Treasury Nominee Geithner's Tax Problems Getting the Glossover Treatment; AP Coverage 'Forgets' at Least Chavez, Baird


Jan. 14 Update: "AP's Early-AM Revision Flushes Many Details, Calls His Tax Problems 'Goofs'"

Timothy Geithner, pictured at right in an AP photo, is Barack Obama's nominee for Treasury Secretary. 

Mr. Geithner will, among many other duties, oversee the Internal Revenue Service.

How odd, to say the least, that Mr. Geithner has had persistent tax filing and payment problems going back over 15 years involving self-employment taxes for both himself and his paid help, as well as with the employment of someone who for a time did not have proper legal status to remain in the country.

You would think that such things might place a cabinet nominee, especially to head Treasury, in jeopardy, and to cause the president who nominated him to have second thoughts. After all, in 2001, Linda Chavez's nomination as Labor Secretary went down in flames over matters relating to an illegal immigrant whom Chavez had sheltered in her home a decade earlier. Also, in 1993, Zoe Baird withdrew as Bill Clinton's nominee for Attorney General over the employment of illegal-immigrant domestic help and her failure to pay the related employment taxes on a timely basis.

But Geithner's nomination is apparently getting the all clear, with pliant Republicans giving the okey-dokey, and press outlets like the Associated Press giving his problems the relatively no-big-deal treatment.

Here are some excerpts from tonight's AP story by Brett J. Blackledge (stored here for future reference when there are subsequent updates; 5 AM Update: The link did indeed change; an alternate link that seems to match what AP had up at its own site at the time of this post appearance is here):

Geithner failed to pay self-employment taxes

WASHINGTON (AP) -- President-elect Barack Obama's choice to run the Treasury Department and lead the nation's economic rescue failed to pay $34,000 in taxes from 2001 to 2004, but the last-minute disclosure didn't stop Senate Democrats from moving forward with his nomination.

Timothy Geithner had paid some of the back taxes in 2006 after the IRS sent him a bill. When the Obama transition team discovered he owed even more back taxes, Geithner paid those additional taxes days before Obama announced his choice in November, according to materials released by the Senate Finance Committee considering his nomination.

..... Finance Committee Chairman Max Baucus, D-Mont., said he still hoped Geithner could be confirmed on Inauguration Day, asking senators for unanimous consent to skirt rules and schedule a hearing as early as Friday.

..... Utah Sen. Orrin Hatch, another committee member, said he continues to support the nominee.

..... After senators met with Geithner, the panel released 30 pages of documents detailing his tax errors - and also how he came to employ a housekeeper whose legal immigrant work status had briefly lapsed in 2005.

Senate Majority Leader Harry Reid, D-Nev., dismissed the events as "a few little hiccups," and said he was "not concerned at all" about the impact.

..... Geithner also said he 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 documents indicated.

One of his housekeepers' legal authorization to work in the United States expired on July 15, 2005, and the person continued to work for Geithner until October of that year, the committee's report states.

..... The committee's materials said Geithner "has experience with Social Security tax issues." He filed the taxes late for his household employees in 1996 for years 1993 to 1995; he incorrectly calculated Medicare taxes for his household employees in 1998 and received an IRS notice; and he received notices from the Social Security Administration and the IRS after not filing 2003 and 2004 forms for his household employees, the report states.

Would it be impolite to suggest that had Geithner not been nominated, the odds that he would have caught up on all of his tax obligations when he did are very, very low?

Giethner's personal self-employment "mistakes" have to do with his obligation to pay Social Security taxes on his income when he worked at the International Monetary Fund. The IMF is exempt from paying the employer's share, and apparently doesn't withhold any amounts for Social Security on employees' behalf. It's easy to see how non-financial administrative employees might get tripped up here, but the idea that Giethner wasn't aware of his obligations makes him either evasive, negligent, or incompetent. The same possible adjectives apply to the fact that he took as long as he did to catch up on his assessments. These are usually not qualities one looks for in a Treasury Secretary. 

While the problem with the legal status of his housekeeper might seem minor, it should not be forgotten and Chavez and Baird withdrew their nominations in somewhat related circumstances. The AP's Blackledge should have at least noted the past problems of other nominees and their results.

So why does Geithner deserve a Senatorial and journalistic pass, let alone an assumed instant, rule-skirting nomination on Inauguration Day? No one has even begun to explore the issue of how aware he should have been of some of the serious troubles at the Wall Street money center banks that just so happen to be headquartered in the Fed district he has overseen, and what he could have or should have done to prevent some of the implosions that occured there.

Cross-posted at

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