It sounds nice, but there are just a few problems with this.
(1) The biggest earmarker is George W. Bush himself. According to the Washington Examiner, David Obey, the Democratic chair of the House budget committee, said the President creates twenty times as many earmarks as all Congresspersons combined. Actual numbers come to billions of dollars- that's right, billions with a B, demanded by one man alone. If Bush wants to cut government waste, he should start by looking in a mirror.
(2) Bush's opposition to earmarks is strangely inconsistent... strange, that is, only to those who are politically colorblind. As reported in the New York Times, Bush signed bills into law over his Presidency with 55,000 earmarks totalling over $100 billion. Quoth the Times: "Such projects tucked into the endnotes of complex spending bills at the request of individual lawmakers with almost no oversight have contributed to a mounting pileup of waste and corruption, including sending the lobbyist Jack Abramoff and the former congressman Randy Cunningham, a California Republican, to jail."
(3) Congress, under the Democrats, has already cut earmarks in half, according to the New York Times (subscription required). Bush, in the State of the Union, either ignored that fact when he promised to veto any bill that didn't cut earmarks in half... or, more sneakily, he might have made that promise so that he could take credit for the cuts in earmarks already made.
Finally, (4)... it's unconstitutional. The President does not have the authority to deliberately not spend money Congress has ordered to be spent, nor can he redirect those funds to other purposes. Bush's order hails back to the old and discredited concept of impoundment. Impoundment was first used in Thomas Jefferson's Presidency to postpone- not stop- spending on riverine gunboats until new technology became available. The first President to use impoundment to stop spending was Ulysses S. Grant (not a good example to take). FDR, Truman, and LBJ used impoundment in isolated cases, usually going to Congress to ask permission. Only one President ever attempted to use impoundment as a line-item veto power... Richard Nixon. (Source: The Imperial Presidency, Arthur M. Schlesinger, Jr., book very highly recommended.)
Nixon's attempts to deny Congress its budgetary authority were consistently overruled by the courts. After Nixon's resignation, the principle appeared dead as the dodo, a relic of a president who wanted absolute power... until Bush, who despite Democrats holding Congress still appears to be a president who has been given absolute power by his party's members in the legislative branch.
During the Clinton administration, I supported the line-item veto. After seeing Bush, I oppose it. Dubya is again seeking to exercise powers the Presidency does not possess...
... and, if the past is anything to go by, he'll get away with it.
Get away with it despite angering one of his staunchest
I repeat: the Republican Party is the party of evil.