A new analysis from the Congressional Budget Office could prove critical in Senate Democrats’ COVID-19 relief/stimulus strategy. One might even call it a “big f*****g deal,” if it gives them an opening to shove a minimum-wage hike down Republicans’ throats. Despite a gloomy prediction from Joe Biden about prospects for keeping the “fight for $15” in the bill, Politico reports that the new CBO scoring might give Democrats an opening — or bury it:
Sen. Bernie Sanders’ bill to hike the federal minimum wage to $15 an hour would grow the deficit by $54 billion over a decade, Congress’ independent budget scorekeeper estimated Monday.
That prediction of a deficit pile-up could work in Sanders’ (I-Vt.) favor as he fights to include the minimum wage increase in the package Democrats are crafting to enact President Joe Biden’s $1.9 trillion stimulus plan.
How exactly does that work in Sanders’ favor? By definition, a bill under reconciliation cannot contain any deficit-increasing measures within it. The CBO score should really disqualify the minimum-wage hike. The only way to make that work out as deficit-neutral or better would be to include some revenue enhancers — ie, taxes or fees — to balance it out, or to cut spending in other areas. Good luck on the latter in a bill that is explicitly designed to spend cash. Any tax hikes would have to initiate in the House (in principle, anyway) and would have to balance out the other spending in the relief/stimulus plan as well as this measure.
Politico never does quite explain how Sanders could accomplish this. They only explain that reconciliation is the only way he can get the bill past the filibuster, but even that’s far from assured:
The Senate parliamentarian decides which provisions will make the cut, but congressional leaders can tinker with the language to try to make it work.
Even if a minimum wage increase can withstand parliamentary challenges, support for the proposal may fall short of the 50 votes needed in the Senate to be included in a final package. Sen. Joe Manchin (D-W.Va.) has already said he does not support increasing the minimum wage to $15 an hour. Last week, the Senate passed by a voice vote an amendment from Sen. Joni Ernst (R-Iowa) that would prohibit a $15 hike during the pandemic.
Added deficit spending isn’t the only reason to put an end to this measure. The CBO also concluded that the “Raise the Wage Act” would cost 1.4 million jobs overall, adding nearly a full point to the unemployment rate, even while giving those who keep their jobs more income:
In an average week in 2025, the year when the minimum wage would reach $15 per hour, 17 million workers whose wages would otherwise be below $15 per hour would be directly affected, and many of the 10 million workers whose wages would otherwise be slightly above that wage rate would also be affected. At that time, the effects on workers and their families would include the following:
- Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate;
- and The number of people in poverty would be reduced by 0.9 million
You gotta break a few eggs to make an omelette. That works out well for those who eat, but not so well for the eggs. Needless to say, forcing job-killing federal mandates is a bad idea at any time, but it’s especially bad in the middle of an employment crisis caused by government interventions in the first place. To include it as part of a rescue package for that crisis is not just ironic, but almost maliciously obtuse. It’s such a bad look that only a socialist would be unable to recognize it. Oh, wait …
At any rate, literally, Roll Call explains why another number in this analysis all but kills the path through reconciliation:
The Senate’s so-called Byrd rule requires that any items considered under reconciliation must have more than a “merely incidental” impact on federal spending and revenue. While the CBO’s 2019 estimate suggested a minimum wage boost would have only a marginal impact on the federal budget, the new report estimates it would increase deficits by $54 billion.
And the “on-budget” deficit — which excludes components such as the Social Security trust funds and the Postal Service — would increase by nearly $77 billion over a decade. That is the figure that would apply under the reconciliation process Democrats are using to skirt a certain Senate Republican filibuster.
“The CBO has demonstrated that increasing the minimum wage would have a direct and substantial impact on the federal budget,” Sanders said in a statement Monday. “What that means is that we can clearly raise the minimum wage to $15 an hour under the rules of reconciliation.”
But the new deficit estimates — whether $54 billion or $77 billion — present fat targets for Republican critics of the measure to shoot it down. Accommodating the wage boost at that price tag could require lawmakers to make cuts to other relief programs to stay within their overall spending cap of nearly $1.9 trillion.
Senate Democrats have made it pretty clear that they aren’t interested in making other cuts to relief programs. And since Manchin isn’t interested in the “fight for $15,” there’s not going to be much point in pushing this.