Senate Strikes Deal on Minimum Wage, Gas Tax

After weeks of uncertainty that tied the Senate in political knots, Democratic and Republican leaders struck a bargain Tuesday that would bring votes on legislation to raise the minimum wage by 90 cents, offer tax relief to small business, grant management greater voice in union workplaces and trim 4.3 cents from the federal gasoline tax.

“I am sure there are senators on both sides of the aisle who are not happy with this agreement,” Senate Majority Leader Trent Lott (R-Miss.) said in a floor speech. “But this is what’s necessary to move the process through.”

Under terms of the deal, the Senate would proceed on the items in sequence.

First, on July 8, lawmakers are to consider a House-passed provision offering about $7 billion in tax breaks over eight years to small businesses. Republicans said that the tax cuts are essential to cushion the blow of higher payroll costs caused by increasing the minimum wage.

The House already has approved legislation that would benefit small business by increasing tax deductions for the purchase of new equipment, simplifying pension plans and exempting employer-paid tuition from a worker’s taxable income.

The day after voting on the tax legislation, the Senate then would debate and vote on the minimum wage bill, which calls for giving the nation’s 9 million minimum-wage workers a raise over two years to $5.15 per hour from the current $4.25.

Republicans are expected to propose a six-month delay in the effective date of the increase and to seek a provision giving employees the right to pay only $4.25 an hour to employees in their first six months on the job.

But to ease and speed up the process, Democrats and Republicans agreed to offer only a single amendment to both the small business and minimum wage bills.

Before turning to the gas tax repeal, lawmakers also agreed to consider a controversial bill to modify a 1935 labor relations law to allow U.S. businesses to establish worker-management teams to deal with such issues as safety, productivity and quality control.

The proposed Teamwork for Employees and Management Act--or TEAM--was vigorously backed by Dole and remains popular with Republicans but is strongly opposed by Democrats and labor groups.

Its advocates say that the legislation would allow for greater cooperation between management and labor. But opponents, including Secretary of Labor Robert B. Reich, fear that the bill would allow employers to set up handpicked groups of employees to circumvent union representatives.

Finally, after votes have been taken on the other three issues, the Senate would consider repealing the 4.3-cent gasoline tax approved in 1993. No date was set for debate on the gas tax legislation.

Yet while the agreement appears to have untied what Lott called a legislative Gordian knot, several potential snags still could plunge the Senate back into stalemate.

For example, Democrats could create friction with the majority if they insist on trying to push through their health care bill in the form of amendments to pending legislation. In fact, Senate Minority Leader Tom Daschle (D-S.D.) threatened to do just that if progress is not made on health care this week.

“We are not making progress that frankly I would like to see on health care and as a result it is very likely we will be offering it as an amendment to the defense bill at some point this week,” he said.

Both houses have approved legislation that would restrict insurance company denials of coverage to workers with preexisting health problems or who change jobs. But Republicans want to grant broad use of so-called medical savings accounts, while Democrats want only a small demonstration project to test their impact on the insurance market.

But even as Daschle conceded that the agreement could be derailed, he said that he doubts that would happen. Offering generous praise for Lott’s efforts to reach a compromise, Daschle said: “We’re working in good faith and expect the amendments would be agreeable to both sides.”

Lott, who assumed leadership of the Senate after Sen. Bob Dole (R-Kan.) resigned to devote full attention to his GOP presidential campaign, had pledged to work with Democratic leaders to break the gridlock on several issues that Dole was unable to get through the Senate over Democratic opposition in his final days as majority leader.

As presidential politics played out on the Senate floor, “it was taking up everything we were trying to do,” Lott said. “This [agreement] begins to move that forward.”

Lawmakers reached their compromise only hours before Sen. Edward M. Kennedy (D-Mass.) was to act on his threat to bring the Senate to a standstill by attempting to attach the minimum wage provision to every piece of pending legislation until a vote is taken.

“I welcome this agreement,” Kennedy told reporters as word of the deal emerged from a Senate leadership luncheon. “An increase in the minimum wage is long overdue.”