of 1996 - Legislative History
Sen. Bob Dole (R-KS) introduced S4 (which would become Public Law 104-130) on 4 January 1995 (see Thomas.loc.gov) with 29 cosponsors. There were several related House measures (H.RES.147, H.RES.391, H.R.2, H.R.27, H.R.3136).

There were restrictions on Presidential, however. From the CRS Conference report, the bill:

Amends the Congressional Budget and Impoundment Control Act of 1974 to authorize the President to cancel in whole any dollar amount of discretionary budget authority, any item of new direct spending, or any limited tax benefit signed into law, if the President: (1) determines that such cancellation will reduce the Federal budget deficit and will not impair essential Government functions or harm the national interest; and (2) notifies the Congress of any such cancellation within five calendar days after enactment of the law providing such amount, item, or benefit. Requires the President, in identifying cancellations, to consider legislative histories and information referenced in law.

On 27 March 1996, the Senate vote 69-31 to pass the final version of the bill. The House did so on 28 March 1996 on a voice vote. On 9 April 1996, President Bill Clinton signed the bill into law.

Line Item Veto Act of 1996 - Judicial History
The day after passage, a group of Senators challenged the bill in the U.S. District Court for the District of Columbia. U.S. District Judge Harry Jackson, a Reagan appointee, declared the law unconstitutional on 10 April 1997. The U.S. Supreme Court ruled that the senators did not have standing to sue.

President Clinton exercised the law's line item veto authority 82 times. Then the law was challenged in two separate lawsuits filed in the U.S. District Court for the District of Columbia. Senators Byrd, Moynihan, Levin, and Hatfield maintained their opposition to the law through amicus curiæ briefs, as did Rep. Henry Waxman, Rep. David Skaggs and Rep. Louise Slaughter.

U.S. District Judge Thomas Hogan, a Reagan appointee, combined the two cases. On 12 February 1998, he, too, declared the law unconstitutional. His ruling was affirmed on 25 June 1998 by a 6-3 decision of the Supreme Court of the United States (Clinton v. City of New York).

Those justices in the majority: Chief Justice William Rehnquist, Justices Ruth Bader Ginsburg, Anthony Kennedy, David Souter, John Paul Stevens (author of the opinion) and Clarence Thomas. Justices Stepehn Breyer, Sandra Day O'Connor and Antonin Scalia dissented.

The Court ruled that the law violated the Presentment Clause (Article I, Section 7, Clauses 2 and 3) of the U.S. Constitution because it gave the President of the United States the power to unilaterally amend or repeal parts of statutes that had been passed by the United States Congress. The Court ruled that the Line Item Veto Act of 1996 violated the process that the U.S. Constitution establishes for how bills originating in Congress become federal law.

Subsequent Action - Legislative Line Item Veto Act of 2006
Despite the 1998 U.S. Supreme Court decision, President George W. Bush sent the Legislative Line Item Veto Act of 2006 to Congress on 6 March 2006. Senate Majority Leader Bill Frist (R-TN), Republican Whip Sen. Mitch McConnell (R-KY) and Sen. John McCain (R-AZ) jointly introduced the presidential proposal, S.2381. On 22 June 2006, a related bill (HR 4890) passed the House of Representatives on a party-line roll call vote (247-172-14). Neither bill came up for a vote in the Senate.