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December 17, 2004



PAUL GIGOT: Welcome to THE JOURNAL EDITORIAL REPORT. We begin with a story we think other people have missed. It was only two weeks ago that President Bush nominated Bernard Kerik to be the next Cabinet Secretary in charge of Homeland Security -- a very important job and a spectacular triumph for the man who started out as a beat cop. At that point Kerik seemed like a slam dunk, a 9/11 hero as police commissioner of New York, friend and colleague of former Mayor Rudolph Giuliani and campaigner for the re-election of President Bush.

Now Kerik is no longer the president's nominee, and he spends much of his time answering questions about his personal past -- social relationships with people said to have ties to organized crime, and alleged misuse of his position of power for personal purposes. There are also questions about how the White House could have missed evidence that Kerik was not squeaky clean before they nominated him.

All of those details overwhelm the discussion of Kerik's original explanation for dropping out: that he had employed a nanny who might have been an illegal immigrant and did not pay appropriate taxes. Some people have suggested that was just an excuse to cover up the other allegations, but what strikes us is the opportunity to focus on something more important than the Kerik case, the immigration laws that penalize workers for traveling many miles from home to improve their lives, and tax laws that set low thresholds for taxes on domestic help. With me to discuss all this are: Melanie Kirkpatrick, associate editor of the editorial page; Jason Riley, senior editorial page writer; and Kim Strassel, also a senior editorial page writer.

Kim, we've seen this nanny stuff derail candidates in the past, a couple from the Clinton years, for example. Why has hiring a nanny suddenly become a capital offense, and does it make any sense?

KIM STRASSEL: Well, the why is for the same reason that most things are capital offenses in this country, which is the tax code.


KIM STRASSEL: But no, it doesn't make any sense. This tax first got rolling back in the 1950s, and every year it increasingly encompasses a lot more Americans that don't know how to deal with its complexity, can't afford its costs, and it makes no sense that they are struggling with this.

PAUL GIGOT: What is a threshold of income?

KIM STRASSEL: Well, back in 1994, after the Zoe Baird thing, Congress reformed this. Which basically meant that 1400 dollars is when it kicks in, which is something you could pay your next door neighbor kid who occasionally babysat for you in the course of a year, much less someone who gave you full-time child care.

But the other issue, too, is the complexity of it. They said that they made it more simple during the reforms, but what they basically did is now you only need one accountant to handle it for you instead of 10 like you did before.

PAUL GIGOT: Zoe Baird was Bill Clinton's nominee to be Attorney General, and she had to withdraw because of the nanny issue as well. A lot of people argue, Jason, that it's an issue for the elites, something that only people on the coasts pay attention to, or people who are wealthy enough to hire nannies. Is that really it? Or is this a much broader phenomenon?

JASON RILEY: I think it's a broader phenomenon. Some people like to catch the elites on this, to make sure that they have to abide by the same laws as everyone else. I think some people enjoy watching them have to go through something like this. There is a point to be made that the law is the law, but a bad law, a law that no one's willing to enforce. A law that everyone winks at might be worth taking another look at. The fact of the matter is, most of the people who come into this country, most of the people who want to come into this country, come here to work. This is a good example of that. They don't come here to do us harm. To the extent that we can provide more legal channels for these people to come through, they will use them. That has the added benefit of shrinking the pool that we have to go through to search for people who do come here to do us harm. So if you're really against illegal immigration, you should be for providing more legal channels for people like this nanny to use. She'd likely use it.

PAUL GIGOT: Melanie?

MELANIE KIRKPATRICK: It's not just rich parents, working couples, who hire nannies. It's middle class people who would, if the tax code made it easier for them, they might hire a nanny rather than send their kids to daycare. And it's also the elderly, who need some help at home. Last year only 239,000 filers paid the nanny tax, a number that has gone down steadily since the late nineties.

PAUL GIGOT: A lot of this goes back to the Simpson-Mazzoli law in 1986, if I can bring up those old names. Two members of Congress who passed a law that basically deputized business to become an arm of the border police, to go after and say, you've got to find out who the illegals are. So it made the employer suddenly responsible -- and that means even individual employers, people who hire them as personal help -- responsible for checking that out.

Now, people don't have the resources to do that. Some people aren't even inclined to try to do that, and it's also illegal if you ask people, based on their ethnicity, by the way, do you have a green card? You can be charged with violating the antidiscrimination laws if you do that. So that people are trapped, coming or going.

KIM STRASSEL: I think a lot of Americans out there, they don't like -- for all the reasons you just said, but they also get angry because this is an inconsistent law as well, too. As you said, they get deputized to look for immigrants who have come and done this. At the same time, they can go get an au pair, a nice 20-year-old woman from a European country who comes over, works for them full-time, gets paid by them, and they don't have to pay any taxes on her because it's a cultural exchange.

JASON RILEY: And it also works against our economy's self interest. These people come here and do jobs in agriculture, in construction, in the service industries at hotels and so forth, that a lot of Americans don't want to do. And so you're putting business, you're putting the economy in trouble when you put in place laws that work against what the economy needs to continue to thrive.

PAUL GIGOT: So there's an element of hypocrisy on all of our parts here, because we need these people, we hire them, we see them working, they help our economic engine going, yet a lot of people say, well wait a minute, we have to enforce our immigration laws more aggressively.

Now let's talk about the immigration reform, Jason, that the president has proposed, because it really does get to the heart of this with its guest worker program.

JASON RILEY: Yes, and there's a nice segue. It's nice to see us talking about illegal immigration in terms of labor law, because I believe that's where the debate belongs. But since 9/11 the talk has been about our leaky borders and how people can come across and do us harm. And that speaks to the point I was saying earlier, which is that to the extent that we can shrink the pool of people we need to search who come here to do us harm, we have a more efficient system.

So the president's guest worker program, which would provide more legal avenues for people to use to come here, is something that would free up our border patrol to chase down the people who come to do us harm, instead of Bernie Kerik's nanny, if she exists..

PAUL GIGOT: So there's a real economic logic to this. But politically, Kim, a lot of -- just as free trade divided Bill Clinton's own supporters in the Democratic Party, immigration proposals the president has made really does divide Republicans. What's their objection?

KIM STRASSEL: Well, they've got nativist crowds back at home that they want to cater to. And you see a lot of Western Republicans in particular from Arizona and a lot of the border states, where there is a strong feeling that immigrants come and take away jobs. And what has been sort of nice about the Kerik debate is the fact that this reminds us that actually there are a huge number of Americans out there who depend on these immigrants for vital services. I mean, what could be more important to you than having someone that you trusted to look after your children? So this is something that I think would be good to remind those Republicans in Congress. And the more they hear from their constituents about that, the better.

PAUL GIGOT: All right, Kim. It sounds like we're going to be talking about this a lot in the coming months. Thank you very much.

Next subject.