Throwing a Sop to the Base

At The Hill former Pennsylvania Ed Rendell proposes some immediate action items for the incoming Biden Administration. They are:

  • An beefed-up COVID-19 relief bill
  • $15/hour minimum wage
  • Reduction in prescription drug costs
  • A major infrastructure bill

In the past I’ve mentioned that it is quite typical for incoming administrations to “throw a sop” to their bases. For incoming Republican presidents that has been cuts in the personal and corporate income taxes. For Democrats it’s been infrastructure spending bills and new or expanded entitlements.

Given the composition of the new Congress, I think that accomplishing any or those let alone all of them will be a tall order. I expect that the most notable effect of a $15/hour minimum wage will be to subsidize increased immigration from Mexico and Central America. Some benefit might go to poor people in rich states. It will mean that the jobs of other people people in those same states will be eliminated.

For Red states where wages tend to be lower from a political standpoint it will be roughly equivalent to reducing the state and local tax deduction for Blue states so I expect it will receive substantial support from Democrats in the House. Don’t expect it to receive a lot of Republican support in the Senate.

0 comments… add one

Leave a Comment