President Talks Tough On Minimum Wage

A $1 increase in the minimum wage may fall victim to election year politics as Congress and the president go toe-to-toe over tax cuts Democrats say favor the rich.

CBS News Correspondent Diana Olick reports President Clinton threatens to veto the $1 increase in the $5.15-an-hour minimum wage over two years that House Republicans linked to a 10-year, $122 billion tax cut.

The president says, "This bill repeals key overtime protections, could reduce pension coverage for many families, and includes risky tax giveaways that threaten our prosperity and the future of Social Security and Medicare."

The Senate has passed a three-year $1 increase in the minimum wage and its own tax package of $103 billion in cuts over 10 years.

Differences in the Senate and House measures will have to be worked out before a bill is sent to the president.

For workers like Michael Rucker, the boost in the minimum wage meant a raise of $2,000 a year. It's money he needed.

"I tell you what it's like," Rucker told CBS News. "It's not knowing what you're gonna be able to pay for—if you're gonna be able to pay for groceries this week, take out for the rent this week."

Clinton accused the GOP of catering to rich constituents.

"I think the American people question why Congress can't do something as simple as raising the minimum wage without loading it up with special favors," the president said. "The right answer is to send me a clean bill."

Costing $78.6 billion over 10 years, the tax cuts have been portrayed by Democrats as a giveaway primarily for people with incomes over $319,000 a year.

Republicans, however, contended the tax package would offset the costs to business of raising the minimum wage, which many in the GOP view as a job-killer and hindrance to new investment or expansion.

"Do we really wish to leave the owners of small computer firms, restaurants, and mom pop stores hanging out on limbo where we shove them off alone?," Rep. Rick Lazio, R-N.Y., asked during the floor debate. "I think not, Mr. Speaker."

Many Democrats said the increase was long past due, noting that average pay for corporate chief executive officers has risen some 750 percent since 1980, compared to only 68 percent for the average worker. About four million workers are paid the minimum wage.

"Even the modest $1 increase we are debating today is not enough," said Rep. Donald Payne, D-N.J. The $6.15 wage authorized by the bill annualizes to $12,792.

Indeed, workers in many American cities are undertaking campaigns for higher "living wages."

Rucker, however, simply expressed frustration with Washington politicians.

"They give you a promise," he said. "They didn't keep it and they say its okay."

The measure calls for a 50-cent increase in the minimum wage in April of this year, followed by another 50 cents in April 2001. It is unlkely, however, that the legislation will become law by April and there has been no talk of making it retroactive.

Mr. Clinton says a higher minimum wage encourages people to move from welfare to work, and lures people who were not looking for jobs into the labor force.

The tax package also would gradually boost 401(k) contribution limits and make other pension changes; make health insurance premiums fully tax deductible for the self-employed sooner than under current law; increase the amount of business meals that can be deducted; and enact other tax breaks for small business.

The bill was passed by the House Thursday night, after two days of intense negotiations between GOP leaders and Republican conservatives who threatened to delay the bill over their desire to allow states to choose whether to implement the wage increase. The measure had already been delayed once from last fall.

More from CBS News