House Votes to Hike Minimum Wage to $6.15

The House passed two companion bills Thursday that would increase the federal minimum wage by $1 to $6.15 an hour and provide substantial tax cuts for businesses and upper-income individuals, ostensibly to help them finance the wage boost.

Approval of both measures came on broadly based votes after an intense partisan battle in which GOP leaders denied Democrats an opportunity to propose a substitute tax cut package that would have limited the tax relief to small businesses and family farmers.

The minimum wage measure passed, 282 to 143, while the vote to approve the tax cut package was 257 to 169.

The increase would mark the first in the minimum wage since 1996, when Congress voted to boost the benchmark figure--then $4.25 an hour--to $5.15 an hour over 18 months. The latest increase would restore the minimum wage to its 1982 value, after adjustment for inflation.

Nevertheless, Democrats prevailed on an amendment to speed up the minimum-wage increase by phasing it in over two years instead of three, as Republicans had proposed initially. The vote on that proposal was 246 to 179, with 42 moderate Republicans voting with Democrats on the issue.

The measures now go to a House-Senate conference committee, where lawmakers will try to reach a compromise with the Senate, which attached a similar measure to a bankruptcy reform bill in February. The Senate bill would spread the minimum wage hike over three years.

Lawmakers said it was not clear how the conference committee would fashion the final legislation, but it is likely that the minimum-wage hike and tax-cut package will end up as a single bill so that President Clinton cannot veto one without killing both.

Clinton on Thursday reiterated his threat to veto the minimum wage bill unless the wage hike were telescoped to two years and the tax-cut provisions were dropped, but his warning was widely regarded as the opening bid in White House-congressional negotiations.

House Republicans previously have opposed increasing the minimum wage but agreed to enact the measure anyway as part of a strategy to cooperate with Clinton on a handful of measures so they can show voters some legislative “accomplishments” and deprive Democrats of some popular issues in the fall election campaign.

Democrats have been demanding for months that Congress increase the minimum wage, saying that workers affected by it have been left out of the prosperity enjoyed by the rest of the country. About 10 million Americans earn less than $6.15 an hour.

The measure passed Thursday would raise the current $5.15-an-hour federal minimum wage in two steps--first to $5.65 on April 1 and then to $6.15 a year later. The state-mandated minimum wage in California is $5.75 an hour.

Thursday’s floor action was marked by contentious debate in which Democrats accused Republicans of trying to water down the proposed increase in the minimum wage and grant huge tax cuts to upper-income Americans under the guise of helping businesses meet wage costs.

“How dare you say that the tax provisions in this bill are to protect small business?” said Rep. Charles B. Rangel (D-N.Y.), ranking Democrat on the House Ways and Means Committee, to Republicans. “Two-thirds of the tax benefits . . . go to the richest people we have.”

But Rep. Bill Archer (R-Texas), floor manager of the tax cut package, insisted that the cuts--which would include a substantial reduction in the inheritance tax--are proper. “Let’s put an end to this divisiveness and class warfare,” he told the House in response.

Despite their victory on the tax cut issue, GOP leaders were forced to retreat on one provision--a measure that would have permitted states to exempt their workers from the $1 an hour boost and set a lower minimum wage as long as it was at least $5.15 an hour.

Although conservatives insisted that the provision remain in the bill, Republican leaders had it removed before the minimum-wage measure came to the floor after it became clear that the overall bill would not pass if the language were included.

The GOP tax-cut package contained a spate of reductions for businesses, from increasing deductions for health insurance and business meals to more liberal tax benefits for pension contributions.

But it also included a plethora of provisions aimed primarily at upper-income Americans, including reductions in federal estate and gift taxes that White House budget officials charged would provide “a disproportionate benefit to the very wealthiest estates.”

Congress’ Joint Committee on Taxation estimated that, over the next 10 years, the tax cuts would drain $122.7 billion from Treasury revenues--more than 1 1/2 times as much as the $76-billion Senate package and almost 11 times the $11.2-billion cost of the wage hike.

Two-thirds of the 10-year cost of the House package comes from the proposed reductions in the estate tax.

Moreover, calculations made by the liberal-oriented Citizens for Tax Justice show that 73.1% of the tax benefits would go to taxpayers in the top 1% income bracket. Republicans disputed that analysis but did not provide a breakdown of their own.

Democrats charged that, combined with other recent tax bills--such as the one to reduce the so-called “marriage penalty,” which taxes many couples more heavily than if both marriage partners were taxed as single filers--Thursday’s bill would go far toward restoring much of the $792-billion tax package that Clinton vetoed last year.

“It was clear to us a long time ago what your game-plan was--and that was to do nothing at all,” Rangel told Republicans in floor debate. “Now you’re going to give us [last year’s proposed] $800-billion tax cut $200 billion at a time.”

Clinton told reporters Thursday that he still plans to veto the bill if it emerges as is, but he hinted that the two sides might be able to negotiate a compromise.

“Today’s vote . . . , is not the final word,” he said.