Senate Advances $1.9 Trillion Coronavirus Relief Bill Without Minimum Wage Increase

Vote-A-Rama is over in the Senate, and there is some good news, and some bad news. Democrats approved President Biden’s $1.9 trillion coronavirus relief package, but failed to support raising the minimum wage to $15 hour.

The New York Times reports, Senate Votes Against Minimum Wage Increase During Pandemic as Biden’s Economic Plan Moves Forward:

Senate lawmakers gave their support to President Biden’s $1.9 trillion coronavirus relief package just before sunrise on Friday, clearing a major hurdle for the legislation to proceed without Republican support after an overnight voting session that stretched for about 15 hours.

Vice President Kamala Harris arrived early in the morning to the Senate dais, where she cast her first tie-breaking vote, and the Senate adopted the resolution along party lines, 51-50, at about 5:30 a.m.

Why do Republicans hate America?

In the marathon session — known as a vote-a-rama and for which more than 800 amendments were drafted — Senate Democrats maneuvered through a series of politically tricky amendments that Republicans wanted to attach to a coronavirus relief package as lawmakers pressed forward with a budget plan that includes Mr. Biden’s economic aid proposal.

The resolution will go to the House, where Democrats do not require Republican support to approve it.

Still, the proposal did not pass the Senate without setbacks for some Democrats. Lawmakers dealt a significant blow to Mr. Biden’s plan by dismissing a major tenet: a measure that would raise the federal minimum wage to $15 an hour.

In an impassioned speech around 5 a.m., Senator Bernie Sanders, independent of Vermont, called for his colleagues to back the budget resolution “in the strongest possible terms,” even after they rejected the minimum wage proposal for which he has been the Senate’s leading proponent.

“We now come to the end of the debate that has gone on for over 14 hours, and we end this debate in a moment in which our country faces more crises, more pain, more anxiety than any time since the Great Depression,” Mr. Sanders said. “But we have the opportunity to give hope to the American people and restore faith in our government by telling them that tonight we understand the pain that they are experiencing and we are going to do something very significant about it.”

By a voice vote, senators backed an amendment from Senator Joni Ernst, Republican of Iowa, to “prohibit the increase of the federal minimum wage during a global pandemic.” It was a signal that the wage increase would be difficult to pass in an evenly split Senate, where at least one Democrat, Senator Joe Manchin III of West Virginia, is on record opposing it.

“A $15 federal minimum wage would be devastating for our hardest-hit small businesses at a time they can least afford it,” Ms. Ernst said on the Senate floor. “We should not have a one-size-fits-all policy set by Washington politicians.”

Mr. Sanders seemed unfazed. He said that his plan was to carry out the wage increase over five years and that he had never wanted to raise it during the pandemic.

“We need to end the crisis of starvation wages in Iowa and around the United States,” Mr. Sanders said. He added that he planned to try to get the phased-in wage increase included in a budget reconciliation bill that would allow Mr. Biden’s stimulus plan to circumvent the Senate’s 60-vote filibuster rule.

“At a time when half of our workers are living paycheck to paycheck, when millions of workers are earning starvation wages and when Congress has not voted to raise the minimum wage since 2007, I will do everything that I can to make sure that a $15-an-hour minimum wage is included in this reconciliation bill,” Mr. Sanders said.

Here is a reality check for the Iowa hog castrator, from Dean Baker, the co-director of the Center for Economic and Policy Research (CEPR). If Worker Pay Had Kept Pace With Productivity Gains Since 1968, Today’s Minimum Wage Would Be $24 an Hour:

If the minimum wage had kept pace with inflation since 1968, it would be close to $12 an hour today, more than 65 percent higher than the national minimum wage of $7.25 an hour. While this would make a huge difference in the lives of many people earning close to the national minimum wage, it is actually a relatively unambitious target.

Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity.

This is an important distinction. If the minimum wage rises in step with inflation, we are effectively ensuring that it will allow minimum wage earners to buy the same amount of goods and services through time, protecting them against higher prices. However, if it rises with productivity that means that as workers are able to produce more goods and services per hour, on average, minimum wage earners will be able to buy more goods and services through time.

While the national minimum wage did rise roughly in step with productivity growth from its inception in 1938 until 1968, in the more than five decades since then, it has not even kept pace with inflation. However, if the minimum wage did rise in step with productivity growth since 1968 it would be over $24 an hour today, as shown in the Figure below

It is worth considering what the world would look like if this were the case. A minimum wage of $24 an hour would mean that a full-time full year minimum wage worker would be earning $48,000 a year. A two minimum wage earning couple would have a family income of $96,000 a year, enough to put them in the top quintile of the current income distribution.

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This raises a final point: we can’t imagine that we can just raise the minimum wage to $24 an hour without serious disruptions to the economy, many of which would have bad effects (i.e., unemployment) for those at the bottom. While there is certainly room to raise the minimum wage, and many states have done so with no measurable impact on employment, there clearly is a limit to how far and how fast we can go.

It is quite reasonable to have a target where the minimum wage returns to where it would be, if it had tracked productivity growth over the last 50 years. But we will have to reverse many of the institutional changes that have been put in place over this period to get there. This is where the sort of policies described in Rigged (it’s free) come in, but that is a much longer story.

The Times continues:

Entering the early hours of the morning, senators in both parties pushed forward test votes to showcase their dueling priorities. In an evenly split Senate, any amendment required the majority’s support to pass, and therefore several failed on a 50-to-50 tie.

Among the Republican proposals that did not garner enough support were measures to reduce funding to states like New York, which is under investigation over coronavirus deaths in nursing homes; to prohibit funding for schools that do not reopen for in-person classes once teachers are vaccinated; and to block funds from so-called sanctuary jurisdictions that do not cooperate with federal law enforcement.

