The line item as passed federally was declared unconstitutional, with help from Rudy Giuliani. Antonin Scalia says it was constitutional, and that with some minor re-wording would have been found constitutional by the court.
You are correct, but Mitt is trying Bull S**T the public into believing he will use a Line Item Veto that exists.
Justice Scalia dissented:
Had the Line Item Veto Act authorized the President to "decline to spend" any item of spending contained in the Balanced Budget Act of 1997, there is not the slightest doubt that authorization would have been constitutional. What the Line Item Veto Act does instead -- authorizing the President to "cancel" an item of spending -- is technically different. But the technical difference does not relate to the technicalities of the Presentment Clause, which have been fully complied with[.] Clinton, 524 U.S. 417, 469 (1998).