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Wag the Blog: The Geithner Dilemma

Does Timothy Geithner's issue with back taxes disqualify him from serving as treasury secretary? (Chip Somodevilla/Bloomberg News)

Revelations yesterday that Tim Geithner, the secretary of treasury designate for President-elect Barack Obama, had not paid Social Security or Medicare taxes for several years postponed his confirmation hearing and threatened the prospects of one of the incoming president's key Cabinet choices.

At issue is roughly $43,000 in back taxes that Geithner owed (and paid) due to his -- mistaken -- belief that the International Monetary Fund (his employer at the time) was deducting Social Security and Medicare taxes from his paycheck. There also are some questions surrounding Geithner's housekeeper who briefly worked for him without proper immigration papers.

The revelations postponed Geithner's confirmation hearing before the Senate Finance Committee, originally scheduled for Friday, and prompted the nominee to meet with committee members yesterday to explain himself.

Coming out of that meeting, it appeared as though Geithner had weathered the storm as he drew signals of support from Democrats as well as some Republicans on the committee. Iowa Sen. Chuck Grassley, the ranking minority member on the committee, was slightly more circumspect about Geithner's prospects; "It's serious, and whether or not it's disqualifying is to be determined," Grassley told the Wall Street Journal.

For today's Wag the Blog question, we want to know whether you think Geithner's failure to pay taxes is a legitimate issue to raise in connection with his future role as the person most responsible (other than Obama himself) for leading the country out of an economic crisis. Is Geithner's explanation that it was simply an oversight good enough for you? And, if so, how does Geithner's situation differ from past Cabinet picks like Zoe Baird, Bobby Ray Inman and Linda Chavez -- all of whom had tax and/or housekeeper issues and ultimately were forced to remove themselves from consideration?

The comments section is open for business. The most thoughtful responses will be excerpted in their own post later this week.

By Chris Cillizza  |  January 14, 2009; 1:30 PM ET
Categories:  Wag The Blog  
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GEITHNER is competent but the real question raised is why did the IRS waive penalties.

Geithner's explanation is ignorance. There are four basis for relief;

Internal Revenue Manual (02-22-2008)
Relief From Penalties

Generally, relief from penalties falls into four separate categories:
* Reasonable Cause
* Statutory Exceptions
* Administrative Waivers
* Correction of Service Error

If no one is above the law Geithner's testimony gives cause for an investigation of the basis for the IRS waiver.

Posted by: taxpayer6 | January 21, 2009 1:43 PM | Report abuse

the comment that he gets a pass since his background is not in personal finance is a hoot. my background is not in traffic engineering but that doesn't mean i don't follow the rules of the road and it certainly doesn't mean i can ignore traffic tickets.
Boyz Klub Obama seems intent on no white male left behind - concerns less serious than these tanked several female candidates for past federal jobs. Obama never has a problem with a guy. this one tried his best to kick Shelia Bair to the curb but was stopped. a sexist pig, to match the Summers and Favreau picks.
is it 2012 yet?

Posted by: OrlandoNan | January 17, 2009 2:02 PM | Report abuse

Honesty! Honesty! Honesty! Isn't this the real issue here with Timothy Geithner's "tax problem?" If there is dishonesty here, what does this suggest about his previous government jobs and the financial industry?

Posted by: reubenesp | January 16, 2009 2:19 PM | Report abuse

The only thing I find particularly shocking about the matter is that the IRS wouldn't accept back taxes for 2001-2002 until Geither had the wheel oilers of a presidential candidacy team settle the matter for him. I understand there might be some conflict of interest concern and that this matter probably doesn't come up all that much but, come on. We've stumbled across the first case in history where the IRS doesn't want your money!

But the mistake seems pretty understandable to me. It's an unusual arrangement with plenty of room for confusion; I don't fancy many peoples chance of doing much better, myself included. Geither obviously wasn't conniving to get away with this, if so he would have obscured the matter rather then giving the IRS a very obvious tax not paid on their bottom line. In fact, I'm just pleased to see that Geither does his own taxes (or at least that's the impression I got.) He's not trying to screw the government over by having an accountant deduct every penny possible, the legal means of tax shirking which many rich people exploit to the fullest.

Posted by: theamazingjex | January 16, 2009 10:52 AM | Report abuse

I believe that Geithner is a honest person, we all make mistake, we all are too human. This was his honest mistake he should be foegiven.!!!

Posted by: akber_kassam | January 15, 2009 4:35 PM | Report abuse

Hey folks if the man can find a way to elude the IRS folks to the tune of $43,000,then maybe he
CAN be a player in helping pull the country out of it's financial mess. Why not put him in. Make him pay up in a hurry and get on with the job! If Obama wants him and the country's open for C-H-A-N-G-E let 'er rip!!

Posted by: vinnie799 | January 15, 2009 3:11 PM | Report abuse

The United Nation's Millennium Development Goals aim to cut world hunger in half by 2015 and eliminating it completely by 2025. An estimated $19 billion would eliminate malnutrition and starvation around the world. Our current defense budget is $522 billion, in comparison.

The Borgen Project ( provides lots of information about this issue.

