Tuesday, January 13, 2009

Gong Show Time for Timothy Geithner

It's roasting the nominees season.

Timothy Geithner, Barack Obama's nominee to head the Treasury, didn't pay Social Security and Medicare taxes for several years while he worked for the International Monetary Fund.

The IMF and World Bank reimburse employees, including U.S. citizens, for their U.S. income taxes. They don't, however, make contributions toward Social Security and Medicare taxes, which individuals are expected to pay on their own.

In 2006, the IRS conducted a letter audit of Geithner's 2003 and 2004 taxes and concluded he owed taxes and interest totaling $17,230, according to documents released by the Senate Finance Committee. He paid up and the IRS waived the related penalties.

But, according to WSJ:

During the vetting of Mr. Geithner late last year, the Obama transition team discovered the nominee had failed to pay the same taxes for 2001 and 2002. "Upon learning of this error on Nov. 21, 2008, Mr. Geithner immediately submitted payment for tax that would have been due in those years, plus interest," a transition aide said. The sum totaled $25,970.

The Obama team said Mr. Geithner's taxes have been paid in full, and that he didn't intend to avoid payment, but made a mistake common for employees of international institutions. That characterization was contested by Senate Finance Republicans, who produced IMF documents showing that employees are repeatedly told they are responsible for paying their payroll taxes...

Other tax issues also surfaced during the vetting, including the fact Mr. Geithner used his child's time at overnight camps in 2001, 2004 and 2005 to calculate dependent-care tax deductions. Sleepaway camps don't qualify.

Amended tax returns that Mr. Geithner filed recently include $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use
Geithner prepared his own tax returns in four of the years in question. Economist Magazine tells us he is, "a quick learner: within a year of joining the New York Fed he could debate the intricacies of monetary policy with academic experts." The current revelations suggests he is either not a quick learner, or a tax cheat---or both.

And don't forget, Geithner once said, “Most consequential choices involve shades of gray, and some fog is often useful in getting things done."

Geithner's biggest problem: The IRS is a division of The Treasury. The folks back home aren't going to be happy with a tax cheat running the Treasury. The blogs are blowing up on this one.

A tentatively scheduled confirmation hearing Tuesday for Geithner was canceled.

But grab a cold one, popcorn and get comfortable in your easy chair. These roastings are about the only time you get your moneys worth from government. It won't matter policy wise whether Geithner is shot in public or given the medal of honor, he is just a tool in the machine. If the heat gets too intense, and he bails, or is forced to bail, the Council on Foreign Relations and the Group of Thirty (Geithner is a member of both) have plenty of other soldier recruits waiting in line. For the powers that be, this is what California's Jerry Brown once called the presidential nomination process, "a Gong Show for the rich".

A new confirmaton hearing is now scheduled for Friday.

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