Treasury Nominee Accounts for Own Tax Errors

President-elect Barack Obama called disclosures about Treasury choice Timothy Geithner's tax problems an embarrassment Wednesday but said Geithner's 'innocent mistake' shouldn't keep him from confirmation.
By Michael D. Shear and Lori Montgomery
Washington Post Staff Writers
Wednesday, January 14, 2009

Timothy F. Geithner, the man tapped to lead the nation out of the greatest economic crisis in decades -- and who would oversee the Internal Revenue Service -- trekked to Capitol Hill yesterday to explain to senators how he made almost $43,000 worth of mistakes on his own tax returns.

As Treasury Secretary, Geithner would be tasked with directing a mammoth rescue of the nation's economy. President-elect Barack Obama selected him for the post late last year, citing his "unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency."

But on Tuesday, Geithner appeared before members of the Senate Finance Committee to argue that mistakes on his tax returns early this decade were unintentional and that he has since paid back the $42,702 he owed, including interest.

There was little evidence yesterday that Geithner's errors, which included a related disclosure about a housekeeper who worked for him briefly without proper employment documentation, would derail what has been a smooth confirmation process for Geithner, who is the president of the Federal Reserve Bank of New York.

But the revelations could delay consideration of Geithner's nomination. Late Tuesday, Republican Sens. Jim Bunning (Ky.) and Jon Kyl (Ariz.) blocked a request to proceed with his confirmation hearing Friday. Democratic lawmakers still hoped to confirm Geithner to the critical economic post before Inauguration Day.

In his appearance yesterday, Geithner told the committee that he had failed to pay Social Security and Medicare taxes because he mistakenly believed that his employer at the time, the International Monetary Fund, was deducting those taxes from his paycheck.

Several senators from both parties quickly came to Geithner's defense, saying in interviews Tuesday night that the mistakes were common and innocent and that his confirmation was not in jeopardy. Through an aide, Senate Finance Committee Chairman Max Baucus (D-Mont.) called Geithner's errors "serious" but said they do not disqualify him from being Treasury Secretary.

"I still support him. I have no problem," Sen. Orrin G. Hatch (R-Utah) told Fox News. "He's a very, very competent guy."

"Tim came to the committee, admitted he had made some mistakes and was very contrite," said Sen. Charles E. Schumer (D-N.Y.). "In my opinion, these mistakes were not at all disqualifying."

Senate Minority Leader Mitch McConnell (R-Ky.) said he would defer judgment while Finance Committee members review a staff investigation. "The committee's taking a look at it," he said.

But the situation echoed past revelations that led to the withdrawal or rejection of Cabinet nominees. Zoe Baird, Bill Clinton's first choice for attorney general, withdrew after it was revealed she had not paid the proper taxes for her nanny.

Others who ran into trouble because of back taxes included Bobby Ray Inman, nominated by Clinton to succeed Les Aspin as Defense Secretary; Linda Chavez, who was President Bush's choice for Labor Secretary; and Bernard B. Kerik, who Bush hoped to make secretary of Homeland Security.

CONTINUED     1        >

© 2009 The Washington Post Company