Dems Ditch Minimum Wage Tax Scheme To Fast-Track $1.9 Trillion Stimulus

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by Tyler Durden
Monday, Mar 01, 2021 - 12:21 PM

Senate Democrats are ditching a proposal to use tax code to penalize corporations which don't raise the minimum wage for their lowest paid workers, according to Bloomberg. According to two anonymous sources, the move comes after Democrats were left seeking alternatives after the Senate parliamentarian nixed raising the federal minimum wage to $15 an hour as part of the $1.9 trillion pandemic relief package.

Senate Majority Leader Chuck Schumer (D-NY)

With the minimum wage discussion out of the way, for now, the Senate "could begin consideration of the stimulus measure as soon as Wednesday — with final votes as soon as late Thursday — pending full Democratic support and sign off from the parliamentarian," according to the report.

The tax penalties were proposed by Senate Finance Committee Chairman Ron Wyden (D-OR) and Budget Committee Chairman Bernie Sanders (I-VT, who notoriously didn't pay his own campaign staff $15 an hour until he was called out), however it became clear over the weekend that pushing the issue would risk failure, as all 50 Senate Democrats would need to agree on specific language in order to avoid missing a March 14 deadline for extending expiring supplemental unemployment benefits, according to one of Bloomberg's sources.

The decision removes a major complication in the Senate and could speed approval of the rest of the package in the chamber. In addition to getting the backing of all 50 senators who caucus with Democrats, the tax language also would have had to pass muster with the parliamentarian, the House and the administration and be signed by Biden -- all in a two-week period.

Still, dropping the minimum wage increase from the stimulus could create other headaches for both Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi. -Bloomberg

On Saturday, the House narrowly passed their version of the stimulus (219-212) which includes the $15 an hour minimum wage which had no GOP support. Two moderate Democrats voted no to the party's signature issue. With House and Senate Democrats divided on the issue, "the conflict is bound to increase tension between the two wings of the party with Biden in the middle."

The current big-ticket items in the bill include $1,400 direct payments to individuals, a $400 weekly federal unemployment benefit through Aug. 29, and help for those having difficulty in paying rents and mortgages during the pandemic.

On Monday, progressive lawmakers sent President Biden and Vice President Kamala Harris a letter spearheaded by Rep. Ro Khanna (D-CA) which demands they set aside the parliamentarian's ruling on minimum wage within the upcoming stimulus package. Signatories included Alexandria Ocasio-Cortez (D-NY), who said on Friday: "Really our options right now, at least our immediate options on this specific issue, is to do something about this parliamentary obstacle or abolish the filibuster."

"We’re moving ahead with a bill that probably will get no Republican votes in the Senate, but will have broad Republican support in the country," Democratic Senator Chris Coons told CNN's "State of the Union" on Sunday. 

Meanwhile, Congressional GOP say the plan is still too expensive, and includes items such as transportation projects which have nothing to do with the pandemic.

"It’s $1.9 trillion, more than half of it won’t even be spent in this calendar year ... So how could it be about COVID relief? No one expects a year from now that we’ll be in the COVID crisis we are in now," GOP Senator Rob Portman told ABC's "This Week."

 Both chambers must pass the same version of the bill before sending it to Biden's desk.