Is the Geithner Nomination in Trouble???
Over the past several days, I have been hearing from a wide assortment of people outside Washington who seem to be really angry about the Geithner tax issue. It seems there are a lot of people in the US to whom $34,000 is a lot of money.
Meanwhile in DC, both Democrats and Republicans are waxing euphoric about Geithner, how he is the “right man for the job” and “the nation needs him.” Judd Greg (R-NH) is among the Geithner cheer-leaders, but I doubt he can discuss the man’s qualifications.
That said, I think the decision to delay the Geithner hearing has given opponents a chance to educate members of Congress and defeat this ill-advised nomination. Indeed, based on conversations I have had with several members of the GOP leadership in the past 24-hours, it seems that members of Congress in both parties are starting to ask themselves what also they do not know about Tim Geithner. I believe that we can stop this nomination and give President Obama another chance to fill this key Cabinet post with a competent candidate. To me there are three issues, from least to most important:
Taxes
Here are a couple of things I have learned in the past several days.
1) Geithner’s story about “not knowing” about his tax liability as a contract employee of the IMF seems to be/is falling apart. Consider the sequence of events. The IRS tax audit of Geithner was under limitations because there was no fraud suspicion. Hence only 2003-4 were assessed for the taxes. And ponder how the 2001-2 error was found during the Obama transition team vetting process and paid in November. He did not realize that more taxes were due?? Makes the Obama admin look a little silly since they were the ones who triggered the 2001-2 payment!!! AND, Geithner was the NY Fed Pres during the time his 2001-2 taxes were unpaid. Both sides of the aisle in the Congress did not realize that either. FED OFFICIALS ARE REQUIRED BY FED OF NY PERSONNEL RULES TO OBEY AND BE COMPLIANT WITH ALL US LAWS AND REGULATIONS, PERIOD. GEITHNER SHOULD BE FIRED FOR CAUSE BY THE FRBNY BOARD, BUT SINCE THE CHAIRMAN STEVE FRIEDMAN AND THE OTHER DIRECTORS ARE CURRENT/FORMER GOLDMAN SACHS BANKERS AND/OR CLIENTS, THAT IS UNLIKELY TO OCCUR.
2) I spoke to a senior former IMF official yesterday about the tax situation:
“Having worked for the IMF I find it hard to believe that any US taxpayer did NOT know that he/she had to pay those taxes. I knew and paid them. As “self-employed,” one has to send in estimated taxes quarterly. I sadly remember my horror at my first April 15 at the IMF when I found that I had vastly underestimated what I had had to pay (double the usual social security etc) and had to cough up $000s immediately. I went to see Carter Magee immediately to avoid any future shocks. Geithner should be toast!”
She also told me that the IMF personnel function projects tax payments for employees!! How could Geithner say he did not know?? Also, there may even be a paper trail at the IMF because, it has been suggested to me, many IMF official receive quarterly estimates of tax payments from the IMF personnel office.
Competence
More important the issue of taxes is the question of competence. Tim Geithner’s tenure at the Fed has been hardly successful and represents a lurch toward state socialism. If we are going to socialize all of these losses and not use the traditional process of bankruptcy to clear the markets, then Congress needs to vote on that issue. More, remember that all of the TARP investments in C, BAC, JPM are about absorbing losses, not creating new leverage. Geithner and Bernanke have badly misrepresented the economic benefits of investing tax dollars in zomby banks. Our past comments on Geithner/Rubin/et al. are below:
What Barack Obama Needs to Know About Tim Geithner, the AIG Fiasco and Citigroup
IndyMac, FDICIA and the Mirrors of Wall Street
Conflict
To me, the apparent conflict of interest between Geithner, Hank Paulson, Robert Rubin and other principals of Goldman Sachs is Topic A for the Senate confirmation hearing. We talk about some of those issues in the comments above. I’d like to see Paulson finally respond to the numerous FOIA requests from news organization for his telephone and email logs. In particular, the Senate needs to focus on the reported activities of Geithner on behalf of Goldman Sachs to stop members of the media from reporting on Geithner’s apparent rescue of GS by bailing our AIG. I from understand that Geithner threatened a member of the NY press corps because of that journalist’s reporting on the AIG rescue. I have promised said journalist not to reveal the writer’s name for now, but I hope to see that writer in touch with members of the Senate minority early next week.
Chris
January 16th, 2009 at 12:45 pm
Time for Obama to name someone new – and quick! IMO, Geithner lost all credibility with his tax issues.
January 16th, 2009 at 1:18 pm
There are many comlexities in the IRS code. Paying SE tax on SE income is not one of them.
January 16th, 2009 at 1:39 pm
The tax issue is a non-issue to me. As the saying goes, the shoemaker’s son goes barefoot. After working finance 12 hours a day, I can understand not paying much attention to some IRS mass-mailer.
What worries me more is Geithner not being ahead of the curve on the financial meltdown. Too tied to the Wall Street culture which led to this mess.
