House Democrats to vote on $1.9 trillion stimulus plan with minimum-wage hike in jeopardy

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• House Democrats were set to vote later on Friday on a $1.9 trillion stimulus plan.
• Democrats scrambled to rescue a $15 minimum wage provision struck from the package late on Thursday.
• Several Democrats say they support imposing a tax penalty on large corporations that don't pay workers $15 an hour.

House Democrats were on course to vote on President Joe Biden's $1.9 trillion stimulus package later on Friday as lawmakers rushed to rescue a key progressive priority from being left out of the legislation.

The Senate parliamentarian ruled on Thursday evening that the $15 minimum wage should be removed from the legislation because it did not comply with strict budgetary rules. The decision imperiled a wage hike that's been championed by Sen. Bernie Sanders of Vermont along with other progressives.

Speaker Nancy Pelosi said in a statement that the wage measure would remain in the legislation set to clear the House in a party-line vote and go onto the Senate.

"Democrats in the House are determined to pursue every possible path in the fight for 15," Pelosi said on Thursday.

The House Rules Committee took up the legislation and is expected to wrap up its hearing sometime in the afternoon. A floor vote will occur in the evening.

Plan B gathers momentum

Several senior Democrats are attempting to gather support for a proposal to levy taxes on corporations as a sort of plan B to the minimum-wage provision. A senior Democratic aide told Insider that Senate Majority Leader Chuck Schumer was weighing whether to support a provision to tax large corporations that do not pay their workers $15 hourly.

Sanders said on Thursday that Democrats were drafting a proposal, and Sen. Ron Wyden said he would unveil a plan to levy a 5% tax penalty on large businesses who do not pay workers at least $15 an hour. It would be tied to incentives for small businesses, setting up a tax credit equivalent to 25% of wages capped at $10,000 annually per employer.

"I'm committed to getting American workers a raise and will not let Senate procedure stand in the way," another senator, Sherrod Brown of Ohio, said in a statement to Insider. "I've said for years that taxpayers shouldn't be subsidizing megacorporations that pay poverty wages."

"It's a sticks-and-carrots approach," Ernie Tedeschi, a former Treasury Department economist in the Obama administration, told Insider. "You're targeting the sticks at very large businesses and you have some carrots at small businesses, giving them tax credits if they raise wages."

But Tedeschi expressed concern that the tax hike may speed up domestic outsourcing among large businesses that already tend to favor cost-cutting. Wyden said the plan includes a safeguard to keep companies from outsourcing jobs, but the size of the tax penalty could influence their decision to evade the rule.

"Large firms for certain aspects, like security and cleaning, will outsource those duties to a subcontractor," he said. "That's already been motivated by labor cost concerns. Now if for large corporations, you have a provision like this, does this just further accelerate that?"

Rep. Richard Neal, chair of the tax-writing House Ways and Means Committee, was noncommittal on the proposal in speaking to reporters on Thursday.