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(Bloomberg) -- Prospects for using President Joe Biden's $1.9 trillion Covid-relief bill as a vehicle for raising the U.S. minimum wage to $15 per hour took a possibly fatal blow on Thursday, when a Senate official ruled that Democrats cannot use a fast-track budget procedure to make the change.
Senate parliamentarian Elizabeth MacDonough has found that the wage provision does not have a sufficient fiscal impact in relation to its effect on the economy to qualify for budget reconciliation, according to a person familiar with the decision, who spoke on condition of anonymity.
That means Democrats will almost certainly have to remove it from the Covid-19 relief bill. The move set off a firestorm of reactions, with progressives calling on party leaders to set the ruling aside and proceed apace. Moving a standalone wage-hike bill would prove challenging, given broad Republican opposition and the likely need for 10 GOP votes in the Senate.
"We are deeply disappointed in this decision," Senate Majority Leader Chuck Schumer said in a statement. "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."
The battle isn't over, according to Senate Budget Committee Chairman Bernie Sanders. He pledged to seek an amendment to the bill that could make the wage hike a more explicitly fiscal measure inside the reconciliation process and may have the potential to garner enough support.
"In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don't pay workers at least $15 an hour -- and to provide small businesses with the incentives they need to raise wages," Sanders said Thursday night. "That amendment must be included in this reconciliation bill."
Senate Finance Committee Chairman Ron Wyden of Oregon held out a similar proposal, saying in a statement that he's "looking at a tax penalty for mega-corporations that refuse to pay a living wage."
The parliamentarian's ruling on the application of the so-called Byrd rule can be overturned with 50 votes, but West Virginia Senator Joe Manchin, a moderate Democrat, has already said he would not supply the key vote to do so.
Harris's Authority
Progressives have referred the parliamentarian's power as advisory only. Representative Ro Khanna tweeted that Vice President Kamala Harris, who presides over the Senate, "needs to disregard and rule a $15 minimum wage in order."
The White House has ruled out such a scenario, however.
"That's certainly not something we would do," White House Chief of Staff Ron Klain said on MSNBC Wednesday when asked about the potential for Harris to override the parliamentarian. "We're going to honor the rules of the Senate and work within that system to get this bill passed."
Even if the vice president did try to overrule the decision, she'd run into the obstacle of needing enough senators to agree to with her, which seems unlikely, a White House official said.
For his part, Democratic Senator Brian Schatz of Hawaii tweeted that the Senate's filibuster rule -- requiring 60 votes to cut off debate for most legislation -- should be abandoned. That would allow Democrats to pursue the Covid-19 aid bill without the worry of reconciliation requirements.
South Carolina Senator Lindsey Graham, the top Republican on the Budget Committee, said the decision reinforces the principle that "reconciliation cannot be used as a vehicle to pass major legislative change -- by either party -- on a simple majority vote."
"This decision will, over time, reinforce the traditions of the Senate," Graham said n a statement.
Varying Proposals
For Schumer, the ruling is both a setback and a potential benefit -- from the perspective of moving swiftly on the pandemic-relief bill. Had the parliamentarian approved the minimum-wage hike's inclusion, he'd have had to assemble 50 votes for the measure. But moderate Democrats had indicated they wanted changes to the House version -- which set a phased increase from $7.25 an hour to $15 an hour in 2025.
The House is poised to pass the $1.9 trillion stimulus on Friday, and congressional leaders have pledged to send the bill to the White House by March 14.
Manchin said this week that he could back an $11 an hour minimum, phased in over two years, and then indexed to inflation. Before the parliamentarian's ruling on Thursday, he said a compromise might be found. "There are a lot of things we can do," he said.
Arizona Senator Kyrsten Sinema has also expressed opposition to a $15 wage, but hadn't outlined what she would support. Montana Senator Jon Tester said that he's in favor of a different phase-in for the higher wage, but thinks a compromise can be found.
Biden, a 36-year veteran of the Senate, recognized that the minimum wage might not qualify under the chamber's rules, and earlier this month urged that a standalone bill be sent to him in that case.
(Updates with additional lawmaker reaction starting in fifth paragraph.)
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