The Senate Tuesday approved a Republican measure raising the minimum wage by $1 over three years and cutting business taxes after rejecting a more modest Democratic alternative.
Senators voted 54-44 to increase the $5.15-an-hour minimum wage and for a companion tax cut of $18.4 billion over five years that would be financed by projected budget surpluses.
But President Clinton, in a White House statement, vowed to veto the GOP plan.
"The Senate Republican leadership made a serious mistake by insisting on using a minimum wage increase as a cynical tool to advance special interest tax breaks that aren't paid for and do little to help working families," he said. "I cannot let this bill become law in its current form."
Democrats portrayed the GOP minimum-wage boost as too sluggish and the tax package as tilted toward people who don't need relief.
Labor Secretary Alexis Herman described the Senate action as a "lost opportunity," reports CBS News White House Correspondent Peter Maer.
"We're talking about bringing back the three-martini lunch as a way of paying for this minimum wage," she said.
If the GOP bill becomes law, the minimum wage would rise by 35 cents in March 2000, 35 cents in March 2001 and 30 cents in March 2002. About 11 million workers earn the minimum wage, half of them younger workers under age 24 and many holders of part-time jobs.
Earlier Tuesday, the Senate rejected the Democratic version on a 50-48 vote. It would have raised the minimum wage by $1 over 13 months and provided $9.6 billion in business tax relief without dipping into projected surpluses.
Republicans criticized the Democratic bill on grounds it would raise other taxes and trigger costs on small business that opponents said could force up to 500,000 people from their jobs.
"Our amendment saves small businesses and allows them to grow and prosper,'' said Sen. Pete Domenici, R-N.M.
Republican Sens. James Jeffords of Vermont, Lincoln Chafee of Rhode Island, Arlen Specter of Pennsylvania and Olympia Snowe of Maine joined all Democrats present in support of the Democratic plan.
On the Republican plan, Democratic Sen. Max Cleland of Georgia crossed party lines in favor while GOP Sen. George Voinovich of Ohio voted no.
Ten states and the District of Columbia require minimum wages higher than $5.15 an hour, including a $6.50-an-hour wage paid in Oregon. The other states are Alaska, California, Connecticut, Delaware, Hawaii, Massachusetts, Rhode Island, Vermont and Washington.
Across the Capitol, the House Ways and Means Committee was to consider later Tuesday a GOP bill to raise the minimum wage by $1 over three years and provide up to $30 billion in business tax relief.
The Senate GOP tax package includes a health insurance deduction for people who don't have employer-provided coverage and an immediate 100 percent deduction for the self-employed. It aso increases the business meal deduction from 50 percent to 80 percent and allows higher 401(k) contribution limits and other pension expansions.
The Democratic version included several similar items, adding credits for employer-provided child care, businesses investing in new markets, for wages paid in new empowerment zones and for startup business costs.