By Robert Yeakel, Director of Government Relations
It has been barely a week since President Biden was inaugurated, and yet both the new administration and a Democratic-controlled Congress are anxious to get moving on legislative priorities to address COVID-19 and its economic fallout.
The president and Democratic lawmakers have released their agenda for a new phase of coronavirus relief, focusing on funding to states, ramping up federal resources for vaccinations and signaling their interest in extending current federal unemployment benefits. But Democrats’ larger policy goals are being discussed as well. From taxes to stimulus payments, Biden & Co. are hoping to “go big and go bold,” lest they make the same mistake of squandering a crisis that they believe cost them their majorities in Congress in 2010.
While the present economic malaise may force Democrats to delay their plans to pare back some of the corporate and wealthy gains from President Trump’s 2017 Tax Cuts and Jobs Act, one of the hot topics of discussion at the moment is an increase in the federal minimum wage. What has long been a priority for labor-minded lawmakers, many on Capitol Hill see a wage increase as an easy remedy to make sure that Americans at the lower end of the economic spectrum receive some targeted relief. But questions remain as to how Biden and Congressional Democrats plan on accomplishing the “fight for $15” and whether a unilateral action right out of the gates may squash any hopes that Biden may have had for bipartisan agreement in his first term.
The Art of the Deal
Cognizant of the need to act quickly, Democrats and Biden have already begun discussions with bipartisan groups in both chambers of Congress looking to at least find some areas of common ground that can serve as the foundation for the next round of COVID relief. An easy starting point for negotiations would be the items that failed to make their way into the most recent coronavirus bill that was passed just before Christmas. In this guise, a package could include state and local funding, another round of direct stimulus payments ($1,400 that members of both parties have been calling for), another extension of the federal pandemic unemployment insurance benefit, which is set to expire on March 14, paired with some type of liability shield – a Republican priority – for businesses. This targeted approach could likely be had for a price tag of around $500-$600 billion and thus receive enough support from Senate Republicans to make it to Biden’s desk. However, while the discussions are ongoing, Biden & Co. are simultaneously preparing to go it alone.
The Reconciliation Play
Biden and the Democrats know that a prolonged negotiation on a new COVID package could easily last until the spring. And with time being of the essence, Dems are using the threat of unilateral action to hopefully bring Republicans to the table. However, there are many in the Democratic ranks that see the current situation as a catalyst to tackle issues with which the GOP would never likely get on board. As a result, both the House and Senate are preparing to begin the process of budget reconciliation next week. This tactic, created in 1974, allows the majority to pass a legislative package in the Senate with just 51 votes (instead of the usual 60 to withstand a filibuster). While this procedural move has been the vehicle for a number of recent partisan accomplishments – President Obama and the Democrats used it in 2010 to pass parts of ACA, President Trump and the GOP used it twice in 2017 for their failed healthcare reform plan and then for the TCJA – reconciliation has its limits. The primary difficulty affixed to legislation that uses reconciliation to be passed is that each of the provisions contained in the bill must have a direct effect on either federal spending or revenues.
Byrd, Bath and Beyond
The limitation placed on the type of provisions that can be included in a reconciliation bill is known as the Byrd Rule, named after the late West Virginia senator, Robert Byrd. This process plays out when the legislation undergoes strict review by the Senate parliamentarian to make sure that each piece in the bill meets the spending-revenue requirement, or in Congressional parlance, a “Byrd Bath.” While the parliamentarian has almost primary say in what is allowed in the legislation, he or she can be overruled by the president of the Senate, in this case Vice President Kamala Harris, or the president pro tempore, Sen. Patrick Leahy (D-VT).
Week’s End at Bernie’s
So where does this leave the “fight for $15”? No one is entirely sure at this point. Congressional legal experts have long argued that the Byrd Rule’s strict interpretation would generally prohibit policy changes that merely have a secondary or ancillary budgetary effect. For example, the presumption is that Republicans could not use reconciliation to ban abortion because the primary policy goal is not budgetary in nature; any changes in federal spending as a result of that policy would be indirect. This has generally been the thinking when discussing reconciliation and minimum wage, but many folks on the left who support an increase are arguing that there is some procedural room to maneuver. The argument is twofold: that any change to the federal minimum wage will directly affect spending on federal employees (thus making the provisions budgetary in nature), or that the Senate president can simply deem the minimum wage provisions as being within the scope of reconciliation.
Neither the White House nor Senate Democrats have publicly stated whether they will include a minimum wage increase in their final reconciliation plans, but neither also want to run the risk of ticking off the chairman of the Senate Budget Committee, Sen. Bernie Sanders (I-VT). One of the most vocal supporters of a $15 federal minimum wage, the entire reconciliation process begins with each chamber of Congress passing a budget resolution. It just so happens that the budget resolution falls directly within the purview of the mittens-and-coat-wearing progressive from Vermont.
Independent Grocery and the Minimum Wage
The National Grocers Association would consider a commonsense increase in the outdated federal minimum wage – the last increase was in 2009 to $7.25 per hour – but such a dramatic increase to $15 per hour would be devastating to independent community grocers and many small businesses across America. While large national, and multinational, corporations may be able to absorb increased labor costs and continue to stay viable, small businesses will likely be forced to close their doors or substantially reduce their number of employees. The federal minimum wage has always intended to be a floor, not a ceiling, and many states and cities have taken actions to raise their minimums to levels that best align with the economic and cost-of-living conditions of their individual localities. To read more about NGA’s position on a $15 per hour federal minimum wage, please view our issue brief here.