Saturday, July 29, 2006

Smart Package From Republicans

The House of Representatives have now passed ( with a majority of 230 to 180) an increase in the minimum wage from the current $5.15 to $7.25 in 2009, along with a estate tax cut.

Really smart move to mix the minimum wage issue with the estate tax cut from the Republicans. It is not clear yet that this package will pass the Senate as well, but it clearly increases the chance of a estate tax cut getting passed.

The Democrats are furious over this hybrid bill, which is understandable. If the House bill gets passed in the Senate, the Republicans will get the estate tax cut through, while depriving the Democrats of using the minimum wage issue as a rallying cry. That is why the Democratic leaders oppose this, and it remains to be seen whether this Republican tactic will prove to be successful, but if it is, it will be an example of smart leadership from the Republican leaders.

A higher minimum wage is of course a bad thing, but considering that inflation has eroded the value of the dollar so much -and will continue to erode it until 2009- that such a hike won't do much damage (it will in real terms remain well below historical peaks and the level in most European countries). So, it might even be worth it from a libertarian point of view too, and not just from a Republican tactical point of view.


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