Posted by: alenka | January 15, 2009 2:08 PM | Report abuse

I don't know, but the pattern that emerges is not flattering. The candidates for cabinet positions that oversee several of the nation's more sensitive agencies seem to present challenges when it comes to core competencies: Holder at Justice winks at ethical shortcomings (bypassing internal Justice Dept procedures for the express purpose of releasing unreconstructed terrorists and exonerating wealthy felons); Clinton at State has a record so devoid of relevant experience that Congress is left to indulge in sycophantic congratulations to disguise the fact that they have nothing to discuss, all the while dismissing the obvious mine-field of conflicts (can one ever really balance the interests of the nation vs the questionable donations of dictators and charlatans to her husband's "charity"?); Hilda Solis at Labor has no views to speak of on labor issues, current, past or potential (is she merely inarticulate or has she never thought about workers' rights or is she afraid to admit to unpopular biases that she secretly harbors?); now Geithner at Treasury is exposed for tax violations that are conveniently dismissed as inadvertent "hiccups", fully remedied albeit only after audits. More "hiccups" will doubtless be uncovered for other appointees.
As to whether Geithner, et al., should be approved, it's clear that these lapses are inadvertent "windows" into how they view the world: perhaps cynically manipulative, perhaps cautiously neutral. But I submit that these are not really disqualifiers at all. Rather, each has demonstrated capacity to "game" a system (legal, political, economic). Perhaps that Machiavellian view is what we really value in those on whom we confer power. As for the cacophony of tunes that surround their nominations, short of outright Blagojovitch-style villainy, approval to the desired positions rightly depends more on how well the nominees dance. It's not so far removed from the Greek-style hazing that some of us remember from college.

Posted by: JGKBlueSky1 | January 15, 2009 1:53 PM | Report abuse

Tim Geithner is either incompetant or dishonest. Aren't this the reasons our economy is in a mess? Can't we find someone in America with competency and integrity to head the Treasury?

Posted by: Adrian6 | January 15, 2009 1:08 PM | Report abuse

There is no acceptable excuse for Mr. Geithner's failure to pay his payroll taxes for four years. The IMF notified him about his obligations repeatedly. Ignoring this information was not "innocent" or "honest." But if this judgment is wrong and Mr. Geithner did not understand what the IMF told him, is he then qualified to deal with the vastly more complicated financial instruments involved in the current financial disaster? I think not. Either because he tried to cheat on his taxes, or alternatively because he does not pay close attention to important financial details, he should not become Treasury Secretary.

Posted by: terrylash1 | January 15, 2009 12:46 PM | Report abuse

Before anybody posts a comment, please read this article from, a Republican-leaning political website. Let's actually read what tax experts says about Tim Geithner...

Posted by: Corey_NY | January 15, 2009 12:32 PM | Report abuse

The difference between Geitner and Baird/Chavez/Wood etc. is very simply politics. In the other cases these nominees were unpopular and the opposition was looking for a reason to sink the nomination, Geithner is a pick that Republicans are happy about, and they are worried about the alternative.
As a taxpayer it concerns me. We are told that he is the only one who understands TARP. Is this supposed to be a good thing? TARP is a very poorly designed program that had no accountability or transparency. Do we really want four more years of that? Also, he is so smart that he has mastered TARP, but he was flummoxed by the 1040? Perhaps he can use this to advocate for a simplified taxcode.

Posted by: myhojda | January 15, 2009 12:12 PM | Report abuse

As someone noted 'he owned up to his mistakes.'

No, he did not.

When the IRS caught him, despite IMF notes to all consultants to pay their own SS, etc, he did not then go back and pay prior years where he made the same error.

Fast and loose .. that's what he did. And that's intentional. His reasoning was more than likely .. outside the statute but, jeez, what a creep given his notoriety in the industry.

Posted by: tslats | January 15, 2009 11:14 AM | Report abuse

Let's really look at what has happened and is happening. The Republicans put up 3 excellent nominees and they are all required to withdraw. The Democrats put up a candidate who has issues and he gets a pass? The matter is quite simple if you are a Republican nominee you are required to withdraw, if you are a Democrat you get a free pass to run the MOST important Department in Washington. All hail the new Chief.

Posted by: Roamer1 | January 15, 2009 11:13 AM | Report abuse

I really want Obama's tenure in office to be succesful.
Having said that, I cannot feel good about someone who is supposedly that good unable to see that a W2 had no deductions for Soc Sec Etc. Further, why would he not own up to what was not found in the audit at the time of the audit?
I feel he either lacks the integrety we need or he isn't as compentent as others claimed.
Sad start in a new administration.
Shame on those saying we should overlook this as he is the most comentent. Have they looked elsewhere?

Posted by: kwoerpel | January 15, 2009 11:04 AM | Report abuse

Let me add to my previous criticism of TG that we do have an agreed set of facts to analyze - the Report to the Committee.

Paraphrasing from that report:

When Mr. Geithner’s tax returns for 2003 and 2004 were audited by the I.R.S. in 2006, the auditors found that he had failed to pay self-employment tax in those years. To make good, he paid the back taxes, plus interest — $16,732.

Mr. Geithner also failed to pay the self-employment tax in 2001 and 2002. Those returns, which the report says Mr. Geithner prepared himself, were not audited and so the I.R.S. did not order him to pay up — which raises the question of why he did not voluntarily amend those returns and pay the taxes and interest at the time of the 2006 audit. Instead, he waited until after vetting by the Obama team late last year revealed the shortfall — $19,176 in taxes and $6,794 in interest.

On returns for 2001, 2004 and 2005, Mr. Geithner wrongly claimed expenses for sleep-away camps in calculating his dependent care tax credit. The accountant who prepared his 2006 return informed him that payments to overnight camps were not allowable expenses, but again, he did not file amended returns for the previous years at that time.

We also learn that IMF has a compliance advisor for its American employees, and delivers many relevant notifications to them, and one check in the pay package is marked "S.E. taxes".
The next SecTreas will inevitably have a handle on spending hundreds of billions of dollars of our money and thus he must be above reproach on financial matters.

Posted by: mark_in_austin | January 15, 2009 10:24 AM | Report abuse

if it's just this one issue, i don't think there's a problem. the tax code changes just about every year, so lots of people make mistakes (or have mistakes made on their behalf) all the time. you trust your accountant to do a good job, but it didn't happen in this case. if other "oversights" emerge, then it begins to look like evasion, and that would probably make him unconfirmable.

as it is, the geithner situation is different from baird, et. al. because context matters. the depth of our economic problems was not such in the cases of baird and others as it is today. geithner, as a student of the architects of this mess, has a better position than most to be able to fix it. the best students always see the weaknesses of their professors' arguments. the importance of his specialized knowledge outweighs the false gravity of these unpaid taxes.

