Minimum-wage issue a lesson to Democrats on limits of power
By David Espo
Associated Press, 3/11/07

Washington- At first, legislation to raise the minimum wage loomed as a clean, quick triumph for Democrats eager to celebrate their new majority in Congress.

Two months later, it stands as an early lesson in the limits of their power.

A cohesive Republican minority backed by the White House, the Senate's complex rules and internal divisions among Democrats have combined to slow the measure's progress since it cleared its first hurdle in mid-January.

While final passage is highly probable, Democrats and their allies in organized labor long ago capitulated to GOP demands, agreeing to accept business-friendly tax cuts as the price for the first minimum-wage increase in a decade.

"The minimum wage-tax relief package was a good early lesson for them as to how things will work," Senate Republican leader Mitch McConnell of Kentucky said with a chuckle in a recent interview.

The difficulties have prompted AFL-CIO President John Sweeney, who once publicly insisted on a stand-alone minimum-wage bill, to privately prod Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to strike the best tax-cut compromise possible and quickly send the bill to President Bush.

It was Pelosi who elevated the minimum-wage legislation in political importance, placing it on a list of six bills to be passed within the first 100 hours of the new Congress.

GOP lawmakers wanted to add tax cuts to shield businesses from higher labor costs.

Democrats refused and the House, by a 315-116 vote Jan. 10, passed a bill that would raise the hourly minimum wage from $5.15 to $7.25 over two years.

In the Senate, Reid also wanted a stand-alone measure. But he had already concluded it was impossible.

Senate rules gave Republicans leverage that their House counterparts lacked. After a quiet head count, Reid concluded the bill could not overcome a filibuster that Republicans had threatened if tax cuts were not included.

Democratic Sen. Max Baucus, chairman of the Senate Finance Committee, and Iowa Sen. Charles Grassley, the senior Republican on the committee, eventually settled on $8.3 billion in tax cuts over 10 years and proposed closing tax shelters to make up much of the money.

The Senate bill passed, 94-3, on Feb. 1, almost three weeks after the House acted.

Now House Democrats delayed.

New York Rep. Charles Rangel, the new chairman of the House Ways and Means Committee, presented a tax cut far smaller than Republicans wanted, $1.3 billion over 10 years, designed to encourage the hiring of low-skill workers.

In a gesture of bipartisanship, Rangel, a Democrat from Harlem, offered to let Republicans help draft the measure. They accepted.

The bill passed, 360-45, on Feb. 16, five weeks after Democratic leaders initially had rejected tax cuts on the minimum-wage bill.

Then Senate Republicans asserted their prerogatives once again.

Unofficial talks drifted. Pelosi and Reid discussed a new strategy.

The House would add the minimum-wage measure to a must-pass bill providing money for the wars in Iraq and Afghanistan.

Modest tax cuts would be included.

The next move is up to the Republicans.

Copyright 2007 The Associated Press.