An overwhelming majority of congressional Democrats would like to raise the federal minimum wage to $15 by 2025. Every Senate Republican — and at least two Senate Democrats — do not want to do that. Until Thursday night, however, the pro-$15 majority thought they had a means of getting the policy past the “pro-poverty wages” caucus.
To get around a Republican filibuster, the Democratic leadership would insert the $15 minimum wage into a budget reconciliation bill — a special type of legislation that can pass the Senate with a simple majority. To nullify Democratic opposition, meanwhile, they would specifically insert the wage hike into the the $1.9 trillion COVID-relief reconciliation bill, thereby making it impossible for moderate Democrats like Joe Manchin and Kyrsten Sinema to veto the minimum-wage hike without also voting against relief checks for their voters and fiscal aid for their states.
But the budget reconciliation process is riddled with arbitrary rules. And the most important one is this: Every provision in a budget reconciliation bill must produce changes in the federal budget, and those changes must not be “incidental” to the purpose of that provision. This is a highly subjective rule. But in practice, it’s been interpreted as forbidding economic regulations that are primarily intended to solve non-budgetary problems. The authority to determine whether a given proposal meets that criterion lies with the Senate parliamentarian.
Senator Bernie Sanders had hoped to convince the parliamentarian that the minimum wage’s impact on the federal budget is non-incidental. After all, increasing workers’ wages reduces spending on poverty programs — and who’s to say that the democratic socialist’s primary motivation for supporting a minimum-wage hike isn’t to cut spending on food stamps?
Alas, on Thursday night, the parliamentarian ruled that she does know the truth of Bernie’s heart — or that a minimum-wage hike is objectively more of an economic regulation than a budgetary measure. As CNN’s Manu Raju reports, the parliamentarian “rejects the wage hike because of the way it’s currently drafted, per sources, noting it isn’t possible because it’s a mandate on businesses.”
Fortunately, pro-$15-an-hour Democrats still have a plethora of options for getting around this ruling, if they’re willing to antagonize Manchin and Sinema (and thereby jeopardize the swift passage of COVID relief).
One route is to simply neutralize the parliamentarian, whose role is technically advisory. Ultimate authority on Senate rules lies with the vice-president. If Kamala Harris overruled the parliamentarian, the $15 minimum wage would remain in the bill. Technically, 60 senators could vote to overturn Harris’s overturning of the parliamentarian. But it’s unlikely that there are ten Senate Democrats who’d be willing to rebuke their vice-president in order to block one of their party’s most popular policy priorities. Notably, there are multiple precedents for the vice-president to overrule the parliamentarian. Nelson Rockefeller famously did it in 1975, and Al Gore did it twice in 1993.
Alternatively, Senate Majority Leader Chuck Schumer could fire the Senate parliamentarian, and Democrats could replace her with a reliable partisan stooge. That may sound outlandish, but is actually something that Republicans already did in 2001, when parliamentarian Robert Dove ruled that most of the Bush tax cuts could not be passed through reconciliation. Rather than allow their planned gift to the one percent to die from arbitrary causes, Republicans used their power to knock down the obstacle to its passage. There is no reason, in principle, why Democrats can’t do the same.
If Democrats wish to avoid such procedural hardball, there are also a variety of ways that they could write a de facto $15 minimum-wage provision, and (almost certainly) get it past the parliamentarian.
In 2017, congressional Republicans wanted to repeal the Affordable Care Act’s individual mandate, which imposes a tax penalty on Americans who refuse to purchase health insurance. Initially, the parliamentarian blocked their attempt to repeal the mandate through reconciliation, as the measure was an act of deregulation, not a tax cut. Republicans responded to this by formally preserving the individual mandate in their bill, but setting its tax penalty at $0. This was a repeal of the individual mandate in all but name. But since the provision no longer repealed a regulation — but rather, lowered a tax rate — the parliamentarian ruled that it was budgetary, and thus, eligible for reconciliation.
By reportedly ruling that the $15 minimum wage is ineligible because it is “currently drafted” as a “mandate on businesses,” the parliamentarian appears to be implicitly inviting Democrats to replicate the GOP’s method: Find a way to write a tax law that makes it practically impossible (or prohibitively undesirable) for businesses to pay their workers less than $15, and she’d give it the green light.
Democrats have plenty of options. To name just two: They could establish a new 100 percent payroll tax on all wages below $15 an hour. Or they could make all businesses that pay their workers less than $15 an hour ineligible for tax credits or federal funds of any kind. (If Democrats wanted to replicate their existing proposal, and have the de facto minimum wage phase in gradually, they could adjust these measures to produce that effect.)
Some Senate progressives are currently preparing policies along these lines. Bernie Sanders is reportedly writing a provision that would strip tax deductions from large corporations that pay their workers less than $15 an hour. Ron Wyden has proposed something similar: a 5 percent penalty on the total payroll of corporations that pay their workers less than “a certain amount.” The proposal would also “provide an income tax credit equal to 25 percent of wages … to small businesses that pay their workers higher wages.”
These measures would be better than nothing. But the fact that Wyden and Sanders target their de facto minimum-wage mandates exclusively at large corporations suggests that they’re not just aiming to appease the parliamentarian, but also the objections of Manchin and Sinema.
Which speaks to the fundamental truth of this whole policy fight: The parliamentarian is not stopping Democrats from passing a $15 minimum wage; a small number of moderate Senate Democrats are doing that.
The Democratic leadership could make it maximally painful for those moderates to hold out against the minimum-wage hike; if Harris overrules the parliamentarian, then Schumer could force Manchin and Sinema to take an up or down vote on a COVID-relief bill that includes a $15 federal minimum wage. Schumer may be reluctant to do this because it would risk making these senators even more uncooperative on future legislation (as Joe Lieberman taught Democrats in 2009, hell hath no fury like a senator scorned). Regardless, the basic problem is Manchin, Sinema, and perhaps some other moderate senators who secretly share their opposition. There are myriad ways for Democrats to get a $15 minimum wage through the Senate. There just aren’t 50 Senate Democrats with the will to do so.
