• With: Kim Strassel, James Freeman, Dan Henninger, Mary Kissel

    GIGOT: 37.8 percent, which is unbelievable.

    FREEMAN: It's going to hit them very hard. This is relevant, politically obviously, but the claim is that this is going to speak to our moral values. But the moral value is to let people work.

    GIGOT: Kim, the other thing that may be at play here, are the red state Democrats, how -- who are going to run for reelection in 2014, for the House and Senate. They may not have that same liberal majority in their districts. How are they going to be cross-pressured by this agenda?

    STRASSEL: Well, this is what Republicans need to do because, as Dan said, Obama's great strength has been disconnecting himself from this Congress. And Republicans let him do it. They have allowed themselves to be painted as the only force in town, when, in fact, it is the president who runs to the White House and the Senate. If he's going to put the agenda forward, the object should be to make the Senate go first on this, and then we'll see how many of the president's own members of his own party actually agree with some of these proposals.

    GIGOT: OK, Kim, thank you.

    When we come back, Jack Lew's Cayman Island investment. President Obama once called it a notorious tax scam. And Mitt Romney paid a political price for his accounts there. But will Jack Lew?


    GIGOT: Jack Lew, President Obama's pick for treasury secretary, faced questions on Capitol Hill this week about his tenure as a top executive at Citigroup, the too-big-to-fail bank that received a $45 billion taxpayer bailout. Members of the Senate Finance Committee pressed the former White House chief of staff about an almost $1 million bonus he took home from Citi in early 2009, as well as his investment in a venture capital fund registered in the Cayman Islands.


    UNIDENTIFIED SENATOR: Why is the investment in the Cayman Islands?

    JACK LEW, TREASURY SECRETARY NOMINEE: Senator, I actually don't know why it was organized. I was not involved in setting up the fund.

    UNIDENTIFIED SENATOR: Did you pay taxes on that investment?

    LEW: I reported all income related to the investment on my tax forms. I paid all of my taxes.

    UNIDENTIFIED SENATOR: Explain why it would be morally acceptable to take close to a million dollars out of a company that was functionally insolvent and about to receive a billion dollars of taxpayers' support.

    LEW: Senator, in 2008, I was an employee in the private sector, compensated in a manner consistent with other people who did the kind of work that I did in the industry.


    GIGOT: We're back with Dan Henninger and James Freeman. And Wall Street Journal editorial board member, Mary Kissel, also joins the panel.

    So, James, what did we learn about his tenure at Citigroup?

    FREEMAN: Almost nothing.


    It's amazing. He wasn't involved in that. Didn't have an opinion of that. He was running -- he was Chief operating officer. He was running two troubled divisions at Citi before and during the crisis, overseeing a lot of important stuff, the financing of these divisions, the legal, et cetera. But I think it's -- basically, from what we saw, he didn't really know or care about much of anything that's going on there. And I think --


    GIGOT: Was this the confirmation strategy? Just do the Sergeant Schultz, "I know nothing"? He knows he's going to be confirmed.

    FREEMAN: But in all of the employees at Citi had as little interest in their jobs as he apparently did, that bank could run into real trouble.


    GIGOT: And it did.

    MARY KISSEL, EDITORIAL BOARD MEMBER: There was a particularly troubling back and forth where he was asked about big banks and their funding advantages. And he didn't seem to --


    GIGOT: Because they have an implicit government guarantee --

    KISSEL: Government guarantee --

    GIGOT: They often can borrow more cheaply than smaller community banks.

    KISSEL: He looked rather confused.

    HENNINGER: As appalling as this is, it's a piece with Chuck Hagel. They are a big deal. But the big problem is that --

    GIGOT: Nominee for defense secretary.

    HENNINGER: The nominee for defense. The big problem is that the president of the United States has chosen to nominate two such people into arguably the two most important cabinet positions in the country. It reflects very badly on the president.

    GIGOT: But should we care about the Cayman Islands investment. It was put together for him by Citigroup, OK, so this was part of his compensation? He said to the Congress this week, look, if the Congress wanted to ban this sort of thing, it could have. So everything I did was perfectly legal. So are we just being unfair to the guy on this?

    KISSEL: No. I don't really care so much about the Cayman issue. If we cared about people putting their money offshore, we'd simplify the U.S. tax structure and encourage them to bring that money back to the United States.

    I think the morally questionable decision was the time at Citigroup, taking that bonus, which, by the way, was over a pretty hefty base pay salary, too, at a time when the bank was being bailed out.

    GIGOT: James?

    FREEMAN: Well, I think the --