Posted by: plathman | January 15, 2009 9:58 AM | Report abuse

The problems with this nomination are many, but to focus on the tax situation: yes, he should be forced out, for several reasons. First of all, let's face it. The guy would be in charge of taxes and money, yet seems to not be able to keep track and manage his own. Second is the timing: he was audited and told to pay up for two years. He did. Now, surely he knew the same situation existed for two OTHER years, but he did nothing, until Obama's people came calling. In other words, he was more than willing to pull one over on the IRS until a better opportunity beckoned. That makes him a craven opportunist. Third: apparently he was warned MANY times that as a self-employed individual he was responsible for for the taxes he didn't pay. And apparently he signed acknowledgement of this responsibility. And fourth -- he also tried to inflate child-care expenses, according to the NYT. In other words, like so many Americans, he tried to cheat on his taxes. He got caught, as I hope many more do. He should not get the chance to run our economy.

Posted by: bethIllinois | January 15, 2009 9:29 AM | Report abuse

If the nomination was for any other position in the cabinet save DHS, I would join the nudge-nudge-wink-wink crowd. But this position has oversight of the tax code and the IRS. How hard is it, really, to look at one's W2 and see zeros in the Social Security and Medicare withholding boxes??? This is negligence in an area of future job responsibilities. He can make his contribution from the Fed.

Posted by: 33rdStreet | January 15, 2009 9:08 AM | Report abuse

This is not a problem.

Geithner's expertise and work (past, present, and future) is NOT in personal finance and completion of individual tax returns -- so it's no special relevance here (compared to any other appointment).

The fact that the IRS considers it a common problem and makes special allowances for it tells us something -- namely, that this doesn't really help us identify in Geithner any defect of character or ability.

It's important to question -- but it's just as important to accept answers -- even when they don't yield as much drama or political traction as some might hope for.

Posted by: jefft1225 | January 15, 2009 8:55 AM | Report abuse

"At issue is roughly $43,000 in back taxes that Geithner owed (and paid) due to his -- mistaken -- belief that the International Monetary Fund

Given that Geithner signed paperwork from the IMF stating he was responsible for paying the taxes, your statement above is a lie.

Geithner is a tax cheat. He's perfect for Obama

Posted by: newagent99 | January 15, 2009 8:38 AM | Report abuse

Chris: You really asked for it this time.

I found the usual gaggle of posters opining on this fellow's problems with the usual over the top definitive statements about his qualifications, his tax problem, his fitness to serve....Geez...

Does anyone posting know this man? I'll answer it for you NO. No one on this thread knows what was in his heart and mind when this situation developed. We hear from one accountant who says this happens (SALY) and a second who says no way he is a scoundrel.

Let's try to avoid the great American pass time of jumping to conclusions. We, the citizenry don't have the full factual picture.

My guess it will be a tempest in a tea pot. The man is respected by both conservative and liberal members of Congress. He clearly has skills.

If we can allow that people make mistakes, own up to their responsibility and move on in life. Why shouldn't this man have his time to explain and continue forward.

Posted by: Thatsnuts | January 15, 2009 7:34 AM | Report abuse

Years ago, in Louisiana, the Governor ran for re-election at least partially on his supporters slogan--"Vote for the crook, it's important."

In that case, it was important to vote for the crook, vs. the GOP ex-KKK candidate.

Geithner seems not to be a crook. But, he does seem loosey goosey on honesty and intregity with regard to his taxes.

President Obama needs a better messenger for his economic team. If Mr. Geithner is really the best person for the job, then he should be placed in a consultant position to someone of unquestionable integrity.

Posted by: nettt | January 15, 2009 4:38 AM | Report abuse

Chris, I worked in Human Resources; employers are required to clearly print ALL deductions on the paycheck stub. If the Social Security and Medicare deductions didn’t appear on Geithner's paycheck stubs, then his employer was not making those deductions. So how is it Geithner “believed” his employer was deducting Social Security and Medicare taxes from his paycheck?

Also, when a company/agency hires someone as an independent contractor, they are usually very careful to outline which party is responsible for withholding taxes. The contractual language is standard; as is the practice. When a company hires a direct employee, the company is responsible for the withholding taxes; independent contractors are self-employed, thus responsible for their withholding taxes.

I'm not buying Geitner's story...

Posted by: txgall | January 15, 2009 1:45 AM | Report abuse

"And, if so, how does Geithner's situation differ from past Cabinet picks like Zoe Baird, Bobby Ray Inman and Linda Chavez -- all of whom had tax and/or housekeeper issues and ultimately were forced to remove themselves from consideration?"

By Chris Cillizza | January 14, 2009; 1:30 PM ET |

First of all, Chavez did not have tax and/or housekeeper issues. That's just an inaccurate description of the circumstances surrounding her withdrawal.

Second of all, what Geithner did appears to be much more serious than what Baird, Wood, or Chavez did. Yet he gets a pass. I wonder why that is.

Posted by: Barno1 | January 15, 2009 1:40 AM | Report abuse

This is no time to play politics with the worst recession since the great depression. With respect to Clinton's AG nominees, we were not facing a global crisis that impacted the financial security of the U.S. and arguably the world. From nearly all accounts, Geithner is highly respected by both political parties as one of the most talented financial experts of our time. He has paid for his mistake and this gaffe simply highlights the confusion of our present tax system. Perhaps one the best defenses for Geithner is that now the self-employment payroll system may have an excellent chance of being revamped and simplified.

