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Top budget expert makes case for minimum wage in reconciliation

Procedural move would allow a raise to avoid a filibuster and pass with a simple majority in Senate

A leading authority on federal budget law and Senate rules is making the case that raising the federal minimum wage can be done through budget reconciliation, which would allow the legislation to pass on a simple majority vote rather than requiring the support of 60 senators as is typical.

Bill Dauster, who served as deputy chief of staff for former Senate Majority Leader Harry Reid, D-Nev., wrote in a guest op-ed for CQ Roll Call published Friday that there’s enough budgetary impact associated with a minimum wage boost to at least warrant consideration from the Senate parliamentarian, who typically adjudicates which provisions will qualify.

Dauster, who was also a longtime Democratic aide on the Senate Finance and Budget panels, goes on to say that if the parliamentarian disagrees that the minimum wage can be raised through reconciliation, the presiding officer of the Senate is “empowered to make this call.”

President Joe Biden wants to increase the federal minimum wage to $15 an hour as part of his $1.9 trillion COVID-19 rescue plan. Democrats are preparing to try to pass as much of the plan as possible through reconciliation if they can’t gain enough Republican support to pass it through regular order.

A minimum wage boost appears unlikely to win the backing of enough Senate Republicans to clear the 60-vote threshold.

The House passed legislation in 2019 to raise the federal minimum wage from $7.25 an hour to $15 in stages over a seven-year period, including gradual elimination of the lower minimum wage for tipped workers, by a vote of 231-199 with just three Republicans crossing the aisle to support it.

Critics point to estimates from the Congressional Budget Office and others that over time the measure could result in millions of job losses, while backers cite reductions in poverty and increased wages for millions of workers.

In the Senate, what can be included in reconciliation legislation is restricted by the so-called Byrd rule, named for former Sen. Robert C. Byrd, D-W.Va., who died in 2010. Among other provisions, the Byrd rule bars measures that have no impact on spending or revenue, or where the budgetary impact of the law would be “merely incidental” to the nonbudgetary impact.

The Byrd rule is enforced by senators who raise points of order to strike provisions from a reconciliation bill. The presiding officer determines whether an objection is valid, typically after consulting with the parliamentarian.

If the presiding officer sustains a point of order, the offending provision is struck from the legislation. In the past, presiding officers have almost always followed the advice of the parliamentarian. But the authority to make the call rests with the presiding officer, who in this case could be Vice President Kamala Harris or Sen. Patrick J. Leahy, D-Vt., the Senate president pro tempore.

Dauster argues that small-business tax cuts could be paired with the wage increase to make it more palatable to the GOP, as occurred the last time Congress acted to raise the minimum wage as part of a 2007 war spending bill. Tax cuts could certainly qualify under reconciliation, Dauster notes, since they have a clear budgetary impact.

Dauster, who retired from the Senate staff in 2017, worked on major budget legislation dating back to 1987 while on the Hill and during a stint as Deputy National Economic Council Director in the Clinton administration. He authored an annotated 1993 compilation of federal budget process laws, including a detailed Byrd rule explanation.

‘Merely incidental’

The case against a minimum wage increase passing the Byrd test includes the argument that the budgetary impact of the law would be “merely incidental.” The CBO’s score of the 2019 House bill found some small direct costs due to a group of federal workers whose pay would increase; further, the agency has said in other studies that a minimum wage increase would affect the budget indirectly.

That’s because it could spark inflation and increase prices paid by the federal government, while also boosting taxable income for some and reducing it for others and having a similar impact on government benefit payouts. The CBO said it’s unclear whether this net effect would result in a small increase or a small decrease in deficits over a decade.

In addition, some budget analysts believe the parliamentarian has an aversion to federal mandates in reconciliation based on past rulings, and would view a minimum wage increase as a private-sector mandate.

In an analysis distributed Thursday, James Wallner, a former GOP aide who is a resident senior fellow at R Street, touched on the uncertainty of what would qualify as “merely incidental.”

Up to November 2016, he wrote, the Senate adjudicated 127 points of order or motions to waive them under the Byrd rule. But only 10 of those related to the “merely incidental” test.

As a result, Wallner wrote, “there are very few past precedents with which the Senate can inform its understanding of how to apply” the test. That, he said, means the presiding officer “has considerable discretion in enforcing the rule in ambiguous parliamentary situations.”

Dauster wrote in his op-ed that such uncertainty has led to various prior rulings seen as head-scratchers by some. Deciding what’s “merely incidental” to the budget is “a judgment call,” he wrote. “One person’s fiscal policy is another person’s fundamental policy change.”

Dauster pointed out that Congress has used reconciliation to pass legislation such as the 2010 health care law, opening the Arctic National Wildlife Refuge to oil and gas drilling and imposing work requirements on people receiving public benefits.

“If [Congress] could do those things, it should be able to raise the minimum wage,” Dauster wrote.