Biden’s $15 Wage Bid Hits Headwind in CBO Job-Loss Warning

(Bloomberg) -- President Joe Biden’s quest to increase the minimum wage to $15 an hour as part of his $1.9 trillion pandemic-relief package may have hit a political and procedural roadblock in a new report from the non-partisan Congressional Budget Office.

The CBO said Monday the move would boost jobless rolls by 1.4 million by 2025, even as 900,000 people get lifted out of poverty. The scorekeeper also estimated in its report that the proposal would increase budget deficits by $54 billion over 10 years.

The projections will feed Republican arguments that the measure is a job-killer, and also set off a debate about whether it can win inclusion in the aid package congressional Democratic leaders are assembling. Senate rules say the item must have a fiscal impact to qualify for the legislative process Democrats are using -- the question now is whether the CBO’s deficit impact is significant enough to meet that requirement.

“The CBO’s report strengthens the case for gradually raising the minimum wage through the Covid-19 rescue package,” said Representative Bobby Scott, chair of the House Education and Labor Committee, which has jurisdiction over the minimum wage. Senate Budget Chairman Bernie Sanders also said the CBO’s release validated his view that the measure can be included.

The Scott and Sanders argument is certain to be contested, however. If a provision has only “merely incidental” budgetary effects, it can be struck from the reconciliation bill that Democrats are using for the pandemic-relief package. That’s according to the so-called Byrd rule.

Biden Unoptimistic

“It would be hard to argue that it does not have a budgetary consequence and therefore may not be subject to the Byrd rule. But I would still think, relative to the size of the labor market it is ‘merely incidental,’” said Bill Hoagland, a former Senate Budget Committee director who’s now with the Bipartisan Policy Center.

The report creates another procedural roadblock that could be even more difficult to overcome. It says increasing the wage creates a deficit after 10 years, also a violation of the Senate Byrd rule.

Marc Goldwein, an analyst with the Committee for a Responsible Federal Budget, said that means spending cuts or revenue increases will have to be found to pay for the wage increase.

Democrats could still move to overrule the Senate parliamentarian, who makes judgments on legislative procedure, but that’s fraught with risk, as it would set off a bitter partisan battle.

‘Firmly Committed’

The Senate in a non-binding vote last week backed the concept of waiting until the end of the pandemic to raise the wage, amid warnings that it would hurt employers trying to stay afloat during the pandemic.

Biden said in a CBS interview Friday a wage increase “apparently” wouldn’t be part of the package due to Senate rules. But a House committee on Tuesday could vote to include the increase in the stimulus bill anyhow to make the attempt.

“The president remains firmly committed to raising the minimum wage to $15,” White House Press Secretary Jen Psaki said Monday. Asked about potential inclusion in the Covid-19 bill, she said, “As far as options we’ll see what the parliamentarian decides.”

The CBO estimate finds that the wage increase will lead to higher prices for goods and services that the federal government will have to pay, including through the Medicare and Medicaid programs. Lost jobs would lead to higher spending on unemployment compensation, while increased wages for the working poor who keep their jobs would result in less spending on food stamps and higher tax revenue, the CBO said.

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