Small Business People Can’t Cut the Corners That Zoe Baird Did : Cabinet: Drop nominee or risk dooming Clinton programs.

As a strong supporter of the broad social and economic agenda outlined by Bill Clinton, I am disturbed by attorney-general-designate Zoe Baird’s employment of illegal labor and failure to make mandatory employer contributions to Social Security.

The cavalier attitude displayed by the Clinton transition team toward Baird’s actions indicates that there is little appreciation for the fact that at least in part, universal health care, employee training and European-style apprenticeship programs are likely to be funded by the same type of taxes that Baird evaded--and that most small-business people and wealthy households have the same ability to cheat with impunity that she enjoyed.

Over the past three years, I have been involved in establishing a business that has about 30 employees. We have the option to hire illegal labor, or pay employees and vendors under the table and reduce our costs and liability. A firm that obeys the rules can be rewarded with frivolous workers compensation claims, or see its unemployment insurance funds drained by workers who are officially unemployed but who can find an unreported job.

We have had many workers--American and others with proper documentation--urge us not to withhold and report their earnings. When we refuse, we have seen them employed by our competitors who flout the law, confident that there is little chance of enforcement. Many times they have taken our business because of the significant cost advantage they enjoy.

I studied economics and policy analysis with the best of them, and was a fairly senior manager at some of America’s largest corporations. But in some ways I have learned more through my brief experience with small business about how the war on the deficit must be fought.

It might have been difficult for Baird to find a nanny at $250 per week and comply with the law. But thousands of businesses face potential bankruptcy every time authorities implement policy through an increase in sales taxes and matching employer contributions. Small business now contributes nearly 60% percent to gross domestic product, and the failure of this sector to make the sacrifices required by the new Administration’s agenda might doom it from the start.

Of perhaps greater concern than the nonchalance displayed by the Clinton team is the likely embarrassment that the future chief lawyer of the land will testify before Congress that she did not understand the laws complied with, and sacrifices made, every day by the smallest grocers in the Bronx and South-Central Los Angeles.

She is either incompetent or willing to perjure herself. In either case, given her explanations, her nomination should be withdrawn. If not, her presence in the Cabinet is sure to be exploited by those opposed to the stern medicine required by worthwhile programs on Clinton’s agenda.