Minimum wage increase gets short-changed in Senate

WASHINGTON (AP) -- The minimum wage increase that was supposed to zip through Congress veered off course Wednesday as lawmakers argued over business tax breaks that would be attached to ensure Republican support.

Democratic leaders in the House began laying groundwork to blame the Republicans for any impasse. Senate Democrats, however, cautioned their House colleagues not to jeopardize legislation they'd promised to approve if they gained control of Congress.

House Democrats demanded a clean bill from the Senate -- no tax attachment -- setting up a confrontation that could delay final congressional passage of the $2.10 an hour increase.

The Senate did vote 54-43 to advance a House-passed measure that would lift the minimum wage without any accompanying tax cut. However, that was well short of the 60 votes needed to keep that version moving.

The vote was a signal to the House that without the tax breaks a minimum wage bill appeared doomed in the Senate. And the Senate promptly moved to a broader bill, backed by its Democratic leaders, that would raise the minimum wage to $7.25 an hour over 26 months and provide $8.3 billion in tax benefits to businesses over 10 years.

In the House, Democrats threatened to stifle that effort by enforcing constitutional precedents that require all tax bills to originate in the House. They blamed Republicans for the brewing impasse.

"Democrats are committed to helping small businesses, but we should not delay a minimum wage increase another day in order to negotiate a tax package," said Brendan Daly, a spokesman for House Speaker Nancy Pelosi.

Senate Democrats seemed more willing to accept the tax portion if it meant fulfilling their campaign promise.

"Both bodies want to keep their eye on the ball," said Democratic Sen. Max Baucus of Montana, a co-sponsor of the Senate tax break provisions.

House Democrats could try to alter or even remove the tax package from the Senate version when the two houses try to reconcile their differing versions in a conference committee.

Line-item veto bill effectively dead

The confrontation exposed difficulties the Democratic majority may well encounter when sending other House legislation to the Senate, where the minority Republicans enjoy more power to shape legislation than in the House.

Still, in a separate vote Wednesday, the Senate effectively killed a modified line-item veto bill. The Republican-inspired measure would have permitted a president to pluck individual items out of spending bills and submit them to Congress for a vote.

Senators also defeated a Republican amendment that would have given only the states the right to increase the minimum wage.

The federal minimum wage has been unchanged for 10 years. In the meantime, a number of states have moved on their own to increase their minimums.

According to the Center for Budget and Policy Priorities, a liberal leaning think tank, inflation has eroded the value of the minimum wage to its lowest level in more than 50 years.

"Minimum wage workers are men and women of dignity," said Democratic Sen. Edward Kennedy of Massachusetts, a longtime advocate of raising the wage floor. "They do some of the most difficult, backbreaking jobs in our society. They deserve a fair wage that respects the dignity of their work, and they shouldn't have to live in poverty."

Since the House passed its version two weeks ago, Speaker Pelosi, a California Democrat, and Democratic Rep. Charles Rangel of New York, the chairman of the tax-writing Ways and Means Committee, have prodded the Senate to keep tax proposals out of the bill.

In scheduling the vote Wednesday, Senate Majority Leader Harry Reid of Nevada sought to demonstrate the lack of Republican support for a straight minimum wage bill without tax cuts. Every Democrat present voted to cut off debate, and five moderate Republicans joined them.

"There seems to be agreement to raise the minimum wage," said Republican Sen. Michael Enzi of Wyoming. "The difficulty has been how do we take care of some of the impact to small businesses that will result from this."

Reid is backing an $8.3 billion tax package that would extend for five years a tax credit for employers who hire low-income or disadvantaged workers. It also extends until 2010 tax rules that permit businesses to combine as much as $112,000 in expenses into one annual tax deduction.

The cost of the proposal would be paid from revenue realized from a proposed cap of $1 million on executive compensation that can be tax-deferred. The tax package also would end deductions for court settlements or punitive damages paid by companies that have been sued.

Those proposed revenue increases have drawn opposition from the U.S. Chamber of Commerce, which has urged senators to vote against them.

"These are permanent tax law changes that have significant impact on the broad business community," Bruce Josten, the chamber's top lobbyist, said in an interview.