Biden’s Minimum-Wage Increase Ruled Out of Order for Senate

(Bloomberg) -- Prospects for using President Joe Biden’s $1.9 trillion Covid-relief bill as a vehicle for raising the U.S. minimum wage to $15 per hour took a possibly fatal blow on Thursday, when a Senate official ruled that Democrats cannot use a fast-track budget procedure to make the change.

Senate parliamentarian Elizabeth MacDonough has found that the wage provision does not have a sufficient fiscal impact in relation to its effect on the economy to qualify for budget reconciliation, according to a person familiar with the decision, who spoke on condition of anonymity.

That means Democrats will almost certainly have to remove it from the Covid-19 relief bill. The move set off a firestorm of reactions, with progressives calling on party leaders to set the ruling aside and proceed apace. Moving a standalone wage-hike bill would prove challenging, given broad Republican opposition and the likely need for 10 GOP votes in the Senate.

“President Biden is disappointed in this outcome” and respects the decision and the Senate’s process, White House Press Secretary Jen Psaki said in a statement. The president will work with lawmakers to “determine the best path forward” and called on Congress to “move quickly” to pass the relief bill, Psaki said.

The battle to more than double the current $7.25 minimum wage isn’t over, according to Senate Budget Committee Chairman Bernie Sanders. He pledged to seek an amendment to the bill that could make the wage increase a more explicitly fiscal measure inside the reconciliation process and may have the potential to garner enough support.

“In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour -- and to provide small businesses with the incentives they need to raise wages,” Sanders said Thursday night. “That amendment must be included in this reconciliation bill.”

Senate Finance Committee Chairman Ron Wyden of Oregon held out a similar proposal, saying in a statement that he’s “looking at a tax penalty for mega-corporations that refuse to pay a living wage.”

The parliamentarian’s ruling on the application of the so-called Byrd rule can be overturned with 50 votes, but West Virginia Senator Joe Manchin, a moderate Democrat, has already said he would not supply the key vote to do so.

Harris’s Authority

Progressives have referred the parliamentarian’s power as advisory only. Representative Ro Khanna of California tweeted that Vice President Kamala Harris, who presides over the Senate, “needs to disregard and rule a $15 minimum wage in order,” though Biden indicated the White House won’t go down that road.

Democratic Senator Brian Schatz of Hawaii tweeted that the Senate’s filibuster rule -- requiring 60 votes to cut off debate for most legislation -- should be abandoned. That would allow Democrats to pursue the Covid-19 aid bill without the worry of reconciliation requirements.

South Carolina Senator Lindsey Graham, the top Republican on the Budget Committee, said the decision reinforces the principle that “reconciliation cannot be used as a vehicle to pass major legislative change -- by either party -- on a simple majority vote.”

“This decision will, over time, reinforce the traditions of the Senate,” Graham said in a statement.

In 2001, the parliamentarian at the time was dismissed by Trent Lott, then leader of the Senate’s Republican majority, who was unhappy with his rulings on tax and budget matters. There is no sign Senate Democrats are plotting to do that now.

The House is poised to pass the $1.9 trillion stimulus on Friday, and congressional leaders have pledged to send the bill to the White House by March 14.

Continuing Fight

“We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families,” Senate Majority Leader Chuck Schumer said.

If advocates prove able to restore the minimum-wage measure to the reconciliation process, it would then still require the task of finding 50 votes for the increase. Moderate Democrats had indicated they wanted changes to the House version -- which set a phased increase to $15 an hour in 2025.

Manchin said this week that he could back an $11 an hour minimum, phased in over two years, and then indexed to inflation. Before the parliamentarian’s ruling on Thursday, he said a compromise might be found. “There are a lot of things we can do,” he said.

Arizona Senator Kyrsten Sinema has also expressed opposition to a $15 wage, but hadn’t outlined what she would support. Senator Jon Tester of Montana said that he’s in favor of a different phase-in for the higher wage, but thinks a compromise can be found.

©2021 Bloomberg L.P.