Thursday, August 03, 2006

Rejecting Legislative Extortion

Cheers to the Senate Democrats for defeating a measure tonight that basically amounted to legislative extortion. Republicans, most of whom have staunchly opposed Democratic efforts to raise the minimum wage (and voted against raising it just over a month ago), attached a $2.00 an hour minimum wage hike to the permanent repeal of the estate tax (dubbed the "death tax" by opponents). The repeal would eliminate the tax on estates worth up to $5 million and drastically reduce the tax on estates worth up to $25 million (currently estates worth up to $2 million are spared the tax as are family-owned farms regardless of their worth). Previous attempts to permanently repeal the estate tax have continually failed, leaving the issue hopelessly stalled in the Senate. This is where the extortion comes in.

Republican opposition to raising the minimum wage is costing the party politically in the run up to the mid-term elections, as almost 83% of Americans support such an increase. So in a purely political move, Republicans threw the minimum wage increase into a bill that would have repealed the estate tax (something Democrats vehemently oppose). The idea was to force Democrats to vote against the minimum wage proposal in order to nullify any political advantage Democrats enjoyed on the issue. If, by some miracle, the measure passed, then Republicans would at least have secured a major political coup in repealing the tax and could also campaign on having raised the mininum wage they really didn't want to raise.

Democrats wisely didn't take the bait. Raising the mininum wage should be done on its own merit. We should not have to accept a misguided federal tax policy that centers on preserving aristocratic estates in order to give those scraping by on minimum wage a long awaited cost of living increase.

19 comments:

Chris M. G said...

Marc,
interesting, i always like hearing what is really going on on the hill what with the complicated legislation and political trickery. I especially like it when someone just explains it to me, because it is way too much work to figure it out myself. I do have an unrelated comment, you get a ton of people commenting on here. As a regular LYMA guy I am quite impresseed, I mean seven comments for a one word post? Bravo

Chris M. G said...

Sorry, two words and a link, but still. . .

Marc said...

Chris - I've had my share of ignored posts... but I just tell myself that people must have thought I'd shut the comment strings off on those posts.

BA said...

The estate tax isn't that simple of an issue. For the most part I'm for the estate tax but I think that wealthy people will find a way around it anyway, through tricky trusts or whatever. Additionally, family farms should be exempt, I think.

DAK said...

I can understand how in the olden days of our country breaking up huge family estates was necessary, but I would hardly call five million dollars an "aristocratic estate" nowadays. The economy is much more fluid now than it was back then. Any clown that inherets that kind of money is going to lose it on hookers and blow anyway.

Marc said...

BA - True, there may be other loopholes, but that's no reason to throw in the towel... and family farms are exempt.

DAK - So five million isn't what it used to be... the fact that these clowns are spending their Benjamins on tax-free hookers and blow is yet another reason to tax it upfront.

Sheldon said...

Marc,

Come on, the $2 minimum wage hike attached to the "death tax" repeal was a pretty clever tactic by the Republicans... they win either way.

By "losing" they vote, they are sending Dems back to their constituents, where their Republican opponents can say "these guys voted AGAINST the minimum wage increase AND voted to TAX DEAD PEOPLE!! At least M. Night Shymalan just SAW dead people!" As if the Repubs really WANT to repeal the estate tax... it is such a great war cry to rally the "troops..."

If they had won, Republicans go back to their constituents saying "we finally repealed the death tax, like we always promised!" and maybe even play up the "compassionate conservatives" thing by saying "we were the ones who proposed the minimum wage increase" all the while knowing that the House repubs wouldnt pass the increase, anyway. win-win.

Gargantus said...

i googled "hookers" and "blow" and got this link... Not at all what i was hoping for.

Marc said...

Sheldon - Not saying it wasn't clever... just saying it amounted to legislative extortion (a point on which we seem to agree). I think the Democrats did the right thing in rejecting the proposal.

Garg - Did you mean to include the link or were you just going to let us google it for ourselves?

Anonymous said...

marc...
I got your phone message the other day but your phone number didn't come through. Can you email it to me?
Trav

Marc said...

