Senate Parliamentarian Rules Against Democrats’ $15 Minimum Wage Policy in COVID-19 Relief Bill

What’s the story?

• The Senate parliamentarian reportedly ruled on Thursday that Democrats’ attempt to include an increase of the minimum wage to $15 per hour violates the chamber’s rules governing reconciliation bills. The ruling imperils a major Democratic policy goal and dims the prospects for enacting the minimum wage hike. 
• House Democrats will keep the $15 minimum wage hike in the COVID-19 relief bill, known as the American Rescue Plan Act, which is expected to get a vote in the lower chamber late Friday evening. It will remain in the bill until it reaches the Senate next week when it will be stricken through a point of order if Democrats are unable to find a way to cure the parliamentary violation. 
• House Democrats have already committed to voting on a standalone minimum wage hike bill, but it would require 60 votes in the Senate, which is unlikely to occur given that bipartisan support.

Why was the minimum wage hike out of order?

• Budget reconciliation bills allow Congress to enact policies related to spending, tax revenues, the deficit, and/or the debt limit on a fast-track basis that only requires a simple majority in the Senate ― but it requires that policies adhere to the so-called “Byrd rule.”
• Named after the late Sen. Robert Byrd (D-WV), who led the adoption of the rule in 1985 in response to Congress using reconciliation for non-fiscal policy items, the Byrd rule prohibits the inclusion of extraneous, non-germane policies in reconciliation bills. The Senate parliamentarian reviews those policies in a process known as the “Byrd bath” and non-compliant provisions are removed as “Byrd droppings.”
• There are six ways in which a provision can be deemed extraneous under the Byrd rule. In the case of the $15 minimum wage, it’s because the spending and revenue impact of the minimum wage hike on the federal government is “incidental” to the non-budgetary aspects of the provision.
• Put differently, the $15 minimum wage provision as drafted is primarily a policy requiring employers to pay a higher wage, and while there are effects on the federal budget stemming from its impact on employment and wages, those are incidental to the wage requirement.
• A similar scenario played out with the parliamentarian when Republicans were advancing their tax cut package in 2017. A provision repealing the Affordable Care Act’s individual mandate to buy health insurance was flagged as “incidental” by the parliamentarian. 
• To work around the issue, Republicans left the individual mandate in law but effectively gutted it by lowering the tax penalty to $0, which resolved the Byrd violation by making the policy directly related to revenue and was included in the version of the bill that was signed into law.
• It remains to be seen if Democrats attempt to find another way to include the $15 minimum wage in the reconciliation package, as some have suggested it could be structured as a tax on businesses paying less than a certain level. 
• If they attempt a workaround, there’s no guarantee that the reworked policy wouldn’t run into similar trouble with the Byrd rule, and time is running short as Democrats have said they want the package to become law before enhanced unemployment benefits expire in mid-March.
• Additionally, Senate Democrats lack the votes to overrule the parliamentarian’s ruling, a move that would require all 50 Democrats and Vice President Kamala Harris to vote in favor, as Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) said they would not vote to overrule. 

What they’re saying

• Senate Budget Committee Chairman Bernie Sanders (I-VT), who lobbied heavily for the parliamentarian to rule the $15 minimum wage in order for reconciliation, released a statement that said he strongly disagrees with the ruling and that:

“In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages. That amendment must be included in this reconciliation bill.”

• Sen. Lindsey Graham (R-SC) praised the decision and tweeted: 

“Very pleased the Senate Parliamentarian has ruled that a minimum wage increase is an inappropriate policy change in reconciliation. This decision reinforces reconciliation cannot be used as a vehicle to pass major legislative change - by either party - on a simple majority vote. This decision will, over time, reinforce the traditions of the Senate.”

— Eric Revell

(Photo Credit: ray_explores via Flickr / Creative Commons)