Posted by: billbolducinmaine | January 14, 2009 11:42 PM | Report abuse

Anybody remember the old Steve Martin routine about how to be a millionaire and not pay taxes? First: you get a million bucks. Then when it's time to pay your taxes, you say, "I forgot."

That's Geithner's answer!

Not good enough for me. He has to explain why he got GROSSED UP for taxes he did not pay.

Posted by: Compared2What | January 14, 2009 10:59 PM | Report abuse

Scrivener 50 wrote: "Does any rational person really believe that Geithner set out to INTENTIONALLY evade taxes on $43,000 of income -- what amounts to maybe $15,000 in taxes?...
Of course not. There was no intent to evade taxes here. The IRS obviously agrees, which is why if accepted his payment of back taxes and penalties owed to settle the matter."

No, he avoided taxes of more than $43,000 -- since those were the taxes he had to repay, and as noted in my earlier post, did not necessarily cover all of the taxes he avoided or hoped to avoid in future years. The IRS levied no penalties against ANY of the cases in the blanket settlement, which was meant to deal quickly with a number of cases at the World Bank, the IMF, several embassies and no doubt other international organizations, without having to spend a lot of time on individual negotiations/lawsuits.

Geithner is a sophisticated financial professional nominated to be the SECRETARY OF THE TREASURY OF THE UNITED STATES and het he claims not to have understood a financial arrangement related to his compensation that most people working at the same organization, even at much lower financial and grade levels, did understand and comply with.

Posted by: gilboa | January 14, 2009 10:44 PM | Report abuse

We're going to need a very honest guy at this position. The TARP Reform Bill that Barney Frank is trying to push through not only gives the banks the remaining $350 billion, it gives the banks access to more money through direct borrowing by the FDIC and Treasury without Congressional oversight.

Posted by: websmith1 | January 14, 2009 7:33 PM | Report abuse

The way the Obama team handled the Geithner issue is the most problematic piece of this controversy. Yes, Grassley and the Republicans played politics by making an issue out of the taxes and immigrant over a month after they learned of it all from the transition team. But the Obama team blew it when they tried to keep it quiet from all but the senior members of the finance committee.

Posted by: parkerfl1 | January 14, 2009 7:21 PM | Report abuse

Osama and Dems are calling Geithner the most qualified individual for the position. So how can the "most qualified" individual make such an "honest mistake?"

Posted by: knox2619 | January 14, 2009 7:19 PM | Report abuse

“Obama stands behind Geithner”

It's unbelievable how bad the Financial industry is, both private and public. Full of people with questionable acts, backgrounds and ethics. Obama cannot be soft since he was the one espousing the tough talks and lack of regulations and ethics by Bush. Obama and his administration have no room to tolerate a man who's going to be in charge of the treasury and cannot find an accountant to review his own tax obligations. Wasn’t Obama recently quoted as saying we need more oversight on the Bailout Plan? This is a serious miss and it's better to admit to the serious mistake and choose another candidate. Obama needs to set the tone to the financial community that he has zero tolerance for this kind of history or behavior. Fiduciary trust must be re-established. By not admitting to the grotesque oversight, I think Obama will simply show how naive and weak he's going to be and will simply be run over by a bus in the tough and woolly town of Washington DC. Attempting to unite the country is one thing. Bending over like Gumby is another.

Posted by: notjustdirt | January 14, 2009 6:52 PM | Report abuse

"Imagine for a moment this was an incoming Republican administraion and a Republican Treasury Secretary nominee. Do you think he'd get a pass?"

If the president-elect had a clean and popular win, yes.

About Geithner: I want someone who can help the U.S. get out of the financial tarpit in which we've become mired. This is Problem number 1, 2 and 3. Reform of the IRS is way down. I don't know if he made a mistake or it was willful; I don't think any of you know either. Instead, ask yourself: does he have the skills to get US fiscal policy on a sound basis again?

Posted by: Kili | January 14, 2009 6:36 PM | Report abuse

I don’t buy his story. As an American working at the IMF’s sister institution, the World Bank, I also get an allowance on top of my base salary for paying half of the self-employment tax (or half of SS/Medicare tax that private employers would pay IRS directly but the Bank does not), as well as state and federal income taxes. (Non-Americans, exempt from taxes on WB salaries, do not get these.) This allowance is paid quarterly, separately from payroll. Each element is separated and clearly described on an accompanying statement Fed tax, State tax, and Bank’s share of Medicare/Social Security). When I started at the Bank I signed an agreement that if I did not fulfill my tax obligation, I could be terminated. This message and explanations are repeated on the Bank’s tax allowance website and annual tax seminars in order to make things perfectly clear. I would assume that Geithner signed a similar agreement and saw similar explanations at the IMF. Most Bank/IMF staff of course comply, but a couple of years ago the IRS caught up with a small group who had not been paying some or all of their taxes, or were improperly claiming certain deductions. I assume Geithner was part of this sweep and blanket IRS settlement, which required tax payment but no penalties, and only as far back as 2003 – not for earlier periods, even if there were underpayments. (This explains Geithner’s recent catch-up payments for 2001/2.)
Obviously, the appointment would set a poor example for financial integrity at a time when trust in private and public financial institutions and their regulatory agencies is particularly low. Do we want to turn over a new leaf with a Treasury Secretary who seems to have intentionally cheated the U.S. Treasury and then when confronted with his “error,” paid less than the full amount he improperly pocketed? Wouldn’t IRS employees be subject to dismissal for such behavior?

Posted by: gilboa | January 14, 2009 6:05 PM | Report abuse

Does any rational person really believe that Geithner set out to INTENTIONALLY evade taxes on $43,000 of income -- what amounts to maybe $15,000 in taxes?

Does any rational person really think a professional financial executive would jeopardize this career for $15,000?

Of course not. There was no intent to evade taxes here. The IRS obviously agrees, which is why if accepted his payment of back taxes and penalties owed to settle the matter.

