Clips: 2006 12 21 WSJ

Minimum-Wage Deal as Bellwether
President's Effort to Exact Concessions on Capitol Hill Could Set Tenor for Session

By John D. McKinnon
December 21, 2006; Page A2

WASHINGTON -- President Bush signaled support for raising the federal minimum wage, suggesting the White House is looking for an early deal with Democrats on one of their priorities next year.

Still, Mr. Bush's insistence on tax breaks and regulatory relief for small business sets up a test that could determine the tenor of relations between the White House and Congress's new leaders for the rest of his term.

Incoming Speaker Nancy Pelosi and House Democrats plan to pass an increase in the minimum wage in their first 100 hours of work next year. Other priorities include repealing tax breaks for big oil companies, allowing Medicare to negotiate with drug companies for lower prices and cutting interest rates on student loans.

Democrats hope to build enough momentum to move the provisions through the Senate and force Mr. Bush to accept them as they are. A coalition called "Change America Now," involving about 40 liberal and labor groups, is organizing support this week for passing the measures in the 100-hour package into law.

It is unlikely any of those measures will become law without concessions to Republicans, however. The federal minimum wage, now $5.15 an hour, last was raised in 1997 and its purchasing power has eroded. Democrats and some Republicans have pushed for years to raise it, and Democrats' sweep in the midterm elections significantly increased prospects for doing this. Yesterday, Mr. Bush gave the effort another boost, saying he is willing to sign legislation gradually raising the minimum wage to $7.25 an hour.

"I support the proposed $2.10 increase in the minimum wage over a two-year period," Mr. Bush told reporters at a year-end news conference, calling it an "area where we can work together" with Democratic leaders. At another point, he said that along with education, it is a "key" area where "we've got to work together" with Democrats.

Mr. Bush's comments were his strongest to date in support of a minimum-wage increase, but he also signaled he will expect concessions for business.

"I believe we should do it in a way that does not punish the millions of small businesses that are creating most of the new jobs in our country. So I support pairing it with targeted tax and regulatory relief to help these small businesses stay competitive and help keep our economy growing." He didn't provide specifics about the tax and regulatory breaks that he will seek.

Sen. Edward Kennedy (D., Mass.), incoming chairman of the Senate labor committee and the minimum-wage increase's lead sponsor, was cautious in his praise for Mr. Bush's announcement, noting that "we can't slow down this important legislation with other priorities unrelated to the minimum wage."

Rep. George Miller (D., Calif.), who will head the House Education and the Workforce Committee, also opposed the conditions Mr. Bush wants to attach. "A minimum-wage increase should not and need not be conditional on other legislation or policy changes," he said in a statement.

The House Republican leader, John Boehner of Ohio, was more supportive. "It's important for Congress to ensure a minimum-wage mandate does not have a harmful effect on small employers' ability to create jobs," he said.

Mr. Boehner challenged Democrats to allow Republicans to offer similar legislation on the floor. Democrats have promised not to block debate as strictly as Republicans did when they were in charge.

Past efforts to raise the minimum wage have collapsed over Republican demands for concessions. This year, Republicans tried unsuccessfully to link the minimum wage to a deal to extend relief from the estate tax. It is being gradually eliminated under Mr. Bush's 2001 tax cuts, but returns after the breaks expire.

Mr. Bush's demands for tax and regulatory relief for small business -- as yet relatively undefined -- appear to stand a better chance of drawing Democratic support.

Mr. Bush said he and the Democratic Congress can accomplish a lot working together in the final two years of his presidency. "The truth is the American people are sick of partisanship," he said. He promised to "do my part to elevate the tone."

Write to John D. McKinnon at john.mckinnon@wsj.com