On what grounds did the US Supreme Court declare the legislative veto unconstitutional?

The case of Clinton v. City of New York, 524 US 417 (1998) declared the line item veto unconstitutional.

In a 6-3 decision authored by Justice Stevens, the US Supreme Court held that The Line Item Veto Bill of 1996 was unconstitutional under the Presentment and Bicameral Clauses (Article I, Section 7, Clauses 2 and 3).

Republicans assumed control of both houses of Congress in 1994 as a result of their "Contract with America" platform that promised, among other things, to restore conservative spending and eliminate government waste.

One piece of legislation designed to make the President more accountable for spending was The Line Item Veto Bill of 1996, that authorized the President to strike new, direct spending from appropriation bills (bills that require the federal government to fund something), and disallowed use of funds from canceled provisions to offset deficit spending elsewhere. President Clinton supported the legislation because it gave him unilateral power over wasteful spending. There was no provision in the 1996 bill allowing Congress a voice in the veto process.

A group of six Senators attempted to stop the legislation by court order and were granted summary judgment (in their favor) by the US District Court, but the US Supreme Court dismissed their case for lack of standing because they received no direct injury as a result of the legislation.

Several other groups successfully filed a consolidated suit against the President for changes he made to the Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997. One case involved disputed taxes between the State of New York and health care organizations providing services to medicaid patients; the other eliminated a tax shelter that helped farmers.

The Court held the President could only sign or veto a legislative package in its entirety. If the President objected to any part of the bill, he could return it to Congress and allow them to deliberate over, and address, the objections.

The Court also believed Congress erred in passing the bill under the "non-delegation doctrine" of the Constitution that states Congress can't reassign its constitutional powers to another branch or entity.

In his concurring opinion, Justice Kennedy asserted the line item veto also conferred too much power to the President, who would have the ability to reward or punish certain groups with the strike of a pen. According to Kennedy, the potential for abuse was high, and the practice would upset the government's system of checks and balances.

The Line Item Veto Act of 2006

President Bush attempted to pass similar legislation in 2006 that addressed infringement of the Bicameral and Presentment Clauses by allowing the President to nullify provisions of a bill, but required that he return the Bill to Congress, which would have a period of 10 days to debate the issue and decide how to address the revision.

Article I, Section 7

All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

Every bill which shall have passed the House of Representatives and the Senate, shall, before it become a law, be presented to the President of the United States; if he approve he shall sign it, but if not he shall return it, with his objections to that House in which it shall have originated, who shall enter the objections at large on their journal, and proceed to reconsider it. If after such reconsideration two thirds of that House shall agree to pass the bill, it shall be sent, together with the objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a law. But in all such cases the votes of both Houses shall be determined by yeas and nays, and the names of the persons voting for and against the bill shall be entered on the journal of each House respectively. If any bill shall not be returned by the President within ten days (Sundays excepted) after it shall have been presented to him, the same shall be a law, in like manner as if he had signed it, unless the Congress by their adjournment prevent its return, in which case it shall not be a law.

Every order, resolution, or vote to which the concurrence of the Senate and House of Representatives may be necessary (except on a question of adjournment) shall be presented to the President of the United States; and before the same shall take effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the rules and limitations prescribed in the case of a bill.