This is politics, pure and simple. If the GOP members practice hypocrisy instead of fair judgment, they will reveal their true motive -- to cripple the Obama presidency even before it begins.



• What happened to Homeland Security warnings of "heightened risk" during Presidential transition?

• How about the late November FBI warning about possible Northeast train station attacks?

• "Amtrak Joe" Biden's longstanding warnings about security flaws along the Amtrak Northeast corridor -- why isn't he waving this whistle stop tour to a halt?

It is both mystifying and frightening to contemplate the unnecessary risk to which President-elect Barack Obama and Vice-President-elect Joe Biden are subjecting themselves by going through with Saturday's planned pre-inauguration "whistle stop" train ride from Philadelphia to Washington.

In his farewell press conference on Monday, President Bush seemed to go out of his way to twice repeat that the greatest threat the nation faces is another terrorist attack. At one point in his presser, he said that by giving official voice to the threat, he was not "trying to set something up."

Here are President Bush's exact words:

"There is an enemy that still is out there.

"You know, people can maybe try to write that off as, you know, 'he's trying to set something up.'

"I'm telling you there's an enemy that would like to attack America -- Americans -- again. There just is. That's the reality of the world."

George W. Bush could not have been more plain-spoken, candid and direct. The incoming White House team ignores his words -- which he most likely thought about before uttering them -- at their peril.

OR (if link is disabled):

Posted by: scrivener50 | January 14, 2009 5:57 PM | Report abuse

It's a reasonable mistake, he's paid a penalty. It's even more excusable based on this story that he has an e-mail from his accountant giving him bad information.

Different from those other nominees because there was such widespread bipartisan acclaim for the choice when Obama made it, unlike any of them.

Posted by: billmcg1 | January 14, 2009 5:50 PM | Report abuse

I believed the media and supported Geithner when Obama picked him.

The Social Security tax evasion made me want to learn more about him.

So I checked Geithner out.

Failed to pay Social Security for 4 years - Check.

Claimed camp was legitmate childcare - Check.

Head of the NY Fed Bank and had oversight of Citi and other banks while they sold subprime mortgage mess - Check.

Had oversight while banks over leveraged and credit weakened - Check.

Supported TARP - Check.

Helped implement the bailout of AIG and the rest of Wall Street - Check.

Bailouted his crony Robert Rubin - Check.

And the Senate is going to approve him?

Posted by: jdcw | January 14, 2009 5:13 PM | Report abuse

I made a mistake on my taxes too, and was bummed about the big penalty relative to the amount in error.

But I paid it and it's over. Same for him: he paid, no crime committed.

Posted by: tailwagger | January 14, 2009 5:00 PM | Report abuse

he qualifies as a scofflaw


and therefore fits right in with the new Capone administration.

Posted by: king_of_zouk | January 14, 2009 4:57 PM | Report abuse

Avar wrote:

"I'm a CPA and I think it's a huge mistake. I've read he prepared the returns himself. I can't imagine how he could miss the fact that he had NOT paid his FICA!

Plus, '03 and '04 came up in an audit then the vetting team found the same issue in '01 and '02. After the audit, how do you not go back and look at prior years??

I feel strongly it should disqualify him. How can you be Sec Trea in these incredibly complicated times when you can't even keep track of whether you have paid your own tax?"

Because he chose to stay quiet after the audit and because the issue is of such recent vintage that the BHO vetting team raised it with him or he would still, as we post, have not paid his lawful taxes, he qualifies as a scofflaw, and he can never regain our respect as SecTreas.

Posted by: mark_in_austin | January 14, 2009 4:52 PM | Report abuse

Geithner would be smart to withdraw and get Obama out of the jam he's put him in. After a while in the wilderness he can make a comeback if nothing else (young prostitutes, rent-controlled apartment, ...) surfaces. At the moment we need squeaky-clean people handling money matters. Obama's going to have trouble raising taxes on the Bushies and their pals if they can all point to Geithner and say they're only taking a page from his notebook.

Posted by: hairguy01 | January 14, 2009 4:33 PM | Report abuse

Almost made it one whole day. another day another corrupt Dem:

Ted Strickland's Pimp Arrested [Jonah Goldberg]

This is an amazing story.

DUBLIN, Ohio—Columbus police have charged a former member of Governor Ted Strickland’s staff with seven felonies, involving a prostitution ring.

Eric McFadden, who until October of 2007 was head of Strickland’s Office of Faith-Based Initiatives, was arrested Wednesday morning in Dublin.

Police said they believe McFadden was “Toby,“ the man they have been looking for during the past two months after busting up a prostitution ring that was operated on Craig’s List.

An employee of the OSU School of Nursing and an employee of the Ohio Department of Job and Family Services was arrested at that time.

McFadden was being charged with seven felonies, including pandering obscenities involving a minor, promoting prostitution and compelling prostitution.

Police said the number of charges could rise to 15.

Police also said McFadden was the go-to guy in Columbus when it came to prostitution.

McFadden ran Catholic organizing for Kerry and Clinton in Ohio, I believe.

Posted by: king_of_zouk | January 14, 2009 4:16 PM | Report abuse

We know nothing about how Tim Geithner and others at the International Monetary Fund should have or should not have been taxed. How many others at IMF made the same "honest" mistake?

But perception is reality, isn't it? The perception, right or wrong, for most Americans (those paying attention) is that if Mr. Geithner can't manage his own taxes, how can he manage the entire country? Perhaps the bigger question is: How many Americans will care whom Obama appoints as Treasury Secretary?

Furthermore, the Bush Administration showed us that the president can install anyone into any position (for example, an International Arabian Horse Association Commissioner as head of FEMA) despite the wishes of the majority, and that there is nothing that we Americans can do about it.

