Democrats in the Senate were forced to abandon plans to increase the federal minimum wage in the face of concerns among their own ranks, united Republican opposition and because of a fast-approaching deadline cutting off time to carefully craft the measure under strict budgetary rules being used by the majority to pass COVID-19 relief without GOP support.
Senate Budget Committee Chairman Bernie Sanders and Senate Finance Committee Chairman Ron Wyden had hoped to win approval in the Senate of a “plan B” regarding the minimum wage — a tax penalty for corporations that do not pay their workers at least $15 an hour — this after the chamber’s parliamentarian ruled a straight increase of the hourly minimum to $15 was out of bounds under the fast-track rules known as budget reconciliation.
“Plan B is on hold,” a Democratic aide told ABC News. “We worked through the weekend and it became clear that finalizing ‘plan B’ with the caucus would delay passage and risk going over the jobless benefits cliff.”
Democrats are under a tight deadline to pass President Joe Biden’s $1.9 trillion American Rescue Plan before March 14, when some coronavirus stimulus measures expire, including federally boosted jobless benefits. Additionally, the Wyden-Sanders proposal received pushback from inside their own caucus and from outside allies that would have taken time the sponsors did not have to try to overcome.
Sen. Mark Warner, D-Va., a former tech entrepreneur, warned that corporations might be tempted to “offshore” their work if forced to pay a higher minimum wage.
“I’d be concerned there about those corporations then outsourcing that work to small enterprises,” he told Fox News Sunday.
Outside economists questioned whether corporations made up of franchises would be affected and one chief economist in the Obama administration, Jason Furman, called the measure “a really big, complicated, brand new proposal” and tweeted that he “would be extremely nervous about trying out a brand new idea like this with virtually no vetting.”
The announcement infuriated progressives in the party who had made an increase in the minimum wage a cornerstone of their 2020 campaign, though supporters promised to continue the fight.
Rep. Ro Khanna, D-Calif., and 22 other House progressives sent a letter to Biden and Vice President Kamala Harris urging them to overrule the Senate parliamentarian to keep the $15 minimum wage in the $1.9 trillion COVID-19 relief package. But administration aides have indicated Harris, as president of the Senate, would not do that.
In a call with reporters, some of the signatories decried the inaction while Democrats hold majorities — albeit with exceedingly slim margins — in both chambers of Congress. The group argued that they have bipartisan buy-in from the public, with majorities in recent polls — including Republicans — supporting the $1.9 trillion Biden bill which then included the minimum wage hike.
“It’s so important for the American people for us to not be gaslighted to believe that this is it, that we have no power,” Rep. Rashida Tlaib, D-Mich., said.
But without the protections of the budget reconciliation process — which allows passage by a simple majority for legislation written within the process’ strict confines — a minimum wage is likely not possible in this Congress.
“There are only two ways to get this done, either through reconciliation or eliminating the filibuster,” Khanna said. “The administration hasn’t shown an appetite for eliminating the filibuster, so we have to do it through reconciliation.”
“I believe we need to get rid of the filibuster now,” Warren argued. “If we would get rid of the filibuster, then we wouldn’t have to keep trying to force the camel through the eye of a needle.”
But with two Senate Democrats — Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — opposing the elimination of the legislative filibuster, the majority is without options on the minimum wage, given that passage would require 60 votes outside of reconciliation.
Some progressives even called for Elizabeth MacDonough — the Senate parliamentarian and non-partisan arbiter of the chamber’s rules and procedures — to be fired, saying that Republicans did so back in 2001 as the GOP worked to push through the budget and tax policies of President George W. Bush.
“Abolish the filibuster. Replace the parliamentarian,” Rep. Ilhan Omar, D-Minn., said in a tweet Thursday. “What’s a Democratic majority if we can’t pass our priority bills? This is unacceptable.”
But one member of Senate Democratic leadership, who asked to remain anonymous to discuss the sensitive matter, said Senate Majority Leader Chuck Schumer was not expected to make such a move.
Indeed, the time crunch was a major factor in the senators pulling back the proposal, according to a Democrat familiar with the matter.
And Republicans have remained united — in both chambers — against any effort to increase the minimum wage, particularly during the pandemic, with McConnell, R-Ky., accusing Democrats on Monday of “pushing economic policies that would drag down our recovery, like the House votes for a one-size-fits-all minimum wage policy that would kill 1.4 million jobs.”
The nonpartisan Congressional Budget Office estimated that the original minimum wage increase in the American Rescue Plan would result in 1.4 million jobs being lost over a five-year period in which the $15 per hour hike would phase in, but the number crunchers also found some 900,000 Americans would be lifted out of poverty.
Progressives eye new priority: Taxing the ultra rich
Still, progressives chafed at the loss of a top campaign objective and wasted no time in pushing forward on Monday with another priority, a tax on the “ultra rich” to help pay for their higher ticket proposals aimed at addressing income inequality in the U.S. and the disproportionate effects the coronavirus pandemic has had on minority communities.
“It is time for a wealth tax in America,” said Warren, introducing the bill with Jayapal, D-Wash., and Rep. Brendan Boyle, D-Pa. “I want to remind everybody what the wealth tax is. It’s a tax on the fortunes above $50 million. In other words, your first $50 million is free and clear, but your 50,000,000th and first dollar — you got to pay 2 cents, and 2 cents on every dollar after that until you hit a billion. We hit a billion, you got to pay a few cents more.”
Asked how this controversial proposal might pass, given GOP opposition, Warren pointed to the next measure the Senate is expected to address, Biden’s $3 trillion “Build Back Better” infrastructure plan, suggesting that her Ultra-Millionaire Tax Act would be “the best way to help pay for” that legislation aimed at repairing crumbling infrastructure, expanding broadband access and enacting clean energy proposals.
While Senate Democratic leadership has not yet determined exactly what will be included in that infrastructure package, it is expected to be crafted under reconciliation protections, as well, Schumer recently signaled.
“We’re looking at how we make ‘Build Back Better’ — fit as much of it into reconciliation as we can, because we get two reconciliation motions, one for COVID and then one, probably, for ‘Build Back Better,'” Schumer said earlier this year in an MSNBC interview.
Adding an ultra-rich tax to that measure would endanger support from Republicans, something Biden has said he wants and recently inviting a group to the White House to discuss his plans.
Infrastructure has long been something that has enjoyed bipartisan support, but the president and Democratic leadership would then be faced with a similar quandary as during COVID relief negotiations: Whether the desire to move quickly should yield to Biden’s stated desire to work with Republicans.
“This plan only impacts 100,000 households, the top .05% but still, it would bring in $3 trillion over 10 years. Just imagine what we could do with $3 trillion. That’s COVID relief. That’s health care. It’s infrastructure, education, a transition to renewable energy and affordable housing, all while reducing that racial wealth gap,” Jayapal said in arguing for the tax on the ultra-rich.
*ABC News’ Benjamin Siegel and Allison Pecorin contributed to this report.