Two bills are being considered in Congress (bill A, which would reinstitute the Volstead Act, and bill B, which would prohibit anyone of Canadian origin from owning property). Here are the payo s to Congress and the president depending upon which laws are passed: Outcome Congress President Bill A only 8 -1 Bill B only -1 9 Both bills 5 5 Neither bill 0 0
a. Suppose that Congress rst decides which of the four options to select. The president can then either sign or veto, in which case no law is passed. Which bills become laws in the equilibrium of this sequential game? Explain, with aid of a diagram.
b. Now suppose that the president has a line-item veto, so that if Congress passes both bills, he can choose to sign bill A or bill B only. However, he cannot enact laws that Congress does not pass. Which bills become laws in the equilibrium of this game? Explain.
c. It is often suggested that giving the president a line-item veto would be a good way to make government work more eciently, as then he would not have to veto entire bills just because he felt one provision of the bill would make a bad law. In light of this question, what do you think of this suggestion?