Posted by: dognabbit | January 14, 2009 4:15 PM | Report abuse

Imagine for a moment this was an incoming Republican administraion and a Republican Treasury Secretary nominee. Do you think he'd get a pass?

Posted by: RobT1 | January 14, 2009 4:15 PM | Report abuse

So let me stop insulting you, dear reader, and pose a question to which we do not have any obvious answer. Why is Sen. Clinton, the spouse of the great influence-peddler, being nominated in the first place? In exchange for giving the painful impression that our State Department will be an attractive destination for lobbyists and donors, what exactly are we getting? George Marshall? Dean Acheson? Even Madeleine Albright? No, we are getting a notoriously ambitious woman who made a fool of herself over Bosnia, at the time and during the recent campaign, and who otherwise has no command of foreign affairs except what she's picked up second-hand from an impeached ex-president, a disbarred lawyer, and a renter of the Lincoln Bedroom. If the Senate waves this through, it will have reinforced its recent image as the rubber-stamp chamber of a bankrupt banana republic. Not an especially good start to the brave new era.


Posted by: king_of_zouk | January 14, 2009 4:13 PM | Report abuse

I think that because he paid the employee share and neglected only to pay the employer share, he should be given a pass.

The papers issue for his domestic help shouldn't interfere at all. I think he'll get a stern lecture, allowing the Republican minority to get a little press grandstanding about this (it would be silly of them to not take advantage of the opportunity), then ultimately, they'll let him through.

Posted by: keilprti1 | January 14, 2009 4:04 PM | Report abuse

Business as usual within the Beltway. Our nation's capitol which includes both Houses of Congress and the Executive Branch are filled with nothing but self-serving crooks and mental midgets.

The have conceived a code of conduct for themselves in which anything goes and then should something arise the 'accused' is 'queried' by a panel of his like self-serving peers. Ultimately the final decision, if one ever is determined, is explained away with one of the following: 'just a hiccup' - 'an error that anyone working for the IMF would make'- 'an insignificant oversight' - 'an error of omission', etalia.

If this is Obama's idea of "Bringing Change to America" he is in a heap of trouble.

The very idea that the taxpayers of this nation should allow the very same 'captains of finance and industry' who have sunk our economic system to administer 1 trillion dollars to the same heads of banks, corporations, hedge funds, etc. who became individually wealthy while sinking their own entities is assinine.

They should all be tried for fraud and whatever else the legal system can come up with, tried and put in jail just like the World Com and Enron people.

Personally I am all for another "Boston Tea Party" - throw all the politicians of DC and the financial wizzards of the great financial center of America, NYC into the Atlantic Ocean. They have drowned the nation, now let them drown.

Posted by: dharper2 | January 14, 2009 4:00 PM | Report abuse

I am confident that he and Wrangle can run the IRS into the ground together, since they seem to be able to tell others the rules but can't follow them.

almost a whole day has gone by with no new Lib scandels. but the day is not over yet.

Posted by: king_of_zouk | January 14, 2009 3:48 PM | Report abuse

I have been thinking about this issue since I first heard about it yesterday afternoon. The question that just keeps going around in my head follows: " How can the person who will be the responsible for the management of the entirety of the US Treasury Department, which includes the IRS, not know he had to pay taxes?" I just can't square that circle. It would seem to be the most minimum of requirements to be Treasury Secretary.

Posted by: HillaryClintonSuppoter | January 14, 2009 3:39 PM | Report abuse

I'm a CPA and I think it's a huge mistake. I've read he prepared the returns himself. I can't imagine how he could miss the fact that he had NOT paid his FICA!

Plus, '03 and '04 came up in an audit then the vetting team found the same issue in '01 and '02. After the audit, how do you not go back and look at prior years??

I feel strongly it should disqualify him. How can you be Sec Trea in these incredibly complicated times when you can't even keep track of whether you have paid your own tax?

Posted by: Avar | January 14, 2009 3:21 PM | Report abuse

Yes, Cory_NY: That's true because Geithner is part of the Summers, Rubin deregulation team that led to this mess in the first place (yes, under Clinton) and they are going to keep more or less the status quo. They will make republicans happy. hell they are already taking the campaign promise of increased taxes on the wealthy off the table. Yes, I am a liberal and voted for Obama, but I don't see any change in these pics and so wasn't surprised about the "honest mistake" anyway.

Posted by: drgirl | January 14, 2009 3:18 PM | Report abuse

Good thing Geithner isn't a plumber and will only be overseeing the IRS if confirmed.

We know how the media treats plumbers that failed to pay taxes.

Posted by: robtr | January 14, 2009 3:15 PM | Report abuse

darlene_jr speculates
"Maybe Mr. Geithner will give me a break if I make an honest mistake on my taxes, too."

That is what they do. If the honest mistake is in their favor, they write you a check. If the honest mistake is in your favor, you write them a check, plus interest and penalties.

Posted by: bsimon1 | January 14, 2009 3:09 PM | Report abuse

Geithner didn't get any "breaks" nor did he break any laws.
Still, given his lack of thoroughness in his personal finances I don't want him as head of the treasury department.

Posted by: JRM2 | January 14, 2009 3:08 PM | Report abuse

The many people here saying uninformed things like "If I did what he did, I'd be in jail!" are simply wrong. Many people have made similar mistakes that Geithner made and they are not "in jail". The IRS informs you of the mistake, assesses interest or penalties and you pay the owed taxes. End of story. Unless there's proof you were deliberately engaging in fraud or you refuse to pay what you owe, you DON'T "go to jail".

Posted by: mpl2 | January 14, 2009 3:02 PM | Report abuse

Wait. This guy was audited, and it uncovered the areas of noncompliance. He has multiple tax issues, and did NOT work overseas. He worked for an international organization, and has access to the finest of accountants.

He is not proficient at his job, much less to be CEO of Taxes and Finance. Dealbreaker.