January 16th, 2009 at 1:40 pm
The biggest reason Geithner should be out??
Just ask Elizabeth Warren. He (and Paulson, et al) have been completely and arrogantly unforthcoming about keeping an eye on the TARP money. I do NOT want this guy in charge of my next $350B.
January 16th, 2009 at 2:39 pm
Thanks Chris,
And godspeed on blocking this appointment!
January 16th, 2009 at 3:40 pm
Bottom line is if that were any of us not paying Uncle Sam $34K, we’d be harrassed daily and eventually put in jail. They need to reconsider this and go with someone else. This is utterly ridiculous.
January 16th, 2009 at 4:05 pm
Bernard Kerik?
Zoe Beard?
Kimba Wood anyone?
January 16th, 2009 at 4:06 pm
As the value of a dollar fades so too integrity.
January 16th, 2009 at 6:03 pm
I say bring back Spitzer in some regulatory role, maybe not Treasury Chief, but head of SEC.
January 16th, 2009 at 11:08 pm
Certainly, Geithner wants to extract money from the taxpayers and give it to the banks, which is a course of action not in the national interest.
The question, however, is whether or not Obama likes the idea. If so, he’ll just direct his treasury secretary to do just that. I’ve never heard Obama discuss this matter. There’s no question that he wants government to assume a much larger share of the GDP than is currently the case, but given his campaign rhetoric, I would guess that throwing money at Wall Street “fat cats” is not at the top of his agenda.
January 17th, 2009 at 1:31 am
The bigger problem is not his tax ethics, but his connection to the failed policies that led to the mess and his role in bailing out those who got rich and stuck us with the bill.
January 17th, 2009 at 3:17 pm
How nice, folks now find that Mr.Geithner has basically done nothing.
My favorite is how everybody says our Intelligence on WMF was crap and therefore….. When I remember numerous reports from CIA, FBI, and Foreign Service saying the whole story was BS. Ya, the CIA finally caved, weasels, yet they were correct at the beginning.
Newspapers and News Networks are the biggest damned bunch of cheerleaders in our history. NYTs a great example of today’s liberal. Hell, nuke Syria, Iran —– OK, I guess Iraq was a tiny mistake, so move out and get into the Right War: Afghanistan.
Conflict of Interest? Hello, did you just notice? Try an actual reality check. And while you want reports sent in — I say, reality check again— Paulsen for one said from day 1 he was going to do with the money as he pleased. And Conflict, it will not change. So what do we do with it as it is and was and will be short of a soft revolution of sorts?
Convince the Princes of Supple Side that it would be to their benefit to do a few things for the country. Otherwise they will pocket the $. And the public, hell they believe in the Philips Curve and gladly march down to unemployment for their own good to preempt INFLATION. Public hasn’t gotten a raise in 40 years and we do not hear a peep. In fact the working fool trashes Unions with more venom than a Prince,
January 17th, 2009 at 3:18 pm
I do not see the value of the Dollar fading. Am I mistaken?
January 17th, 2009 at 3:24 pm
Not paying taxes because of the confusing IRS codes — Pathetic to even mention. Most everybody fills out the One Page tax form — by the by — the $ has been taken thank you. The rest of the pages of are for people like Geithner and companies like Citi.
I recommend Geithner try wages — his employer will remove his taxes from his pay and send them to the government. He should be given help in his time of need.
January 18th, 2009 at 3:34 pm
Geithner did nothing that other red-blooded Americans do: namely, chisel on taxes when they can. You know, “…cast the first stone…” and all that. IMHO, that’s not enough reason to reject him.
The most damaging charge against Geithner is that he has, for all practical purposes, been a reduced-size version of Paulson. And Paulson has done a remarkably careless (some might say incompetent) job as Treasury Secretary. We don’t need to repeat that experience.
January 18th, 2009 at 9:01 pm
Obama should withdraw Geithner’s nomination now, if Geithner won’t have the courtesy to do it himself. Each day that this nomination stays outstanding is another day in which Obama’s honeymoon is going away. The tax thing is bad enough and there is no real excuse for it. Anyone as bright as he is can’t really plead ignorance and have us take him seriously, especially with the amount of information provided to him by the IMF.
However, the real problems are his performance at the Fed and his ties to Goldman. He helped lead us into the bank mess we find ourselves in now and the conflicts he shares with Paulson, et.al have yet to be fully explored. There is nothing about this nomination that reflects favorably on Obama and the sooner he pulls it, the better it will be for him. Clearly, there are better prospects out there.
January 19th, 2009 at 11:55 am
Soon-to-be President Obama should make the phone call to have Geitner withdraw his name. SE taxes are pretty simple to understand. Tax representatives are pretty simple to hire and retain. The press often runs pics of Geitner “cutting his eyes” to one side or the other. Makes him seem shifty and slightly paranoid. Duh! If the man can’t take care of his tax obligation, don’t put him in charge of the IRS and the rest of Treasury. Find him a place as White House advisor, EPA, OMB… just not Treasury.