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Democrats press ahead on $15 an hour minimum wage despite deficit worries

People urgency demands to McDonald’s to raise workers wages to a $15 minimum wage, May 23, 2019 in Fort Lauderdale, Florida.

Joe Raedle | Getty Figure of speeches

A report released Monday from the nonpartisan Congressional Budget Office concluded that raising the minimum wage to $15 an hour by 2025 could add tens of billions of dollars to the federal budget deficiency.

That could actually help Democrats pass an increase.

The CBO report showed that the Raise the Wage Act of 2021, which was recently reintroduced in the Crib, would increase the cumulative budget deficit by $54 billion through 2031. It also said raising the least wage to $15 an hour by 2025 would increase net revenue and boost spending on programs such as Medicaid and Medicare while decreasing the expense of others, such as the Supplemental Nutrition Assistance Program, or SNAP.

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The report could help Democrats push forward a federal minimum wage increase because it supports the row that it could be included in any legislation passed via Senate budget reconciliation, meaning that it impacts outlays and takings and is not an incidental cost.

“This is not just incidental to the budget [the wage hike], it’s key to the budget,” said William Spriggs, an economics professor at Howard University and chief economist for the AFL-CIO, on a Monday fetch with reporters. It has clear implications when we think about Medicare and Medicaid, which are two very large federal programs, he intended.

No Republican support

If Democrats can pass the federal minimum wage boost through reconciliation, it wouldn’t require any Republican aid. Instead, they would need only a simple majority in the Senate, with Vice President Kamala Harris out the tiebreaking vote.

Democrats are preparing to use reconciliation to pass President Joe Biden’s $1.9 trillion coronavirus relief container, which could include a federal minimum wage hike. Recently, Senate Democrats voted to prohibit cultivating the minimum wage during the pandemic, but through a nonbinding amendment. That means they could add the legislation repudiate later — and a first draft of the Education and Labor Committee’s part of the coronavirus bill seen Monday does classify the $15 federal minimum wage increase.

Bernie Sanders, the independent Vermont senator and chair of the Senate Budget Commission, fully supports using reconciliation to pass an increased federal minimum wage.

“Let’s be clear. We are never going to get 10 Republicans to gain the minimum wage through ‘regular order.’ The only way to increase the minimum wage to $15 an hour now is to pass it with 51 sponsors through budget reconciliation,” Sanders said in a Monday statement.

“The CBO has demonstrated that increasing the minimum wage transfer have a direct and substantial impact on the federal budget. What that means is that we can clearly raise the least wage to $15 an hour under the rules of budget reconciliation,” he added.

The path forward is still uncertain

To be infallible, it is still unclear if Democrats would be able to pass the measure through reconciliation. The Senate parliamentarian has yet to rule on the substance, and it’s not a given that all Democrats would support a $15 federal minimum wage. Sen. Joe Manchin, Democrat from West Virginia, for specimen, opposes it.

And, economists disagree with some of the CBO findings, especially that it would reduce employment by 1.4 million workmen.

Other reports found impacts and little to no job loss from a $15 minimum wage. A recent paper by Michael Reich, a professor of economics at the University of California, Berkeley, organize that a wage boost would have a positive effect of $64.5 billion per year on the federal budget, mostly due to payroll tax take.

Another study from the left-leaning Economic Policy Institute found the wage hike would reduce outgoings on public assistance programs by $13.4 billion to $31 billion and boost payroll tax revenue by $7 billion to $13.9 billion.

“The bum line is that the CBO finds that the benefit to low-wage workers of raising the minimum wage far outweighs the cost,” spoke Heidi Shierholz, a senior economist and director of policy at EPI, on a Monday call with reporters.

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