Even Albert Einstein couldn't drive a car, but, we weren't proposing that he be head of the Department of Transportation.

Posted by: theeasypartsover | January 14, 2009 3:02 PM | Report abuse

The World Bank makes extensive notice of the requirement to pay your own social security and Medicare taxes, so it is a little incredible that he somehow "missed" that. Did his accountant (if he had one) "miss" the realization that he hadn't paid social security taxes either? How did he even enter his earnings? Any decent tax software package -- even one bought for $29.95 at Costco will prompt you for social security taxes and Medicare taxes, and if you enter the income as self-employed, will put in the full amount due.

Then there is the annual social security statement of earnings that SS gets out. Did he ignore that too? Not notice that there were no earnings reported for a bunch of years?

I'd give him a complete pass on the housekeeper issue, since he checked the docs before she started work, but the tax issue implies one of two things: he's a cheat, or he's incompetent. Either way, he shouldn't be Treasury Secretary.

Posted by: bk0512 | January 14, 2009 3:00 PM | Report abuse

This is a gold standard test for Obama. Either "smart" and "competent" are in, or they are, in fact, not.

This is clear cut evidence that Geithner is either dumb or incompetent to head Treasury.

If he cannot handle the small things in his alleged area of expertise, he cannot be trusted with the economy. Period.

Posted by: theeasypartsover | January 14, 2009 2:59 PM | Report abuse

As a tax accountant who worked in the Expat group for about 4.5 years, this is not an unusual mistake. Every company/organization has it's own distict policy with regards to how it handles the taxes for it employees working around the world. My understanding is the IMF was reimbursing him for the US taxes. My experience is that the organization usually charges the individual a "hypothetical tax" that is roughly equal to their home country tax. This keeps the employee "whole" while they be subject to actual taxes that are much higher from various countries around the globe. If so, the employee feels like the taxes have come out of their paycheck because they have through the "hypo taxes" that is retained by the company and used to offset the cost of the actual taxes paid. Long story short, the employee often has NO IDEA what is going on with their paycheck. Ask any expat working overseas on a plan such as this and they would almost always refer you to HR or the accountants hired to help file their taxes. His accountants should be questioned on why they didn't catch this or why they didn't know enought to ask the right questions. They trained us specifically for these returns. If you aren't trained in both Expat taxes and the IMF's program, it's easy to miss. This is part of why it is so expense to send US employees overseas to work.

Second point, in regards to why it happened year after year. In my experience, there is nothing stronger than the Same As Last Year (SALY) principle. While did the accountant keep preparing incorrect tax returns? They thought it was correct and it was SALY. Why didn't he say something? Because the return looked SALY. Unless you know something is being done wrong, you default to the way it was done before. If the IRS hasn't said anything, we must have done it right.

Posted by: poutasam | January 14, 2009 2:56 PM | Report abuse

To drgirl: Senate Republicans have know all this stuff since December 5th and all praise Tim Geithner.

About the only person right now who wouldn't get confirmed by the Senate or nominated by the President for Treasury Secretary is Hank Paulson.

Posted by: Corey_NY | January 14, 2009 2:50 PM | Report abuse

Maybe Mr. Geithner will give me a break if I make an honest mistake on my taxes, too.

Posted by: Darlene_Jr | January 14, 2009 2:47 PM | Report abuse

The other appalling thing about this is the way it has been handled. It is the shock doctrine (but were in a crisis, rules don't apply) approach. The handlers knew about this for a long time and actually had to force him to pay taxes for 2 additional years that the IRS didn't catch, but the dems held onto this information until the last minute to contain the backlash, not from Republicans, but from the public who is way too tired of different rules for the haves and have nots.

Posted by: drgirl | January 14, 2009 2:38 PM | Report abuse

Is he qualified to avoid a depression and lead the US out of a bad recession? Yes or No. If you are concerned about his taxes direct the IRS to audit him every year. Is it too much to ask the Senate to do their freakin job? As for the work status of his housekeeper, from what I have read she was married to a US citizen and during her employment with Geithner her work permit expired. I am still trying to wrap my mind around how your eligibility to work in the US, when you are married to a US citizen, can expire? It seems Congress and/or the federal bureaucracy owes an apology to the maid.

Posted by: caribis | January 14, 2009 2:31 PM | Report abuse

IIRC, the plunging markets rallied in a big way when the nomination was announced. That's got to count for something.

Posted by: sgammato | January 14, 2009 2:26 PM | Report abuse

The Fix writes
"At issue is roughly $43,000 in back taxes that Geithner owed (and paid) due to his -- mistaken -- belief that the International Monetary Fund (his employer at the time) was deducting Social Security and Medicare taxes from his paycheck."

Without additional evidence supporting the claim, the Obama team's explanation that 'this is a common problem for employees of the IMF' is weak. In Geithner's favor, the taxes and interest were paid as soon as he was made aware of the oversight. More importantly, if this situation is actually unusual for employees of the IMF (do they not talk to one another about such things?), Geithner's nomination will have to be withdrawn.

Posted by: bsimon1 | January 14, 2009 2:24 PM | Report abuse

QUOTE: If I had done what he has done, treasury would be charging me with the crime of tax evasion. Why hasn't Geithner been charged?

You answered your own question. He wasn't charged because the IRS, not just Geithner, determined it was a honest mistake. Despite how Hollywood might portray them, the IRS does not only try to squeeze "the little guy" while leaving alone the fat cat. If you had done what Geithner had done, the IRS probably wouldn't have noticed and you'd have gone to your grave without knowing either.

So long as he didn't get a degree from a Christian college (Monica Goodling really ought to be more of a household name then she is), then he's fine. Republicans don't have any national pull and only come back to D.C. because of incumbency or regional stronghold (ie Wyoming).

