Republicans: I’ll trade you 1 Trillion for your $2.15
July 29, 2006
The House of Representatives today passed a minimum wage law. In a 230-180 vote the House moved to raise the minimum wage from $5.15-per-hour to $7.25 - in three 70-cent steps - by mid-2009.
The bill was opposed by most Democrats. Why? Well, because the wage increase was tacked onto a bill repealing the Estate Tax. In the bill, estates of up to $5 million per individual would be excluded from inheritance taxes as of January 1, 2015. That amount is phased-in starting in 2010 when the individual estate tax exemption will rise to $3.75 million from $3.5 million. It also gradually increases exemption from gift taxes to $5 million. The bill also taxes estates over $5 million to $25 million at the capital gains rate (which, as a result of the Bush tax package is at 15 percent right now). Anything over $25 million would be taxed at 30 percent.
This bill is about one thing: Republican re-election bids in November. By structuring the bill the way they have, Republicans will be able to spend their upcoming 5 week break telling constituents that they supported a minimum wage increase while the Democrats voted against it. They have done this at little to no risk that the minimum wage will actually increase because they are relatively sure that the bill will make it through the Senate, where hostility to the Estate Tax repeal is high.
What is most interesting in all of this is that the Republicans – in rhetoric that implies that a minimum wage increase is bad for the country, but the Estate Tax repeal is good for the country - have their facts exactly backwards.
Typical of the misinformation propagated by Republicans is this comment by Mass Gov. Mitt Romney: “I have spent hours reading a wide array of reviews on the minimum wage and its impact on the economy, and there's no question raising the minimum wage excessively causes a loss of jobs, and the loss of jobs is at the entry level."[1]
Maybe Romney missed the report from Dollars and Sense, which indicates that studies have shown that minimum wage increases essentially cost retail and service industries – the greatest employers of low wage workers – between 1 and 2 percent of their profits. In other words and 1 to 2 percent increase in what a company charges for its products and services would adequately cover the wage increases.[2] Hardly a basis for the wholesale job loss that Romney fantasizes.
Republicans in the US Congress – under pressure from the National Restaurant Association and the National Federation of Independent Business – spout similar garbage such as, comments by House Majority Leader John Boehner: “The marketplace will set better wages and more flexible wages for the American people than government ever could. And by taking away the first rungs of the economic ladder, you eliminate hundreds of thousands of jobs, especially for people who can't get on the ladder because we've taken the rung away."[3]
But what is really interesting is that the party of the “fiscal hawks” who express great concern for the impact of legislation on the economy also espouses a tax break for the 7,500 richest people in the country that would cost roughly 1 trillion (with a T) dollars over the first 10 years of its implementation, according to the Center on Budget Policy and Priorities.[4]
The tradeoffs here are stunning. Republicans are willing to increase the deficit by one trillion dollars to help the richest families in America, but forward mythology and misinformation about a minimum wage increase that – in the words of a May 2005 statement signed by 58 Massachusetts economists (including Nobel Prize winner Robert Solow of the Massachusetts Institute of Technology) that rebutted Romney's job-loss mythology : “will raise purchasing power and could yield other distinct benefits for [businesses], such as reduced turnover and lower training costs;”[5] something that offers clear benefits for the economy and the nation’s workers.
Of course there is also this bit of hypocrisy: in the years since the last minimum wage increase – in a time when a worker earning $5.15 per hour was forced to live below the poverty level for a family of the three - the Republican controlled congress has raised its wages by almost $35,000.
The bottom line – as Rep. Lynne Woolsey has aptly stated – is that “A rising tide should lift all boats, not just the yachts.”
___________________________
[1] Boston Globe, July 25, 2006
[2] Dollars and Sense, May/June 2006
[3] The San Francisco Chronicle, July 17, 2006
[4] Estate Tax - Myths and Realities
[5] The Potential Economic Impact of Increasing the Minimum Wage...
The House of Representatives today passed a minimum wage law. In a 230-180 vote the House moved to raise the minimum wage from $5.15-per-hour to $7.25 - in three 70-cent steps - by mid-2009.
The bill was opposed by most Democrats. Why? Well, because the wage increase was tacked onto a bill repealing the Estate Tax. In the bill, estates of up to $5 million per individual would be excluded from inheritance taxes as of January 1, 2015. That amount is phased-in starting in 2010 when the individual estate tax exemption will rise to $3.75 million from $3.5 million. It also gradually increases exemption from gift taxes to $5 million. The bill also taxes estates over $5 million to $25 million at the capital gains rate (which, as a result of the Bush tax package is at 15 percent right now). Anything over $25 million would be taxed at 30 percent.
This bill is about one thing: Republican re-election bids in November. By structuring the bill the way they have, Republicans will be able to spend their upcoming 5 week break telling constituents that they supported a minimum wage increase while the Democrats voted against it. They have done this at little to no risk that the minimum wage will actually increase because they are relatively sure that the bill will make it through the Senate, where hostility to the Estate Tax repeal is high.
What is most interesting in all of this is that the Republicans – in rhetoric that implies that a minimum wage increase is bad for the country, but the Estate Tax repeal is good for the country - have their facts exactly backwards.
Typical of the misinformation propagated by Republicans is this comment by Mass Gov. Mitt Romney: “I have spent hours reading a wide array of reviews on the minimum wage and its impact on the economy, and there's no question raising the minimum wage excessively causes a loss of jobs, and the loss of jobs is at the entry level."[1]
Maybe Romney missed the report from Dollars and Sense, which indicates that studies have shown that minimum wage increases essentially cost retail and service industries – the greatest employers of low wage workers – between 1 and 2 percent of their profits. In other words and 1 to 2 percent increase in what a company charges for its products and services would adequately cover the wage increases.[2] Hardly a basis for the wholesale job loss that Romney fantasizes.
Republicans in the US Congress – under pressure from the National Restaurant Association and the National Federation of Independent Business – spout similar garbage such as, comments by House Majority Leader John Boehner: “The marketplace will set better wages and more flexible wages for the American people than government ever could. And by taking away the first rungs of the economic ladder, you eliminate hundreds of thousands of jobs, especially for people who can't get on the ladder because we've taken the rung away."[3]
But what is really interesting is that the party of the “fiscal hawks” who express great concern for the impact of legislation on the economy also espouses a tax break for the 7,500 richest people in the country that would cost roughly 1 trillion (with a T) dollars over the first 10 years of its implementation, according to the Center on Budget Policy and Priorities.[4]
The tradeoffs here are stunning. Republicans are willing to increase the deficit by one trillion dollars to help the richest families in America, but forward mythology and misinformation about a minimum wage increase that – in the words of a May 2005 statement signed by 58 Massachusetts economists (including Nobel Prize winner Robert Solow of the Massachusetts Institute of Technology) that rebutted Romney's job-loss mythology : “will raise purchasing power and could yield other distinct benefits for [businesses], such as reduced turnover and lower training costs;”[5] something that offers clear benefits for the economy and the nation’s workers.
Of course there is also this bit of hypocrisy: in the years since the last minimum wage increase – in a time when a worker earning $5.15 per hour was forced to live below the poverty level for a family of the three - the Republican controlled congress has raised its wages by almost $35,000.
The bottom line – as Rep. Lynne Woolsey has aptly stated – is that “A rising tide should lift all boats, not just the yachts.”
___________________________
[1] Boston Globe, July 25, 2006
[2] Dollars and Sense, May/June 2006
[3] The San Francisco Chronicle, July 17, 2006
[4] Estate Tax - Myths and Realities
[5] The Potential Economic Impact of Increasing the Minimum Wage...
posted by Martin Council at 7:02 AM
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