Friday, January 16, 2009

Geithner, Obama, & Republicans -- Will Character Matter or Expediency Rule?

Condoning serious dishonesty in public officials is corrosive to our Republic. I would have thought this principle self-evident. And yet, some prominent leaders continue to voice support for Tim Geithner, Obama’s nominee for Treasury Secretary and head of our income tax agency, the Internal Revenue Service. Tim Geithner is pretty clearly a significant tax cheat, and the irony of his nomination to head the IRS is remarkable to behold.

The Congressional hearing on his nomination is currently set for Wednesday January 21st. Philip Klein writes (link) that "[t]he reason why Geithner is getting a relatively free pass on the Capitol so far is that he's a Democratic nominee who is viewed by Republicans as a solid, business-friendly Treasury Secretary who is the best they can expect to do under Obama." But do and will Republicans stand for clean government or not. Abandonment of core principles for momentary political considerations is the reason Republicans are so down and out.

Obama and his team have known about Geithner’s tax problems and nominated him anyway. Supporters assert that these problems were oversights, and some even excuse Geithner as a victim of excessively complex tax filing rules.

But more details continue to appear, and Byron York, in a posting (link) today marshals more facts that cast a very serious doubt on the Obama and Geithner story that tax mistakes like this were common at the IMF, Geithner’s employer, and that two accountants overlooked the failure to pay self-employment taxes.

We already know (link) that not only did Geithner fail to pay self-employment taxes on income for 2001 and 2002, he requested and accepted extra reimbursement from his employer to pay those taxes, and signed forms acknowledging his responsibility to pay those taxes. In addition, when this problem was discovered via IRS audit in 2006 for tax years 2003 and 2004, Geithner finally paid self-employment taxes for those two years but did not go back and also pay for 2001 and 2002, apparently because the stature of limitations had run on those years and the IRS could no longer force him to pay, even though the taxes were owed. We also know that the dollars involved were significant -- about $43,000 for the four years.

And yet, the ordinarily sensible and perceptive Charles Krauthammer joins with Obama in thinking this problem is a triviality. He said on Fox News last night (link): "We have in Geithner a guy with amazing experience, extremely smart, who has been in every crisis over the weakness in 2008, all the rescues.... And to sink his nomination over what I think is a triviality is simply unserious. Our crisis is too strong, too big, and his is too much of an asset to deny him office over unpaid taxes, which in the end he refunded and repented."

Krauthammer is wrong. Geithner never “repented”. He only paid his 2001 and 2002 taxes some weeks ago when he was nominated by Obama, thereby allowing him to now say all his taxes have been paid. Geithner knew and Obama knew he owed those taxes for years and had not paid, yet Obama nominated him anyway.

This whole issue of ethics and symbolism is bigger than Geithner. Geithner’s story is one of significant tax evasion, and in a land of hundreds of millions of people he is not indispensable, even at this moment in history. That both Obama and Krauthammer think this matter is a triviality is very surprising and very disappointing. This reeks of "one rule for the elite, political class, one rule for the masses" mentality.

And one can only hope that Obama’s early indifference to certain ethical shortcomings in some of his nominees (link), such as Clinton’s conflicts of interest (link) and Holder’s involvement in outrageous pardons (link), is not a harbinger of more serious problems to come.

John M. Greco