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Senate Deal Hikes Minimum Wage Plan Clears Way For Gas-Tax Cut, Tax Breaks For Small Businesses

After weeks of false starts and partisan bickering, Senate leaders of both parties sealed a deal Tuesday to vote on a minimum wage increase and some new tax breaks for small businesses.

The agreement makes it likely that an increase in the minimum wage - from $4.25 an hour to $5.15 an hour - will become law.

The deal also calls for a separate vote to make several labor law changes that have been fiercely resisted by the AFL-CIO and other union groups.

Senate Majority Leader Trent Lott, R-Miss., said about the agreement: “I’m sure there are members on both sides of the aisle who are not very happy about it, but it will allow us to begin to move forward” on deadlocked legislation.

In addition to action on those measures, the agreement could clear the way for a vote, sometime later in July, on a bill to repeal the 4.3 cent-a-gallon gasoline tax that was imposed in 1993 as part of President Clinton’s deficit-reduction package.

“This is a real breakthrough,” said Senate Minority Leader Tom Daschle, D-S.D., who had threatened to keep bringing up the minimum wage hike as an amendment to every piece of legislation on the Senate calendar until Republican opponents relented and permitted a free and clear vote.

As it stands now, the bill would raise the minimum wage by 90 cents an hour, to $5.15, in two steps. The wage would rise by 50 cents an hour this summer and by another 40 cents in mid-1997.

Because Lott knew the proposal probably would pass if it came up for a vote, he had been resorting to all kinds of parliamentary acrobatics to prevent that from happening. In the process, the legislative gears had practically ground to a halt in the Senate.

Although the wage increase passed the House by a comfortable margin in late May and enjoyed strong support in public opinion polls, most business groups remained stoutly opposed to it. It also got tangled in the politics of the presidential election while former Senate Majority Leader Bob Dole, R-Kan., who opposed the hike, was still in charge.

After Dole resigned earlier this month, the newly installed Lott began reaching out to Democrats.

The Senate will vote on the bill the week of July 8, Lott said. The wage bill will be combined with a package of tax breaks for small businesses.

The package includes dozens of new deductions and other tax relief, including bigger write-offs for new equipment, a restoration of tax credits for hiring certain disadvantaged workers and new rules to promote tax-deferred employee retirement plans and simplify the management of company pension plans.

The labor law changes, which the president opposes, will be brought up as a separate bill. This means that, if it passes on a party-line vote, Clinton is likely to veto it.

On the gas tax repeal, Daschle made clear Tuesday afternoon that under the agreement he had the option of stopping it dead if Republicans modified the minimum wage bill in a way that was unacceptable to the president.

“If we’re not satisfied with the (minimum wage) bill that is sent to the president, the gas tax won’t come up for a vote,” Daschle said.

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