The Minimum-wage Trap

TYLER TOO

By Gus Tyler

Published January 12, 2007, issue of January 12, 2007.

The Democratic Party faces a dilemma. It’s with the pending legislation on minimum wage, one of the six items the party promised to enact in its first 100 days in power. For 10 years now, the minimum wage has been unchanged and is steadily losing purchasing power. This is because of the Republican control of Congress, beginning in the early years of the Clinton administration. The GOP has long opposed a federal minimum wage, arguing that wages should be determined by the “market” and not by legislation.

But now, all of a sudden, the Bush White House is talking about raising the minimum wage. What accounts for this 180-degree about face? The answer is a sly stunt to use the minimum-wage proposal as a vehicle carrying a tax cut for business. The Democrats resent this bit of trickery. They believe that legislation calling for an increase in the minimum wage should be voted on independently. So, too, should a tax cut for business.

The House was expected to vote this week to adopt a Democratic version of the minimum-wage hike, sans new business tax cuts. The Senate, where the Democratic margin is paper thin, was still negotiating over Republican demands that the wage hike be tied to a small-business tax cut. If that happens, the two chambers will argue out the difference in conference, knowing that if they settle on the Democratic House version, President Bush will veto it. It would take a two-thirds vote in both the House and Senate to override the veto, which is unlikely.

Faced with this dilemma, our guess is that the Democrats will accept the bill even with its undesirable tax-cut rider. And now the president could boast that he finally succeeded in bringing together the warring parties and putting an end to the ugly partisanship of past years.

Ah, the ironies of history!



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