Geithner Apologizes For Not Paying Taxes

Treasury Secretary Nominee Says He Was Careless; But Confirmation Very Likely

(CBS/AP)  Treasury Secretary-designate Timothy Geithner said Wednesday he was careless in failing to pay $34,000 in Social Security and Medicare taxes earlier this decade but declared "I have paid what I owed." He apologized to Congress.

Geithner told the Senate Finance Committee he was sorry that his past transgressions were now an issue in his confirmation at a time of deepening economic distress. He urged Congress to act quickly and forcibly to deal with the crisis. A top administration priority is to foster economic recovery and "get credit flowing again," Geithner testified.

As to his failure to pay payroll taxes from 2001 to 2004 while he worked for the International Monetary Fund, Geithner said: "These were careless mistakes. They were avoidable mistakes."

"But they were unintentional," he said.

Geithner told the panel that, for the 2001 and 2002 tax years, he had prepared his tax returns himself with a popular tax-preparation computer program.

He said that he hired an accountant to do his 2003 and 2004 taxes who also "did not catch my error."

IMF workers are considered self-employed for tax purposes, a fact provided in detailed instructions and repeatedly acknowledged by Geithner in signed paperwork, reports CBS News correspondent Sharyl Attkisson.

Yet Geithner paid no IMF Social Security taxes from 2001 to 2004. An IRS audit in 2006 caught the mistake, but only for 2003 and 2004. Geithner paid nearly $17,000 in unpaid taxes, but the waived penalties.

Taxpayer watchdog Pete Sepp told Attkisson that that kind of mistake normally incurs the harshest fines.

"If Mr. Geithner got a pass on the penalty, he's a very lucky man," Sepp said.

What really rankled some senators is that only after Geithner knew he was Obama's pick for treasury secretary did Geithner go back and pay his social security taxes for 2001 and 2002 - nearly $26,000 more, Attkisson reports.

Geithner acknowledged signing an IMF statement saying he was aware that it was his responsibility to fully pay U.S. Social Security and Medicare taxes.

"I absolutely should have read it more carefully," he said. "I signed it in the mistaken belief I was complying with my obligations."

Sen. Charles Grassley of Iowa, the senior Republican on the panel, noted that as Treasury secretary, Geithner would be in charge of the Internal Revenue Service and should therefore come under especially tight scrutiny on the issue of paying his personal taxes.

He suggested the danger of "sweeping the under the rug" Geithner's tax problems in a rush to get him confirmed.

"I have paid what I owed," Geithner said under grilling from Grassley. "I apologize to the committee for putting you in the position of having to spend so much time on these issues."

Republican Jim Bunning of Kentucky told Geithner his failure to pay the taxes fully until just before his selection by Obama was announced was "hard to explain to my constituents who pay these taxes on a regular basis."

Although the tax disclosures provided a bump in Geithner's confirmation process, he appeared to have wide support from both parties, especially given the severity of the downturn and the nominee's past experience in the financial system.

"You will be confirmed," Pat Roberts of Kansas told Geithner. Still, the senator said, his phones were "ringing off the hook" from people in Kansas complaining about the prospects of having a Treasury secretary who was careless in tending to his own tax liabilities.

Grassley said he recognizes that many in Congress view Geithner, who worked closely with the outgoing administration on Wall Street's meltdown as head of the New York Federal Reserve Bank, as "possibly the only man for the job of healing the recession before us and a very fractured economy."

"To some, he is not only the best choice, he is the only choice," said Grassley. The Republican has not announced how he will vote on the nomination and aides say he remains undecided.

Committee Chairman Max Baucus of Montana called Geithner's tax transgressions "disappointing mistakes," but said he believes they were innocent ones - and should not bar Geithner from serving in the administration's top economic position.

Baucus said his committee would vote on the nomination Thursday.

Geithner, who also worked in the Treasury Department under three presidents, addressed criticism over how the $700 billion financial bailout program has been spent so far by the outgoing Bush administration.

Many lawmakers have complained that most of the over $350 billion committed so far has gone mostly to the banking industry, and has done little to help individual homeowners facing foreclosure.

Geithner also said that Obama and he "share your belief that this program needs serious reform."

"This is an important program and we need to make it work," he said. "We're going to keep at it until we fix it."

He said the still-evolving Obama economic plan would include a comprehensive housing package.

"Senators, in this crisis, our financial system failed to meet its most basic obligations," Geithner said. "The system was too fragile and unstable, and because of this, the system was unfair and unjust. Individuals, families and businesses that were careful and responsible were damaged by the actions of those who were not. "

Obama last week called Geithner's tax problems an embarrassment but an "innocent mistake."

