GOP Bid on Wages, Estate Tax Is Blocked

Senate Democrats successfully blocked the Republican bid to combine a tax cut for the wealthy with a wage increase for the working poor last night, adding a volatile economic issue to this fall's congressional campaigns.The GOP leadership fell three votes short of the 60 needed to cut off debate and bring the package to the Senate floor, where it was certain to pass on a simple-majority vote. The official Senate tally was 56 to 42 in favor.

Senate Majority Leader Bill Frist initially supported the package but switched his vote. Republicans Chafee (R.I.) and Voinovich (Ohio) joined one independent and 38 Democrats in opposing the bill by backing the filibuster. Four Democrats and 52 Republicans signaled their support for the bill by voting to limit debate.

Republicans contend that most Americans support the bill's call for an increase in the minimum wage and deep cuts in the estate tax. Well. . .they're half right.The wealthiest Americans have already received more than enough breaks from BushCo and it's lock-step GOP Congress. Voters see the Republican bill as a ploy to further enrich upper-income families while trying to usurp the Democrats' role as champions of the working poor. Under the bill, "8,100 of the wealthiest Americans would hit the jackpot, while millions of working families would get $800 billion in [federal] debt," said Minority Leader Harry Reid.

In case you've been living under a rock somewhere, here's a brief synopsis of this situation:The Republican Congress has long wanted to eliminate or slash the taxes levied on estates left by wealthy people, but the Senate has repeatedly refused. Hoping to attract enough Democratic support, House leaders last week added some sweeteners: the first increase in the federal minimum wage in nine years, plus an extension of several popular tax breaks for businesses. The House passed the measure and tossed it over to the Senate for a vote before adjournment this weekend for the August break.

Frist agreed to the deal in the hope that Democrats could not resist a chance to raise the minimum wage from $5.15 to $7.25 in three phases.But the bill would also have exempted from taxation all estates worth as much as $5 million (or$10M for a married couple) and applied a 15 percent tax rate to inheritances above that threshold and up to $25 million. The value of estates exceeding $25 million would have been taxed at 30 percent.

Most Democrats support raising the minimum wage and oppose cutting the estate tax,while most Republicans take the opposite view, although some from both parties support both proposals. Democrats said they will keep pushing to raise the minimum wage with no strings attached. Republicans had practically dared Democrats to vote against the package with the minimum-wage increase. All but four Senate Democrats took the dare, heeding Reid's plea to deny Frist a victory as lawmakers go home to campaign, and expressed confidence that voters will see through the cynical effort to help wealthy GOP supporters by making the estate tax cut the price for a wage increase that the nation's lowest-paid workers so dearly deserve.

Rejecting the measure will be easy to explain "when you have all of labor saying they don't like it," said Senator Menendez (D-N.J.), who is campaigning to keep his seat in November. "It comes down to taking care of a lot of wealthy people" whose estate tax reductions would have prompted reductions in social spending. By one estimate, the plan would have lowered federal tax revenue by $268 billion over 10 years.

AFSCME president Gerald W. McEntee said, "This was a transparent attempt to dangle a minimum-wage increase for families struggling to make ends meet to secure yet another Texas-size tax handout for the wealthiest."

Talk also centered on the impact of the minimum-wage proposal on people in seven states who work mostly for tips. In 43 states, workers who receive tips can be paid as little as $2.13 an hour, provided that their tips bring them to at least the minimum-wage level. But seven states allow no such exemption. California, for example, requires a minimum wage of $6.75 an hour for all workers, including bartenders and waitresses. Senators differed on whether the bill would force these states to drop their protection of tip-earners. Memos offered by various state and federal agencies did not resolve the question and Democratic leaders insist that those seven states' laws would be overridden.

"Under the Republican bill, Paris Hilton and her family will get $250 million, while the tipped workers in their hotels will lose up to $5.50 an hour," said Sen. Edward Kennedy . The seven states include Washington, whose Democratic senators (Maria Cantwell and Patty Murray) were among those Frist had hoped to win to his side. But they cited the tips issue in announcing their opposition to the bill.

Sen. Mark Pryor (D-Ark.), whom Frist had unsuccessfully wooed, said "I want to raise the minimum wage but not if it means such a deep cut in the estate tax. I cannot ignore our $300 billion deficit, and the ongoing costs to support the wars in Iraq and Afghanistan and reconstruction in the Gulf Coast".