WASHINGTON - Democrats' promise of a quick increase in the minimum wage ran aground yesterday in the Senate, where lawmakers are insisting it include new tax breaks for restaurants and other businesses that rely on low-pay workers.

On a 54-43 vote, Democrats lost an effort to advance a House-passed bill that would lift the pay floor from $5.15 to $7.25 an hour without any accompanying tax cut. Opponents of the tax cut needed 60 votes to prevail.

The vote sent a message to House Democrats and liberals in the Senate that only a hybrid tax and minimum-wage package could succeed in the Senate. But any tax breaks in the bill would put the Senate on a collision course with the House, which is required by the Constitution to initiate tax measures.

In a separate vote, the Senate also effectively killed a modified line-item-veto bill. The Republican-inspired measure would have permitted a president to pluck individual items out of spending bills and submit them to Congress for a vote.

Raising the minimum wage is one of the Democrats' top priorities in the new Congress. The wage floor has been unchanged for 10 years. The bill would raise it to $7.25 in three steps over 26 months.

"Why can't we do just one thing for minimum-wage workers, no strings attached, no giveaways for the powerful?" asked Sen. Edward M. Kennedy (D, Mass.), a leading sponsor of the bill.

The House passed the increase two weeks ago. Since then, Speaker Nancy Pelosi (D., Calif.) and Rep. Charles B. Rangel (D., N.Y.), chairman of the tax-writing Ways and Means Committee, have prodded the Senate to keep tax proposals out of the bill.

Senate Majority Leader Harry Reid (D., Nev.) scheduled yesterday's vote to demonstrate the Democrats' lack of Republican support for a straight minimum-wage bill without tax cuts. Every Democrat present voted to end debate, and five moderate Republicans, including Pennsylvania Sen. Arlen Specter, joined them. Sen. Thomas Carper (D., Del.) did not vote.

"There seems to be agreement to raise the minimum wage," said Sen. Michael Enzi (R., Wyo.). "The difficulty has been, how do we take care of some of the impact to small businesses that will result from this?"

Reid is backing an $8.3 billion package that would extend for five years a tax credit for employers who hire low-income or disadvantaged workers. It also extends until 2010 tax rules that let businesses combine as much as $112,000 in expenses into one annual tax deduction.

The proposal's cost would be paid with revenue realized from a proposed cap of $1 million on executive compensation that can be tax-deferred. The tax package also would end deductions for court settlements or punitive damages paid by companies that have been sued.

A vote on the full tax and wages package is not expected until early next week.

The differences between the House and Senate bills will require Pelosi and Reid to agree on how to move a similar tax package through the House.

5 Delegates Get a Limited Vote

Democrats yesterday pushed through a rules change giving limited voting

rights on the House

floor to the chamber's

five nonstate delegates. Republicans called the

move an unconstitutional power grab.

With the 226-191 vote, delegates representing

the District of Columbia, Puerto Rico, Guam,

the Virgin Islands and American Samoa may

cast ballots on amendments. They will not be allowed to vote on final passage of legislation. If their votes decide the outcome of an amendment, the House will immediately vote again without the delegates' participation.

"This is symbolic. The delegates know it," said House Majority Leader

Steny H. Hoyer (D., Md.). "But it is an opportunity for them to participate."

Democrats imposed the rule the last time they were in power, from 1993 to 1995.

Republicans, who in 1993

sued unsuccessfully to overturn the rule, said they were ready to pursue the issue this time to the Supreme Court. They also contended that giving votes to delegates, who have traditionally been Democrats, was a way to pad victory margins on votes.

- Associated Press

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