Senator Patty Murray, Democrat of Washington and the chairwoman of the education committee, called the effort to put restrictions on sending aid to schools “simply a political show.”

“If we withhold funds and schools cannot implement health safety protocols, then we are acting counter to actually getting students back in the classroom,” Ms. Murray said.

Democrats did, however, rally around some amendments from Republicans. The Senate, by unanimous vote, agreed to a motion from Senators Marco Rubio and Rick Scott, both Republicans of Florida, to block tax increases on small businesses during the pandemic. Lawmakers also backed a measure from Senator Roger Wicker, Republican of Mississippi, and Senator Kyrsten Sinema, Democrat of Arizona, to establish a fund to provide grants to food and drinking establishments affected by the coronavirus crisis. And, by a vote of 58 to 42, they agreed to prohibit stimulus money from going to undocumented immigrants — something that is not included in Mr. Biden’s economic rescue plan.

The eight Democrats who voted with Republicans on that last measure included John Hickenlooper of Colorado, Maggie Hassan of New Hampshire, Gary Peters of Michigan and Mr. Manchin.

So these “essential workers” can pick your fruits and vegetables and slaughter your meat under working conditions few American workers want to do, and we cannot give these “essential workers” a break by allowing them a little stimulus money?

The Senate also approved an amendment to maintain the U.S. Embassy in Jerusalem. Under President Donald J. Trump, the United States recognized Jerusalem as the capital of Israel, breaking with decades of precedent, and opened a new embassy in the city, complicating peace in the Middle East.

Only three lawmakers objected to the amendment on Thursday night: Mr. Sanders, Elizabeth Warren, Democrat of Massachusetts, and Thomas R. Carper, Democrat of Delaware.

Among the amendments that passed with bipartisan support — by a vote of 99 to 1 — on Thursday was a measure from Mr. Manchin and Senator Susan Collins, Republican of Maine, to restrict $1,400 direct checks included in Mr. Biden’s plan from going to high earners, though it did not specify what income level was too high. Democrats have largely agreed to limit payouts for Americans with higher incomes.

“Do we want stimulus checks to go to households with family incomes of $300,000?” Ms. Collins said.

Despite the amendments, the process left Mr. Biden’s plan largely intact [sans minimum wage increase] as Democrats moved forward.

“We cannot repeat the mistakes of the past,” said Senator Chuck Schumer, Democrat of New York and the majority leader. “We cannot do too little.”

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The roughly 15-hour rush of vote-casting came as Speaker Nancy Pelosi signaled that House Democrats were open to dropping a $15 federal minimum wage from Mr. Biden’s plan should the proposal be ruled out of bounds under the Senate’s strict budget process rules. Administration officials and some Senate Democrats were bracing for such a possibility.

The speaker said Democrats would not give up on trying to raise the wage to $15 an hour if they were forced to jettison it from the stimulus measure.

“It’s not the last bill we’ll pass,” Ms. Pelosi said. “This is the rescue package.”

Go for $12 hour to at least keep pace with inflation, and index it for future increases without having to pass a bill in order to do it.

Democrats were expected to introduce legislation and begin committee debate in the House next week, aiming to move the plan through the budget reconciliation process. They could then circumvent a filibuster, which can only be overcome with 60 votes, and instead pass with a simple majority, allowing the package to be enacted without Republican votes.

While details remain in flux, people familiar with the plan said it would largely mirror Mr. Biden’s $1.9 trillion proposal. The most significant deviation, they said, was likely to be lowering the cost of providing direct payments to Americans.

At Mr. Biden’s insistence, the maximum amount of those payments would remain at $1,400. But Democrats and the administration are discussing phasing them out for higher-income Americans at a faster rate than the $600 payments that Congress approved in December, meaning those earning more would get smaller checks.

Democrats could further reduce the cost of the plan by lowering the income threshold at which the payments begin to phase out. Mr. Biden has proposed beginning the phaseout for individuals earning $75,000 a year and couples earning $150,000 a year. Lawmakers are discussing reducing those thresholds to $50,000 for individuals and $100,000 for couples, though they have not made a final decision on whether to do so.

Among the Republican ideas that appeared to gain some traction with the White House was a proposal from Senator Mitt Romney of Utah, who unveiled a plan to send payments of up to $1,250 per month to families with children, in an effort to encourage Americans to have more children while reducing child poverty rates.

Mr. Romney’s Family Security Act would provide $350 a month for each child up to 5 years old and $250 a month for children ages 6 to 17, via the Social Security Administration. The payments would be capped at $1,250 per family per month, and they would phase out for individual parents earning above $200,000 a year and couples earning more than $400,000.

To offset the costs of the new benefit, Mr. Romney proposed eliminating other government safety net spending, including the Temporary Assistance for Needy Families program and the expanded “head of household” deduction for parents who do not itemize their income tax returns.

Mr. Biden’s American Rescue Plan includes a one-year expansion of the existing child tax credit and earned-income tax credit, which analysts say could cut child poverty in half. Mr. Romney’s plan would streamline the earned-income tax credit, while adding in the child allowance.

The plan drew praise as an example of the possibilities of bipartisan action, with the White House chief of staff, Ron Klain, writing in a tweet that it was an “encouraging sign.”

Ron, I respect you my man, but the vote was 51-50 with the Vice President breaking the tie. In other words, Republicans voted against the bill even after getting some of their amendments into the bill, demonstrating their bad faith. This is not bipartisanship. Give it a rest.

Democrats are going to have to save America on their own.