Byrd Rule, politics threaten $15 per hour minimum wage

Democrats face a series of steep political and procedural challenges as they plot a path to raise the minimum wage to $15 per hour using a budgetary process known as reconciliation that would sidestep the filibuster.

Budget reconciliation theoretically would allow Democrats in the 50-50 Senate to pass the long-sought progressive goal with Vice President Harris casting the tie-breaking vote. Republicans could not block the hike even if all 50 GOP senators are opposed to the increase.

But it’s not clear Democrats will be united in raising the minimum wage to $15 per hour, even if they use reconciliation, as Sens. Dick Durbin (D-Ill.) and Bernie Sanders (I-Vt.) proposed Tuesday.

Centrist Democrats such as Sen. Joe Manchin (W.Va.) are concerned about an immediate hike to $15 and are pushing for legislation that would raise the minimum wage more gradually.

The restaurant industry and other business groups also are launching an intense lobbying campaign against the effort to raise the minimum wage from $7.25 to $15 per hour by 2025. They say it would deal a crushing blow to restaurants, which have already been hurt by the coronavirus pandemic.

The procedural issue is related to the so-called Byrd Rule, named after Robert Byrd, the former Democratic senator from West Virginia.

Senate Parliamentarian Elizabeth MacDonough will have to determine whether raising the minimum wage through reconciliation meets the Byrd Rule requirements that the change has an effect on the federal budget and that it is not “merely incidental” to that effect.

Experts on budgetary policy say it’s not clear that raising the minimum wage meets either of these questions.

“I think both are questionable,” said William Hoagland, senior vice president at the Bipartisan Policy Center and a former GOP staff director for the Senate Budget Committee.

One problem Democrats face is that the official scorekeeper, the Congressional Budget Office (CBO), is already on record saying the policy will have a minimal budget effect.

The minimum wage bill Democrats reintroduced on Wednesday is identical to the one passed in the House last year. The CBO found that the only budgetary effect was the increase in some federal workers’ pay by $76 million over a decade, an infinitesimal amount when considering the roughly $4.3 trillion the government spends most years. 

Ironically, President Biden’s move to increase the minimum wage for federal workers through executive action might neutralize that one budgetary effect.

Sanders, the incoming Senate Budget Committee chairman who pushed the $15 minimum wage into the national spotlight during his 2016 presidential run, said the CBO should take a different approach.

“We talked to the CBO just the other day, and they did not consider the broad implications,” he said Tuesday. “I think we can absolutely make the case to the parliamentarian that what we’re doing is consistent with the Byrd Rule.”

Sanders argues that if the CBO were to use “dynamic scoring,” a process that takes into account economic effects of a policy on government spending and revenues, it would find that the higher minimum wage resulted in federal savings on welfare and wage subsidies. The CBO said earlier this month that it was already working on such an analysis.

But it’s unclear whether the parliamentarian will accept a dynamic score when considering Byrd Rule violations, or if those effects would be large enough to convince her the policy was not “merely incidental.”  

Budget watchers point to her decision in the 2017 GOP attempt to scrap the Affordable Care Act through the same process. Republicans at the time were seeking to use reconciliation to get rid of former President Obama’s signature law.

The parliamentarian ruled that Republicans could not eliminate the law’s individual mandate on buying health insurance but that they could reduce the penalty to zero.

Democrats point to other rulings, such as allowing drilling in the Arctic Circle and expanding work requirements for welfare benefits, as evidence that policies such as raising the minimum wage should be good to go.

But even some Democrats are skeptical.

“To be very candid with you, I think that is a stretch,” House Budget Committee Chairman John Yarmuth (D-Ky.) said in a CNN interview Monday when asked about moving the bill through reconciliation.

The gambit to sidestep normal order could be a pressure tactic to push moderate Republicans concerned about the $1.9 trillion COVID-19 relief bill’s price tag and dramatic changes to the minimum wage to negotiate a bipartisan deal.

But moderate Republican senators such as Susan Collins (Maine) and Lisa Murkowski (Alaska) say Biden’s inclusion of the minimum wage in the relief bill complicates his stated goal of getting bipartisan support.

“Why is it in there? I mean this is an initiative that is important to many of my colleagues on the other side of the aisle, but it really has nothing to do with COVID relief,” Murkowski said Wednesday.

“We’re giving an opportunity to come together on important and timely legislation, so why wouldn’t he do that rather than try to just move it through with reconciliation and have it be a totally partisan product?” she added.

Even Manchin, who is pushing for bipartisanship, wholeheartedly endorsed using alternative means to pass legislation if Republicans do not get on board. 

Bill Dauster, who served as deputy chief of staff to former Senate Majority Leader Harry Reid (D-Nev.), says Democrats could simply ignore the parliamentarian.

“Vice President Kamala Harris or, in her absence, President Pro Tempore Patrick J. Leahy are empowered to make this call,” he wrote this week in a Roll Call op-ed.

“If the Senate parliamentarian does not advise them that Congress can include the minimum wage in budget reconciliation, Harris or Leahy should exercise their constitutional authority to say that it can.”

Hoagland says that approach could blow up in Democrats’ faces, leaving the door open to future abuses by Republicans and potentially harming their congressional majorities.

“You can break all the rules you want, but from my perspective, if this is the direction we’re going, I’d say do away with the budget process to begin with,” he said. “I think this would be the final nail in the coffin of the whole budget process.”