Posted by: Corey_NY | January 14, 2009 2:23 PM | Report abuse

The question is how could this NOT be the end to this nomination? This is the guy Obama is nominating to head the IRS, and it turns out the guy is a tax evader. Its like discovering the nominee for the head of the EPA drives a hummer and dumps toxic waste into children's water. Oops...I guess the Obama team is doing is taking their que from the Bushies in thinking that the public is too stupid to notice that an "honest mistake" is not going to pass muster. Either he is incompetent to the point of comedy, or he is a crook. PERIOD.

Posted by: drgirl | January 14, 2009 2:22 PM | Report abuse

If this had been during the Clinton years, when congressional Republicans investigated and obstructed anything with a pulse, the nomination would be shot. But President Clinton took office after the merely miserable Bush I presidency. Obama takes office after the absolutely disastrous Bush II presidency, and Republicans will be much less likely to making a mountain out of a molehill in these crisis times.

Posted by: tailwagger | January 14, 2009 2:22 PM | Report abuse

I don't care if it was paid late or in time or whatzeehoozit. Heck, I know NOTHING about economics and am only in charge of my checkbook and I am able to pay ALL OF MY TAXES on time.

This guy is going to be commerce secretary?

Posted by: JRM2 | January 14, 2009 2:21 PM | Report abuse

Timothy Geithner should withdraw as the nominee for Treasury, quickly and quietly. Perhaps, in light of the fact that his Senate confirmation hearing has been postponed until next week, that is exactly what he plans to do.

Obama cannot begin his term with a tainted Secretary of the Treasury because of the enormity of our country's economic troubles -- and because of all the cheating, greed, corruption, and lack of oversight that enabled the mess to occur in the fiorst place.

Confirming Geithner would be tacit affirmation that the "anything goes" mentality of Wall Street and the financial sector of the past 8 years, will continue to one degree or another.

The Democrats who downplay Geithner's tax evasion as "a bump in the road" or a "hiccup" or an "honest mistake" look foolish and inept.

PS I voted for Obama.

Posted by: micheline1 | January 14, 2009 2:21 PM | Report abuse

How did he get through the vetting by the Bush Administration to head the NY Fed? You would think somebody would have looked at his tax returns to see if there were conflicts or major errors.

I can accept at face value that he was confused about the tax status of the Medicare/Social Security taxes when the IRS caught the error. I am more concerned about why he didn't figure out that the previous years would have been a problem as well. that type of obliviousness won't be of a help in negotiating with the sharks in other economies and Wall Street.

However, I think he would be a perfect candidate to lobby Congress to simplify the tax code. After all if the guy who is running a major portion of the world's biggest bank can't figure it out, why would you expect Joe the Plumber too.

By the way, the tax error is one that any independent contractor can have. Even college students with a $1,000 fellowship have to address this if Social Security and Medicare weren't deducted.

Oh well, he can look at the bright side. At least he didn't invest his tax savings with Madoff. Also, if his nomination falls through, the timing is perfect for him to do ads for TurboTax or Taxcut this tax season saying that if he had just used this little inexpensive program to do his taxes, he would now be running the economy of the Free World instead of having to be a shill.

Posted by: raydh | January 14, 2009 2:14 PM | Report abuse

I think it's important to keep repeating that he paid all of his federal and state income taxes in full and on time. This issue is about his FICA (Medicare and Social Security) taxes, as you correctly note.

To me, that is a big difference. We occasionally get local politicians who just didn't pay their taxes at all for several years (didn't file, didn't do anything) and that is totally unacceptable. Somebody who filed in the usual way and screwed up a single component, with a rational explanation of how it happened, then paid immediately when the IRS told him about it a few years later, does not bother me.

It does tickle me that the Obama vetters did a better job than the IRS in determining that the IRS missed part of the amount owed. You have to admit, they're thorough.

Posted by: fairfaxvoter | January 14, 2009 2:11 PM | Report abuse

I find it appalling that there are politicians who believe that it is acceptable to put in charge of collecting taxes a scofflaw who does not pay his own taxes.

Why should the rest of us feel any obligation to obey the tax laws if our chief tax collector does not obey them.

Geithner should not only be disqualified from serving as treasury secretary, he should be prohibited from holing any tax-financed office of public trust.

If I had done what he has done, treasury would be charging me with the crime of tax evasion. Why hasn't Geithner been charged?

If this nomination persists, I will certainly conclude that a major aspect of Obama's "change" includes more corruption.

Posted by: dcrussell | January 14, 2009 2:06 PM | Report abuse

Anybody who has worked for any international organization would understand.

The 1993 political climate of "Nannygate" is very different from the longest recession since WWII, a looming economic crisis, and two endless wars of today.

Bit odd how first Barack Obama and now Tim Geithner have issues with illegal immigrants (re: Auntie Zeituni) and unpaid taxes (re: Obama had unpaid taxes from when he lived in Somerville, MA in 1990 that he didn't paid until 2007)


Posted by: Corey_NY | January 14, 2009 2:05 PM | Report abuse

I like Obama and I like the Geithner pick (would have liked Summers more, but like them both). That said, I'm a little concerned about someone who is responsible for trillions of dollars in bailout funds making a $43,000 personal financial oversight. You don't realize that more money is coming into your bank account than you would expect?

You can' be in charge of our nation's finances and forget to read your own pay stub.

Posted by: andygoldman | January 14, 2009 2:00 PM | Report abuse

I am a staunch Obama supporter, and have thought the Geithner pick a strong one, however I am surprised Dems and Reps are giving him such a "pass." Come on! 35K in unpaid taxes an honest mistake?? Heck, if I did that I'd be in jail. Now is NOT the time to give our leaders a pass - especially Treasury Secy with tax issues during one of the worst economic meltdowns in US history. Not only is it an image problem, it's a problem.

Posted by: VoiceofReason5 | January 14, 2009 1:55 PM | Report abuse

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