Minimum Wage, Maximum Delay

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Senate Says Business Now Needs Even Bigger Bribes Before Minimum Wage Can Be Increased

The U.S. Senate, which has been holding a long-anticipated minimum wage hike ransom for months, has just increased its demands and now insists that $12 billion in tax breaks are needed to "compensate" businesses for the alleged costs of paying a higher wage to those at the bottom of the wage scale.

On February 1, the Senate approved a bill pushed by Senate Finance Chair Max Baucus (D-MT) raising the minimum wage along with a tax cut package costing $8.3 billion over ten years. The Senate had made a half-hearted attempt to pass a "clean" wage increase (without the tax breaks) on January 24 and came six votes short of the 60 needed to end debate. In the House of Representatives, Ways and Means Chairman Charlie Rangel was unenthusiastic about attaching tax cuts (and the offsetting provisions needed to pay for them) to the minimum wage increase, but eventually agreed to a $1.3 billion package that was approved and added to the wage legislation.

Ransom Demand Increased

Now the Senate says $12 billion in tax breaks are needed, an increase of around $3.8 billion from its original demand. BNA reports that the additional tax breaks were proposed by Finance Chairman Baucus, ranking member Charles Grassley (R-IA) and Jon Kyl (R-AZ). They include a one-year extension of the bigger write-offs for restaurants and retail stores (the original extension was only for three months) and a further expansion of the Work Opportunity Credit for companies in rural counties that are losing population. The Senate approved by unanimous consent an amendment to include these new additions to the tax cut package.

A Pragmatic Approach to Increasing the Minimum Wage?

It is sometimes said that including the tax breaks is necessary to get the 60 votes needed to prevent a filibuster in the Senate by members who are not generally supportive of increasing minimum wage. But it's hard to believe the current strategy is a politically feasible way to increase the minimum wage. The wage increase and tax package have been added to the emergency war spending bills just passed by the House and Senate, which President Bush has already vowed to veto because they include timetables for withdrawing from Iraq.

We've said it before and we'll say it again: The idea that businesses need to be "compensated" after they've received $276 billion in tax breaks since the last minimum wage hike (which was worth only about $13 billion to workers) is absurd. Businesses should not have to be bribed billions in tax cuts so that we can rescue the minimum wage from its lowest purchasing power in half a century.

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