Deal possible in Congress on minimum wage increase

WASHINGTON (AP) -- Signs of compromise have emerged for a bill to raise the minimum wage by $1 over two years, now that House Speaker Dennis Hastert proposed to move the legislation without two key tax cut proposals that drew objections from President Clinton.

Senior White House officials and Democratic congressional leaders said Monday that Hastert's offer could represent a breakthrough in long-stalled negotiations on size and speed of a minimum wage increase and the composition of an accompanying package of tax breaks for business.

"We will study Speaker Hastert's offer and hope to work with the GOP, which now seems possible for the first time, to produce a bill that is in the best interest of working Americans," said House Minority Leader Dick Gephardt, D-Mo.

Hastert, R-Ill., said in a letter to Clinton that Republicans still wanted a $76 billion package of business tax breaks paired with the wage measure. But they would remove proposals to abolish the estate tax and to change pension laws, including increased contribution limits for 401(k) plans. Both are subjects of separate bills moving on their own.

Democrats have long sought in these prosperous economic times to increase the $5.15-an-hour federal minimum wage, but Republicans say tax breaks are needed to cushion the higher costs that would fall on businesses.

"It is very clear that a vast majority of congressional Democrats and Republicans would like to see a balanced approach achieved before we adjourn," Hastert said in the letter to Clinton. "I believe that we can work together to pass this legislation when we return in September with strong bipartisan majorities in the House and Senate."

According to Clinton administration estimates, about 10 million workers earning between $5.15 and $6.14 an hour would be directly helped by a $1 minimum wage increase. Under Hastert's proposal, the minimum wage would rise to $6.15 an hour over two years: 50 cents on Jan. 1 and 50 cents on Jan. 1, 2002. The proposal would provide business tax breaks worth $76 billion over 10 years, down from $122.7 billion in an earlier House version of the bill.

The tax package includes:

--Immediate 100 percent health insurance premium deductibility for the self-employed, sooner than under current law. Individuals could deduct from their taxes 100 percent of health expenses without itemizing, if they are not covered by an employer or government plan or by Medicare.

--Repealing excise taxes on producers and marketers of distilled spirits, wine and beer.

--Raising the business meal deduction from 50 percent to 80 percent; increasing the amount of business equipment eligible for an expensing tax write-off from $19,000 to $35,000; providing tax credits for timber companies' reforestation costs; and restoring a law allowing a business seller to pay taxes in installments rather than requiring a lump sum.

--Extending through 2004 the Work Opportunity Tax Credit, given to employers that hire certain disadvantaged workers.

The speaker's plan would also make changes in several workplace regulations: updating exemptions for computer professionals, changing employer rules for workers who receive tips, equalizing rules.