Buying votes with pocketbook issues


Congress is spending its last working days before a long summer break by attending to pocketbook issues, with votes to increase the minimum wage, cut estate taxes and shore up pensions.

The hope is to grab voters’ attention as lawmakers set out campaigning though August, leading to a fall election with control of Congress at stake.

Part of that campaigning is likely to focus on the bill linking the fates of the minimum wage increase and the estate tax reductions. The GOP-controlled House tied the minimum wage and estate tax measures, leading opponents to protest that Republicans had passed a minimum wage increase that is doomed to fail in the Senate.

Whether any of the initiatives becomes more than fodder for speeches depends on the Senate, still at work for an extra week after the House left for their five-week break through Labor Day.

A bill passed by the House that overhauls pension laws stands the best chance of getting to President Bush. Supporters said the measure would strengthen plans that cover 44 million people and they expect the Senate to pass it this coming week.

In the works for years, the legislation is particularly urgent for several airlines that have threatened to terminate their pension plans. The bill gives these carriers special repayment terms.

In addition, employers that have fallen behind in their defined-benefit pension payments would have to catch up within seven years. The bill also would close loopholes that have allowed companies to underfund their plans by an estimated $450 billion.

Less certain of passing is a separate bill that combines an increase in the federal minimum wage with a tax cut on multimillion-dollar estates.

"Whether or not those votes are there, I don’t think the senators know until they put it on the floor," said Rep. Jeff Flake, R-Ariz.

The House finished up its work early Saturday by passing the measure on pensions as well as the bill including the minimum wage increase and estate tax cuts.

GOP House leaders assembled the package in an effort to deprive Democrats of a major campaign issue — Congress last voted a minimum wage increase in 1996 — while also advancing a chief Republican priority of cutting the estate tax, which Senate Democrats have bottled up.

For Democratic senators, the bill offers the uneasy choice of accepting an estate tax cut or rejecting a minimum wage increase. Senate Democratic leader Harry Reid of Nevada said the combination makes the estate tax no more acceptable and he pledged to kill it.

"If the Republicans were serious about raising the minimum wage for the first time in nearly 10 years and extending tax relief for working Americans, they would not hold them hostage in their effort to give the wealthiest Americans hundreds of billions more in additional tax giveaways," he said.

The bill would:

  • increase the minimum wage from $5.15 to $7.25 an hour, phased in over three years.
  • lower estate taxes by exempting $5 million of an individual’s estate, and $10 million of a couple’s, from estate taxes by 2015.
  • tax estates worth up to $25 million at capital gains rates, currently 15 percent and scheduled to rise to 20 percent.
  • trim rates on the remainder of larger estates to 30 percent by 2015.

As an added inducement, the $310 billion worth of tax reductions revives some expired cuts that are popular with politicians and the public, including deductions for sales taxes and college tuition.

The pension bill ran into less opposition, through some Democrats complained it did too little to prevent employers from withdrawing their pension plans and favored some industries at the expense of others.

For example, Northwest Airlines Corp. and Delta Air Lines, which have frozen their pension plans, would get an extra 10 years to meet pension obligations. American and Continental, the only two major carriers with active defined benefit plans, would get an additional three years.

Lawmakers fear the airlines could otherwise abandon their plans and add billions to the deficit of the agency that takes over benefit payments for terminated plans, ultimately burdening taxpayers.

The bill would give legal certainty to cash balance plans created in future years. Companies using such plans have faced lawsuits contending the plans discriminate against older workers.

Copyright © 2006 The Associated Press