Sunday, July 30, 2006

Serious issues: 1) Minimum Wage -- I took advantage of the weekend to get into blogging about sports, but I need to return to serious issues – at least for 24 hours, until the end of the baseball trading deadline. First up is the debate over increasing the minimum wage and the Republicans’ incredibly cynical and underhanded maneuver, tying the proposed increase to their proposal to eliminate the estate tax.

This is pure political blackmail, plain and simple. It doesn’t get any more cynical than this. There is no legitimate connection between the two issues that would make for a legitimate tradeoff. Some Republicans have had the chutzpah to suggest there is a connection, that businesses that will be asked to pay the additional wages will need the assistance of the estate tax break. Of course, businesses do not pay the estate tax. It is tax assessed against the holdings of the recently deceased.

Right now, the estate tax is technically suspended – the estates of anyone dying between now and 2010 will be exempted. If the tax returns to force, as expected after 2010, it would probably be at a level that would apply only to those estates over $3.5 million. With decent tax planning, a married couple could shelter their first $7 million from the estate tax.

Those numbers are important, because they refute the Republicans’ other argument that the tax is devastating for small family businesses passing from one generation to the next. How many family-run small businesses leave much more than $7 million to the kids? I say "much more" than $7 million, because the tax applies only to the excess. So, for a couple’s estate that is worth only a little bit more than $7 million, the tax will be a relatively small tax.

At least, we seem to have moved beyond the Republicans’ gamesmanship in trying to frame the debate by referring to the tax as the “death tax.” Apparently, many Americans came to believe there would be a tax assessed on their death – even though very few Americans are wealthy enough that they need to worry about the estate tax. The curious thing about this is that, several years ago, during the debate preceding the Republicans’ bill to suspend the estate tax, many of the wealthiest Americans (including Bill Gates) came out against the Republican efforts.
So, why are the Republicans pushing to eliminate the estate tax? Well, it will benefit some wealthy families. Many Senators in fact probably do accumulate enough wealth outside of their Congressional salaries to have to worry about the estate tax. I suspect the real motivation is that conservatives have never met a tax they weren’t above criticizing. This is so they can maintain their popular political image as the anti-tax party. The flip-side is this allows them to portray Democrats as the tax and spenders, without any regard to the real merits of the tax, or the level of taxation.

As Republicans have shown there is no limit to their readiness to pander on taxes, the current link to the minimum wage increase raises the question as to whether conservatives are prepared to take any responsible positions regarding increasing the minimum wage for the first time in nine years? Republicans have not been above raising their own Congressional salaries – there is a proposal to raise their salaries for the third time since they have assumed total control of the government in 2001. The increase would bring the average salary to $165,000, up from the 2001 level of $133,000. This is a huge increase -- both in actual numbers, and in percentages – representing nearly a 25% increase, during a period when most Americans have actually seen a decline in their pay.

Make no mistake, the link between the estate tax repeal and the minimum wage increase is completely cynical. Conservatives are hoping that Democrats vote down the bill, both for political reasons and ideological ones. You want proof? Check out this gem of a quote that appeared on CNN yesterday, from Rep. Mike Pence (R-IN): “Many House conservatives are disappointed that we’ll take up an increase in the minimum wage during a time of economic expansion in our country.”

This statement is so stunning, that it bears repeating!!!! Let’s take a look at the replay – Republican Congressman Mike Pence said: “Many House conservatives are disappointed that we’ll take up an increase in the minimum wage during a time of economic expansion in our country.” Well, exactly when would conservatives want to discuss an increase in the minimum wage? Wouldn’t the best time be during economic expansion? This way, workers might be able to share in reaping the rewards of their hard work – hard work which is driving the economic expansion? While the economy is expanding, businesses can afford to absorb the additional labor costs.

Exactly what did Pence mean? Would he prefer to wait until the expansion is over, or wait for a recession, before he would consider increasing the minimum wage? Because when businesses are struggling, what they really want to hear is that the federal government is going to mandate that they start paying more money to their lowest-paid workers, right? Or, is Pence really saying that he would rather the government never consider raising the minimum wage? Perhaps, he’d rather see the minimum wage disappear, along with the estate tax? Then, conservatives could feel that businesses are getting value for their campaign contributions – maybe, then, he’d feel better still about voting for the next Congressional pay increase?

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