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Obama's Treasury Secretary: Tax Rules for Thee, But Not for Me; Update: Link to Senate Finance Cmte Docs Added
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Pssst…did you take care of that problem yet?

They were just honest mistakes, really.

And I’m sure the Obama IRS would be as charitable with you or me as Team Obama is being with Timothy Geithner if we used the same explanation for failing to pay self-employment taxes:

President-elect Barack Obama’s choice to run the Treasury Department and lead the economic rescue effort disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.

Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama’s transition team while investigating Geithner’s background, the official said.

The transition official requested anonymity because the source was not authorized to discuss Geithner’s situation.

Obama reiterated his support Tuesday for Geithner as senators who are considering the appointment quizzed Geithner behind closed doors.

“He’s dedicated his career to our country and served with honor, intelligence and distinction,” incoming White House spokesman Robert Gibbs said. “That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed.”

Geithner failed to pay self-employment taxes for money he earned while working for the International Monetary Fund from 2001 to 2003, the transition official said. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in penalties from 2003 and 2004.

Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.

Oh, wait. There’s more. Geithner somehow overlooked the fact that his immigrant housekeeper’s work authorization papers had expired. Ghost of Zoe Baird:

Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.

Geithner also didn’t realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, the transition official said.

Quick! Pass that amnesty bill now! Or maybe she’s shacked up with Obama’s illegal alien aunt already…


Update: The Senate Finance Committee posted the documents related to Geithner’s “mistakes” here. They show that despite being informed of his tax responsibilities and given an employee tax manual and annual tax allowance request forms, Geithner still failed to pay years of self-employment and FICA taxes.


Update: Well, it turns out that Geithner’s housekeeper got her green card. Nice to have friends in high places.

Allah adds:

Geithner paid his back taxes for 2003 and 2004 when the IRS notified him (in 2006), but not until November 21 of this past year — coincidentally, the very day he was named Treasury appointee — did he pay them for 2001 and 2002. Frankly, I like the idea of a tax cheat as Treasury Secretary in this environment; it makes the thought of him spending trillions of taxpayer dollars on new stimulus bills and bailouts that much sweeter.

Somehow these missteps are supposed to threaten his appointment but not the fact that, as president of the New York Federal Reserve, he oversaw the meltdown on Wall Street.

Ace of Spades: “Wesley Snipes just emailed me to say he too ‘forgot’ to pay his taxes, and would have been reminded to pay them, if only Obama had named him IRS Collector in Chief.”

And a reminder from John Berlau on the more fundamental reasons to balk at a Geithner appointment:

It’s not a case of Geithner being too liberal; there are choices to the Left of Geithner that would not be cause for the specific concerns his nomination raises. Rather, the problem with Geithner is that appointing him appears to be scarcely different from reappointing Treasury Secretary Henry Paulson.

Based on his orchestration of much of this year’s financial bailouts in his current post, Geithner would be “more of the same” of the worst aspects of the Bush administration — more bailouts, more lack of transparency in the bailouts, and more corporate welfare.

As head of the New York Fed, Geithner has been, in The Washington Post’s words “a primary architect of the Bush administration’s response to the financial crisis,” and “has worked closely with [Paulson]to devise responses to the most critical events of the market turmoil.”

Other than organizing bailouts, however, Geithner’s resume is quite thin compared to that of others who have held the office for which he has been nominated. As liberal columnist Robert Kuttner noted recently in TheAmerican Prospect, Geithner “has neither a doctorate in economics nor an M.B.A.”

Also, Geithner has never been a corporate leader, nor an economics professor with a trail of published academic papers. Instead, Geithner’s career has been almost entirely in the bowels of the bureaucracy. He started at the Treasury Department in 1988 as a career civil servant before being appointed under-secretary of the Treasury for international affairs in 1999.

Geithner would not have even been under consideration had he not come to prominence in circumventing rules to arrange the bailout of Bear Stearns’ creditors earlier this year, with $29 billion in backing from U.S taxpayers.

According to accounts from both conservative columnist Robert Novak and the financial magazine Conde Nast Portfolio, Geithner was the main instigator of the bailout, getting Paulson and Fed Chairman Ben Bernanke to sign on to his handiwork.

The Bear deal faced criticism from the Left and Right as both a stretch of the Fed’s power and a precedent that spread “moral hazard,” thus leading to the further bailouts down the line — bailouts that Geithner would be heavily involved in, working hand-in glove with Paulson.

But in addition to the questionable results of bailouts in saving the economy, also troubling has been the Federal Reserve’s lack of openness when it has put taxpayer money on the line, an area where Geithner shares much of the blame.


A recent editorial in The Wall Street Journal noting that “Geithner was the driving force behind the government takeover of insurance giant AIG” also criticized “the New York Fed’s lack of transparency, both about the nature of the ‘systemic risk’ that required the takeover and why it was superior to bankruptcy.”

Geithner’s judgment has also been questioned with recent reports of alleged favoritism toward Citigroup — the financial firm where Geithner’s mentor, former Treasury Secretary Robert Rubin, serves as a director and senior counselor.

According to a Bloomberg News report, Geithner unsuccessfully pushed for Citi to take over troubled banker Wachovia Corp. with government guarantees of billions of dollars, even after Wells Fargo & Co. offered to take over the company at no cost to taxpayers and a higher price for Wachovia shareholders.

(Republished from by permission of author or representative)
• Category: Ideology • Tags: Tim Geithner