A number of observers today said that their bigger objection to Geithner is that they consider him a chief architect of the failed policies that led to the bailout, reports Attkisson. But it appears that most in the senate believe he's the right person to lead an economic recovery.

[jodyrae4]

oh its okay.. he is a democrat.. he said he was sorry

[ppark7]

The Treasury Secretary should be someone who has demonstrated that he understands the importance of the tax laws and paying taxes. Treasury Secretary-designate Timothy Geithner has not earned the right to be the Treasury Secretary. "Forgetting" is never an excuse. Even my children, who have only been paying taxes for a few years understand this. Please do not confirm Timothy Geithner and really send the message that it is NOT "Business as Usual"in Washington.

[thgdriver1]

So let''s see if I have it right. I don''t pay taxes I should be paying, I cheat and get away with it. Then when offered a job from the new messiah Nobama, all I have to do is apologize and pay it up to date?

What really smells up this whole thing is the messiah Nobama knew about it but appointed him anyway. This cheat''s mentality from the start was--- I got the money, if I get caught I pay. if I don''t get caught it''s money in my pocket. That''s why he should have paid a hefty penalty. Boy, I wish I had his friends at the IRS!

[gophwy71]

34,000 and your dear friend President Barack Obama wanted to tie Joe the Plumber to an ant hill over 1200?

Hypocrites!!!!!

34,000 and they''re going to allow him to serve on the Hill? No way, no how!!!! Grill his sorry self!

HOW do you overlook 34,000 dollars? 34 THOUSAND?

You fools. You elect the destructor of this country!

[truthin2009]

Why does the administration want this guy so badly, knowing the questions that are being raised about him?


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Posted by pillbox67 at 07:48 AM : Jan 22, 2009

The problem is this administration is being allowed to do anything they please without any scrutinization from the media, fellow politicians, or the American people.

Can you say "DICTATORSHIP?"

Certainly shaping up to be that way.

Funny how people were openly allowed to critizice Bush for 8 straight years but no one dares to criticize Obama for his poor judgments that he''s ALREADY MADE considering some of his appointments in his cabinet.

[dumdnc]

Let''s play a game here. How about all these "candidates", like clinton, geitner, holder and the new "environmental czarina, ms brown" are REpublicans. Now, just how many would get the position? Why, I would guess none. But, since we now have a one party system (which queen nance denounced when the Republicans had the majority)they will sail through. Just look at ms clinton and her hubby. All the money they got from the Chinese, the SAudi''s and God know who else. Not a problem! It''s ok. I bet bubba will loven traveling the world and meeting new hotties. He''ll probably be able to get more money for his "foundation."
As for this crook, still say he and charlie rangle need to get together to be more creative. Ole charlie heads the Ways and Means Committee and this jerk willl be head of the IRS. The possibilities are endless.
Typical dem politics. Nothing new.
Has joe the plummer been jailed yet for his non payment of taxes.

[likeitis5050]

A $34,000 tax owed to the government since 2001-2003 doesn''t get ''overlooked'' until a prime position on Obama''s Administration comes along in late 2007. He is a tax cheat. He was getting the same notices all along that every American gets when they owe taxes...and attached were the same penalities with interest. This cheat wants to head the IRS and expects (and will get because Congress is either missing vital spinal fluid or they are just plain corrupt) confirmation because he said, ''Ooops...careless of me...that darned Turbo Tax..little hiccup...sloppy accounting on my part...but I am still the ONLY qualified person to do this job..''. Done deal. How any American who is in hock to the IRS isn''t on a bus and storming this committee demanding like treatment is beyond me. What this says is basically...''fvck taxes until Obama offers you a position high profile enough to bother with them...''.

[pillbox67]

I don''t think a man prominent enough to work at the IMF would ever do his own taxes on a software program unless he was trying to hide something. There are other qualified people who could be Treasury Secretary. Why does the administration want this guy so badly, knowing the questions that are being raised about him?

[truthin2009]

Funny how most of us average Joes never have any problems doing our taxes each year, but somehow the TREASURY SECRETARY DESIGNATE of these UNITED STATES can''t seem to figure it out.

Again, what a comedy!

[truthin2009]

Do does anyone think that the average Joe could get a job with the IRS if he/she cheated on his taxes for a couple of years?

LOL

Apparently when you''re appointed and selected to be the TREASURY SECRETARY by Lord Obama of the entire USA however, you''re allowed to cheat on your taxes.

LOL...what a joke.