WASHINGTON -- Seeking to defuse a potent 2000 campaign issue, Senate Republicans today won approval of a $1 minimum wage increase and companion business tax cut after rejecting a more modest Democratic alternative.
Senators voted 54-44 to increase the $5.15-an-hour minimum wage and for a companion tax cut of $18.4 billion over five years that would be financed by projected budget surpluses.
President Clinton called the Senate's action "a serious mistake," and accused lawmakers of using the minimum wage as "a cynical tool to advance special interest tax breaks" that the country can ill afford. He asked that lawmakers accept his proposal to increase the minimum wage by $1 over the next two years.
"I cannot let this bill become law in its current form," Clinton said. "I once again call on Congress to give working American families the pay raise they deserve."
Sen. Pete Domenici, R-N.M., said the GOP wanted to give moderate Republicans a chance to vote on a minimum wage increase without handing Democrats a victory by approving their bill. Conservatives, meanwhile, were happy to vote for a new round of tax cuts.
"This just seemed like the right combination as far as pulling Republicans together," Domenici said. "Sooner or later, a very significant tax reduction for the American people is going to be achieved."
A few minutes earlier, the Senate rejected the Democratic version on a 50-48 vote. It would have raised the minimum wage by $1 over 13 months and provided $9.6 billion in business tax relief without dipping into projected surpluses. But that bill would have also raised other taxes.
If the GOP bill becomes law, the minimum wage would rise by 35 cents in March 2000, 35 cents in March 2001 and 30 cents in March 2002. About 11 million workers earn the minimum wage, half of them younger workers under age 24 and many holders of part-time jobs.
Because of differences with the House, it is unlikely the minimum wage increase will get to President Clinton until next year, if at all. It was attached to an unrelated bankruptcy bill that would also have to pass the Senate.
But that didn't stop the political fight. Democrats portrayed the GOP minimum-wage boost as too sluggish and the tax package as tilted toward people who don't need relief.
"We can't delay it. We can't stretch it out," said Sen. Edward M. Kennedy, D-Mass.
Clinton, who has threatened a veto, said today the GOP plan was rife with "unfair and excessive tax breaks to special interests." He supports the Democratic version.
Republicans criticized the Democratic bill on grounds it would raise other taxes and trigger costs on small business that opponents said could force up to 500,000 people from their jobs.
"Our amendment saves small businesses and allows them to grow and prosper," Domenici said.
Republican Sens. James Jeffords of Vermont, Lincoln Chafee of Rhode Island, Arlen Specter of Pennsylvania and Olympia Snowe of Maine joined all Democrats present in support of the Democratic plan.
On the Republican plan, Democratic Sen. Max Cleland of Georgia crossed party lines in favor while GOP Sen. George Voinovich of Ohio voted no.
Ten states and the District of Columbia require minimum wages higher than $5.15 an hour, including a $6.50-an-hour wage paid in Oregon. The other states are Alaska, California, Connecticut, Delaware, Hawaii, Massachusetts, Rhode Island, Vermont and Washington.
Across the Capitol, the House Ways and Means Committee was to consider later today a GOP bill to raise the minimum wage by $1 over three years and provide up to $30 billion in business tax relief.
Senate Majority Leader Trent Lott, R-Miss., said Monday that no minimum-wage boost will go to Clinton unless it is coupled with significant business tax relief.
"My main focus is to make sure that we have some tax breaks, some tax incentives for small businessmen and -women, and the self-employed, that will have to bear the brunt of the cost of the increased minimum wage," Lott said.
The Senate GOP tax package includes a health insurance deduction for people who don't have employer-provided coverage and an immediate 100 percent deduction for the self-employed. It also increases the business meal deduction from 50 percent to 80 percent and allows higher 401(k) contribution limits and other pension expansions.
The Democratic version included several similar items, adding credits for employer-provided child care, businesses investing in new markets, for wages paid in new empowerment zones and for startup business costs.
In debate Monday, Republicans attacked the Democratic bill because it would be paid for with other tax increases, including a reinstatement of the expired Superfund environmental tax and a plan to close corporate tax shelters.
"This is really a big, bad tax increase," said Sen. Don Nickles, R-Okla.
Democrats, however, said Clinton has already promised to veto any tax relief bill that spends surplus dollars and that the GOP tax bill is too large compared with the modest minimum wage increase.
"Republicans are more interested in providing tax breaks for the rich than in fairly compensating minimum wage workers," Kennedy said. "Each day we fail to raise the minimum wage, families across the country continue to fall farther behind."
The federal hourly minimum wage since its inception:
October 1938 - 25 cents
October 1939 - 30 cents
October 1945 - 40 cents
January 1950 - 75 cents
March 1956 - $ 1
September 1961 - $ 1.15
September 1963 - $ 1.25
February 1967 - $ 1.40
February 1968 - $ 1.60
May 1974 - $ 2
January 1975 - $ 2.10
January 1976 - $ 2.30
January 1978 - $ 2.65
January 1979 - $ 2.90
January 1980 - $ 3.10
January 1981 - $ 3.35
April 1990 - $ 3.80
April 1991 - $ 4.25
October 1996 - $ 4.75
September 1997 - $ 5.15