POLITICAL observations & opinions

* Obama’s Geithner compromise

Posted by Lew Weinstein on January 22, 2009

JACKIE CALMES and DAVID M. HERSZENHORN write in the NYT …

  •  Timothy F. Geithner, Mr. Obama’s choice to be Treasury secretary, was grilled less about his prescriptions for the perilous times than about his personal failure to pay more than $34,000 in payroll taxes earlier in the decade.
  • Mr. Geithner insisted his nonreporting of the payroll taxes on income from the I.M.F. from 2001 to 2004 were mistakes that were, in his words, careless and avoidable but unintentional.
  • Despite the fire, senators of both parties predicted Mr. Geithner would be confirmed. The Finance Committee will vote Thursday morning. The full Senate could vote next week, but Democrats said timing would depend on agreement from the Senate Republican leadership.

LMW COMMENT … Geithner will be confirmed and we fervently hope he will be effective as Treasury Secretary and help lead us out of our economic debacle. BUT … he did not offer the Senate committee a plausible explanation of why he failed to pay certain 2001-02 taxes after IRS audited and directed that he pay the same taxes for 2003-04. Did IRS know about the prior years but say he didn’t have to pay? Had the statute of limitations expired? It is inconceivable to me that Geithner simply didn’t remember the 2001-02 taxes, not after paying the substantial sum including penalties for 2003-04. It seems to me he thought he could legally get away without paying the prior years, so he did. Maybe most U.S. taxpayers would have done the same. The Obama response is interesting. Geithner was told, in November, to pay the prior years, which he apparently did not legally have to do, and Obama decided to stick with him as the best choice for a crucial post. There is a interesting coming together of ‘doing the right thing’ and ‘compromising when compromise is needed.’ I think we’ll see this pragmatic approach again and again. President Obama is unlikely to ever cut off his nose to spite his face.

Read the entire article at … http://www.nytimes.com/2009/01/22/business/economy/22treasury.html?_r=1&hp

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