WASHINGTON (Reuters) - Senate Republicans on Wednesday blocked the Democrats from fulfilling a campaign promise to increase the federal minimum wage, demanding that the pay hike include tax relief for small business.
On a vote of 54-43, Democrats fell six short of the 60 needed to end debate and go to passage of a House-approved bill, to raise the minimum wage for the first time in a decade — boosting it over two years to $7.25 per hour from $5.15.
Democratic leaders responded by adding $8 billion in tax breaks, and the Senate is expected to pass the bill next week. The measure adopted by the House included no tax breaks. The two chambers must agree on a final bill before it can become law.
“There is no doubt in my mind that we will get together quite quickly,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.
But Brendan Daly, an aide to House Speaker Nancy Pelosi, a California Democrat, said: “We should not delay a minimum wage increase another day in order to negotiate a tax package.”
President George W. Bush has said he wants tax relief in the bill to help small business pay for a minimum wage hike.
“We’re trying to make sure we don’t put mom-and-pop businesses and their employees out of work,” said Sen. Mike Enzi, a Wyoming Republican.
With the gap between rich and poor widening, Democrats promised a minimum wage increase as a part of the campaign that saw them win control of the Congress from Bush’s Republicans in last November’s elections.
“Millions of Americans who earn the minimum wage have been waiting a decade for a much-deserved raise,” said Rep. Rahm Emanuel, an Illinois Democrat. “Incredibly, Senate Republicans would have them wait even longer.”
Democratic Sen. Edward Kennedy of Massachusetts had initially opposed adding tax breaks to the bill, noting that in the past decade corporations and the wealthiest Americans have received billions of dollars in tax relief.
But Kennedy said to win passage, he will back the proposed tax breaks. He said they were far less than those demanded by Republicans when they repeatedly stopped an increase in the minimum wage in recent years.
Republicans have cited studies that say an increase would drive people out of work and hurt the economy.
But Democrats counter that a modest increase would cause no significant job loss. They have also noted a survey that found most small businesses believe it would not hurt them. Most already pay above it.
At $5.15 per hour, a person working 40 hours per week makes $10,712 per year, about $5,000 below the poverty line for a family of three.
According to federal statistics, in 2005, the latest year figures are available, 479,000 people received the minimum wage. But several million others were paid just a dollar or two more. All would benefit from the proposed increase.
Additional reporting by Donna Smith