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A Comedy of Tax Errors

Treasury nominee and mistake-maker Tim Geithner.
Treasury nominee and mistake-maker Tim Geithner. (By Melina Mara -- The Washington Post)
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Thursday, January 22, 2009; Page A03

Make no mistake about it: Tim Geithner made mistakes.

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"These were careless mistakes," said the man who as Treasury secretary would supervise the same IRS he underpaid by nearly $43,000. "They were avoidable mistakes."

"These are disappointing mistakes," agreed Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which held Geithner's confirmation hearing yesterday.

"Tim has made some mistakes, which he has freely admitted and corrected," Sen. Chuck Schumer (D-N.Y.) assured everybody.

But Sen. Chuck Grassley (Iowa), the panel's ranking Republican, was skeptical that "the nominee's actions can be explained as simple and common mistakes."

The chairman asked the nominee to explain his mistakes, and Geithner repeated that he had "mistakenly" done his taxes wrong. "Now, that was a mistake," and "I failed to correct it initially." In short, "as I said in my opening statement, these were -- these were careless mistakes. They were avoidable mistakes."

You would not be mistaken to think there was a bit of showbiz going on with Geithner's hearing yesterday. Senators plan to confirm him, but they don't want to encourage tax cheats. The solution: 3 1/2 hours of ritual flagellation.

Sure, the hearing managed to work in some other issues, such as the economic collapse. Paul Volcker, an adviser to the Obama administration, told the committee that "we are in the midst of the mother of all financial crises." Schumer shared his view that the bailout plan "gave the banks too much dessert before it made them eat any of their vegetables." And Geithner skillfully distanced himself from the plan, even though as president of the New York Fed he was an architect of it. "Although policy did move, it did not move aggressively enough across the entire board, and we're living with the consequences of a deeper recession, in part, because of that," he said.

But there was still plenty of time to discuss Geithner's income tax gap. The nominee, a trim and baby-faced man of 47, understood his role: to be amply penitent, but not to depart from his script. "I should have been more careful," he uttered with proper contrition. "I take full responsibility. . . . I have gone back and corrected these errors and paid what I owed. I want to apologize to the committee."

Baucus was ready to forgive. "I believe them to be innocent mistakes," he said, while Schumer nodded and Geithner drank rapidly from his glass of water.

But Grassley found it "troubling" that Geithner didn't pay his self-employment taxes, as he was supposed to, while working for the International Monetary Fund from 2001 to 2004. "I -- I mistakenly believed that I was meeting my obligations fully," Geithner said, "but I did not prepare my returns in a way that caught that mistake initially."

Grassley asked what software he used to prepare his taxes. "These are my responsibility, not the tax software's responsibility," Geithner replied, "but I used TurboTax."


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