Minimum wage bill under debate in Senate

NEW YORK (CNNMoney.com) -- The Senate began debating the minimum wage bill this week with plans for a vote to end debate Wednesday and possible passage next week.

Even so, a Senate bill could face opposition in the House for having tax cuts included and from the White House for having provisions to pay for the tax cuts.

The House on Jan. 10 overwhelmingly passed a bill that would increase the minimum wage from $5.15 to $7.25 in a 3 steps over two years.

The Senate version would do that too, but may include tax breaks for small business owners and could close tax-loopholes for large ones.

Sen. Edward Kennedy (D.-Mass), who is co-sponsoring the bill, nonetheless has said he expects a bill with minimal amendments would pass by the middle of next week.

But hurdles to the bill's passage remain.

Sen. Judd Gregg (R-N.H.) filed a motion Monday to debate an amendment to the minimum wage bill that would give the president line-item veto authority. Most view its chances of being passed in the Senate as unlikely.

Republicans and some Democrats are also hoping to attach a tax cuts and accounting simplification for small business in order to aid the bill's passage through the Senate.

House Majority Leader Harry Reid (D-Nev.) has indicated a willingness to work with Senate Republicans to pass a bill.

"Majority Leader Reid has taken a look at the votes and doesn't believe a so-called 'clean' minimum wage bill passing through the Senate is possible," said Jim Manley, spokesman for Reid.

Unlike the House, where Democrats enjoy a 233 to 202 majority, Democrats in the Senate hold only a two vote edge. Senate watchers say Democrats have more than 50 senators lined up for a minimum wage vote. But Democrats need fully 60 votes to end debate on any subject.

Last Wednesday, the Senate Finance Committee, chaired by Sen. Max Baucus (D-Mont.) approved a tax bill offering the tax and regulatory relief for small business sought by Senate Minority Leader Mitch McConnell (R-Ky.).

In addition to offering tax breaks for small business, the tax bill will also close loopholes on tax revenue from corporations in order to pay for the measures.

Senate Democrats are following the pay-as-you-go principles (PAYGO) in budget matters, meaning the cost of every proposed expense must be accounted for.

House Democrats have already passed PAYGO into their budget rules.

The White House's Office of Management and Budget Friday issued a release saying the Administration does not think it is necessary to tie small business tax relief to revenue increases.

Before any bill can be delivered to the White House for President Bush's signature, the Senate's bill will have to be reconciled with the House bill.

House Democrats have expressed little enthusiasm for a minimum wage bill including tax breaks.

Procedural issues between the House and the Senate could slow the passage of the bill into law, as well.

Rep. Charles Rangel (D-N.Y.), Chairman of the powerful Ways and Means Committee, has stated his desire for a "clean" minimum wage bill.

Rangel has also reminded Senate Democrats in the past week that, constitutionally, any tax bills - including the small business tax bills -must originate in the House, opening up another area of possible contention between a Senate and the House bills.

A minimum wage hike would directly affect 6.6 million workers currently earning the $5.15 wage, according to the labor-backed Economic Policy Institute.

The hike could also increase the wages of another 8.3 million who earn just above the minimum. Workers in 28 states already have a higher minimum wage. A number of those states have automatic increases for inflation.

The cost of minimum wage will affect large retailers like Wal-Mart (Charts), Target (Charts) and Lowe's (Charts) directly or indirectly by creating more competitive rates at the lower end of the wage scale.

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