Trav -
(1) Nice threadjack
(2) Will email you the numero forthwit

Gargantus said...

well, google sent me here to this blog...

http://www.blogger.com/comment.g?blogID=13324551&postID=115466863804513910

Marc said...

This blog? You must have been sorely disappointed.

Rob M. said...

I know we've discussed this before, Mr. B, but I maintain that raising the minimum wage won't help poor people. Only about 20% of people earning minimum wage live in families earning below the poverty line. If Congress truly wanted to help poor people--as opposed to appearing to help poor people--they could find ways to more directly target that 20% instead of middle-class teenagers. (e.g., by helping the 20% better access public job training resources, etc...) The minimum wage debate is about political posturing, not pulling people out of poverty.

Marc said...

Not suprisingly, I disagree with your characterization. I don't think the Democrats are all posturing (though some might be, I can't speak for everyone). I support this issue because I believe it is the right thing to do. I have never touted the minimum wage as a cure all, but it is an important tool in preventing exploitation. That said, I would also support pairing a minimum wage hike with other types of programs designed to help pull people out of poverty, like, as you mentioned, perhaps providing more access public job training resources.

On a sidenote, you have continually mentioned teens in our conversations, but 80% of those earning the minimum wage are 20 or older. This isn't a teen issue. Moreover, the fact that some teens may be earning minimum wage is not an argument against the minimum wage.

Rob said...

OK, OK, I'll grant you that all advocates for raising the minimum wage aren't just posturing any more than its opponents aren't greedy and anti poor people. Also, saying most minimum wage workers are teenagers is an exageration, but it is true that the largest share of minimum wage workers are under the age of 25 and from middle class families that don't rely on the kid's job for income.

Marc said...

I would agree with you that not all opponents are "greedy and anti-poor people." But I don't think I ever made that charge. In the past I have pointed out the hypocrisy of Congress giving itself a cost-of-living raise while denying one to minimum wage earners, but that's a different issue.

I have to dispute your stats again though. One, this isn't just about minimum wage earners, but anyone earning less than $7.25 or so an hour. Two, this isn't just about people below the poverty line, but people riding the poverty line.

If you like, I can send you statistics that show that:

1) In 1996-97, the average minimum wage worker brought home more than half (54%) of his or her family's weekly earnings.

2) About 1,400,000 single parents with children under 18 would benefit from a minimum wage increase to $7.25 by 2008 and just about 4 million parents with children under 18 would benefit.

3) Over half (54%) of workers who would benefit from a minimum wage increase work full time and another third (30%) work between 20 and 34 hours per week.

woo said...

"Benefit", I still believe to be an unsure guess. I think there will probably be an immediate benefit to all those earning less than the new minimum wage... provided they all keep their jobs. However, I don't see this a) creating any new jobs, and b) helping that many people out in the long run. That is to say, as I have mentioned previously, the money for increased wages will not come from nowhere. If the number of jobs are reduced, that is bad. If the cost of everything is increased, that is also bad, and will take its toll almost completely on those who this increased wage is "designed" to assist. That said, I am not completely opposed to it, especially if they do attempt to address more important issues such as job training and education, but don't think I won't be pointing fingers if/when there is a negative effect on the poor. (as an example, there are studies that have shown that the number of folks who drop out of high school due to increasing the minimum wage goes up... That for one would be a negative effect...)

Marc said...

Woo - The problem with the arguments against raising the minimum wage is that they rely heavily on theoretical arguments. The problem with economic theory is (1) that there is not always a consensus on it (2) it is often difficult to apply in the real world. Just skim some of Greenspan's comments over the last twenty years (e.g. "I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said" - Alan Greenspan).

Case and point: There is simply no evidence that any of the wage hikes in the 1990's caused any job loss. In fact, the opposite may be true. There have been numerous studies that have shown that the minimum wage hike does help people, even in the long run (I can send you some of these studies if you like). It is certainly no cure all, but I've never argued for it as such. I think the argument that we shouldn't raise the minimum wage because it doesn't somehow eliminate all poverty is a weak one. It should be paired with efforts to encourage and/or provide better educational and job training opportunities (and, if what you say is true, the policies should also seek encourage students to graduate high school).