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Capitol Correspondence - 02.23.21

Congressional Democrats Look into Contingency Plans for $15 Minimum Wage Hike

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The House is moving fast towards a full floor vote on its portion of the reconciliation package this week, though an exact date for the vote has not yet been set. One high-visibility provision, which would increase the federal hourly minimum wage to $15, faces an uncertain future in the Senate. Because our members, while supporting increasing wages for staff, are limited by fixed, non-negotiable Medicaid rates, we share reporting from Politico Pro on back-up plans Congressional Democrats are looking into if the provision does not survive the reconciliation process. We are actively educating members of Congress on the need to increase Medicaid funding to comply with any potential increase in the minimum wage.

“The White House and Hill Democrats have been waiting to see how the Senate’s parliamentarian, its official adviser on procedural matters, opines on the wage increase. That ruling could happen as early as Tuesday, according to a senior Senate Democratic aide. In the meantime, Democrats are already weighing several options to try to save the wage hike from fully imploding and make it more palatable for moderates in their own party — whom congressional leaders need lockstep support from in order to muscle the Covid-19 aid package through the Senate with a simple majority vote before unemployment benefits expire for millions of Americans in mid-March.

[…]

Some Democrats are discussing the possibility of capping the increase at less than $15 an hour, to possibly $11 or $12, Yarmuth said. Such a move could satisfy wonky Byrd Rule restrictions that constrain the projected cost of the pandemic relief proposal outside of a 10-year budget window, he said.

Budget rules that allow the bill to pass the Senate without the threat of a filibuster essentially require that all pieces of the bigger package have a significant effect on federal spending, revenues and the debt within a decade. If the package increases deficits beyond that window, approval from the Senate parliamentarian can get problematic.

[…]

Progressives aren’t yet ready to ditch the $15 figure. Senate Budget Chair Bernie Sanders (I-Vt.) and his staff have repeatedly contended that the Congressional Budget Office has already produced ample evidence showing that the $15 increase satisfies budgetary rules within the 10-year window. Sanders aides note that raising the wage will produce a much bigger effect on the budget than oil drilling in the Arctic and the repeal of Obamacare health insurance mandate penalties — which were both previously allowed under the Senate’s arcane rules.

But to ensure that the $15 wage hike officially checks off all the right boxes, progressives have another idea. They’re pushing the possibility of a small business tax relief plan that could be paired with the minimum wage increase in order to alleviate any burdens on businesses required to increase their pay, according to a senior Senate Democratic aide.

Separately, Democrats are exploring other options from the Senate Finance Committee that could include closing “some loopholes that benefit the rich or large corporations,” the Democratic aide said.

Democrats ‘could certainly repeal’ some tax provisions, including one added to last year’s pandemic relief measure, ‘that benefit wealthy real estate owners,’ the aide added. ‘There are some other tax provisions that President Biden has supported that would raise more than enough money to cover both the 10-year window and out-year expenses with respect to the minimum wage.’

Senate Finance Chair Ron Wyden (D-Ore.) ‘is looking at various options to stay within our allocation and support small businesses, ‘said his spokesperson Ashley Schapitl, noting that he’s previously said ‘he’s doing all he can’ to keep the minimum wage increase in the broader package.

A House Democratic aide, who described the issue as “a Senate math problem,” said additional revenue could also come from cutting one month off the expiration date for unemployment benefits that the House package would extend through August. House Democrats have already lopped a month off Biden’s original unemployment benefits extension, which he proposed to run through September, to offset the cost of pension aid that they included in the Covid-19 aid bill.

[…]

Biden has privately signaled to governors that the wage hike likely isn’t happening as part of his first Covid-19 aid measure. And while Democrats could technically overrule the parliamentarian on the issue, that’s unlikely to happen given that Biden is leaning heavily against the idea, POLITICO reported earlier this month.”