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:
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.
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:
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.