A Senate parliamentarian blocks the minimum wage of $ 15.

Democrats hoping to raise the minimum wage in their COVID relief bill suffered a crushing defeat Thursday night. Senate MP Elizabeth MacDonough said the increase was not allowed in budget reconciliation legislation, the process Democrats use to bypass a Senate filibuster on their COVID relief bill.

MacDonough’s decision was brief and to the point, according to a Senate source. In his view, the budgetary impact of an increase in the minimum wage was “merely incidental” to its non-budgetary impact. This would make it a violation of Byrd’s rule, the statute with guardrails on what is and is not allowed under reconciliation.

Vermont Senator Bernie Sanders, as chairman of the Budget Committee that manages the reconciliation process as well as the body’s most vocal advocate of a $ 15 minimum wage, had worked to argue to the parliamentarian that the The increase would go beyond the procedure. The Congressional Budget Office has shown it will increase the deficit by $ 54 billion over ten years, which Sanders said “demonstrated that increasing the minimum wage would have a direct and substantial impact on the federal budget.” (It does not need to have a substantial deficit reduction He also requested and received a report from the CBO comparing the budgetary impact of the increase in the minimum wage to that of a few elements of the Republican tax cut bill of 2017, also passed by reconciliation: the zero removal. the ACA’s individual tenure penalty; and the leasing allowance for oil and gas in the Arctic National Wildlife Area. CBO found that the budgetary impact of the increase in the minimum wage was more substantial than the others.

None of this, however, satisfies MacDon, although the budgetary effect of the increase in the minimum wage is more than an “ancillary” by-product of the change in labor law.

“We are deeply disappointed with this decision,” Senate Majority Leader Chuck Schumer said in a brief statement after his announcement. “We are not going to give up the fight to raise the minimum wage to $ 15 to help millions of struggling American workers and their families. The American people deserve it and we are committed to making it a reality.

Democrats have a few options on how to proceed next.

They could try to restructure a wage increase under the tax code – incentives for small businesses to raise wages, penalties for large ones – to accommodate restrictions in tax policy and reconciliation spending. In a statement following the decision, Sanders said he would pursue this Plan B.

“In the coming days, I will be working with my Senate colleagues to move forward with an amendment to remove tax deductions for large, profitable companies that do not pay workers at least $ 15 an hour and to provide small businesses have the incentives they need to raise wages, ”Sanders said. “This amendment must be included in this reconciliation bill.” While certainly better than nothing, this pullback would rely on corporate behavior to get the job done.

Procedurally, Senate Democrats could vote to “overrule” the parliamentarian’s advice and simply include the minimum wage increase in the bill. But the same Democrats who oppose the removal of legislative obstruction – Arizona Senator Kyrsten Sinema, West Virginia Senator Joe Manchin, President Joe Biden – are just as strongly opposed to this option, because it could set a precedent for the effective cancellation of the filibuster. Democrats could also fire MacDonough and replace her with someone who is a bit more loyal to all those tedious “rules” questions. The is previous for that.

But Democrats are unlikely to raise the minimum wage in their COVID relief end product. (The House, which is expected to vote on its version of the relief package on Friday, still has a $ 15 minimum wage in its bill.) And as long as a few Democrats pledge to preserve legislative obstruction, Democrats will have to do of the horse – to discuss with the Republicans if they want one day to obtain a (less) increase in the minimum wage. The parliamentarian’s decision may come as a relief to some Democratic senators who were – some publicly, more in private – uncomfortable with a $ 15 minimum wage and its potential reduction of more than a million jobs. The 27 million Americans who were due to see pay increases will be less relieved.