Belfast Telegraph

Sunday 20 April 2014

US Notebook: Tea Party still able to throw its spanner in the works

Opposes rise: Senator Ted Cruz

Now that the two-week-plus Tea Party tantrum in Congress is over and America is an estimated $24bn (£14.8bn) poorer for all the lost economic activity, the dreaded deficit and debt-ceiling debacle has been parked.

But Congress's theatre of the absurd could return in January, the deadline for a bi-partisan committee of Democrats and Republicans to hammer out an agreed way to tackle deficit-debt devils via spending cuts and tax reforms.

Given that re-runs of the same Capitol Hill brinksmanship have been playing for the last three years and hundreds of members of Congress are up for re-election in 13 months' time, the likelihood of a 'Grand Bargain', settling all the issues once and for all, isn't good. More likely is that a half-way house deal will eventually be sealed and it'll include substantial cuts to the social safety net government assistance programs that keep the poor from being poorer.

According to a study by the University of California at Berkeley, since the US officially emerged from recession in June 2009, 95% of economic gains have gone to the wealthiest 1% of Americans.

One of Obama's proposals for helping those at the bottom of the income ladder is to raise the federal hourly minimum wage to $9 (£5.55), from its current $7.25.

In late August, thousands of fast-food employees, whose industry is dominated by minimum-waged workers, staged a series of daylong strikes and walkouts calling for a $15 (£9.25) hourly wage.

Last week, two studies were released highlighting the depth of their plight – and just how much corporations like McDonald's have benefited from it.

Labour economists at the University of Illinois and the University of California found that more than half of the families of fast-food workers are paid so poorly they are forced to rely on government aid – medical and food assistance – to survive. The cost to taxpayers is an estimated $7bn (£4.3bn) each year.

That $7bn figure is all the more interesting, given that another study has found that the 10 biggest fast-food chains in the US – including the likes of McDonald's, Pizza Hut and Dunkin Donuts – posted $7.2bn (£4.4bn) in profits last year. Collectively, they paid their 10 CEOs nearly $60m (£37m) in compensation.

The National Employment Law Project study also found that McDonald's – whose CEO, Donald Thompson, took in a combined $19.2m (£11.85m) in salary and stock benefits last year – cost US taxpayers the most. Its employees needed $1.2bn (£741m) in assistance last year.

On the whole Republicans have generally opposed hikes to the minimum wage ever since it was established in 1938 as part of Franklin Delano Roosevelt's New Deal programmes.

A recent Pew/USA Today poll showed that two thirds of Americans support raising the minimum wage to $9. Polls have also shown that Republicans took the lion's share of the blame in the public's eye for the government shutdown debacle. That's more bad news for a party that continues to come up short in wooing the major voting constituencies of blacks, Latinos, and women.

So, it would seem sensible that cooler heads within the Republican Party wouldn't want to alienate the working poor by dashing their dreams of a living wage.

But Ted Cruz, the Texas senator who's the Tea Party's main mouthpiece in Congress, is vehemently opposed to a rise.

And, as recent events have shown, in spite of being a minority within the GOP, the Tea Party can still drag the party in places it doesn't want to go.