Treasury Secretary-nominee Tim Geithner faced a somnambulent crowd of Democrats and partially-animated Republicans in his confirmation hearing before the Senate Finance Committee yesterday. Questioning was focused on his failure to pay personal income taxes for several years, failure to pay employment taxes for a housekeeper and his employment of a housekeeper who was in this country illegally. As Treasury secretary, Geithner would oversee the IRS.
“These were careless mistakes,” Geithner told the committee when asked about his failure to pay self-employment taxes from 2001-2004 while working at the International Monetary Fund. “These were avoidable mistakes, but they were unintentional. I should have been more careful. I take full responsibility for them. … I have gone back and corrected these errors and paid what I owed.”
Geithner made these claims despite having signed a statement for each year stating that he understood he had been reimbursed for having paid those self-employment taxes — taxes that he had not paid. He also said that he was “unaware” that one of his housekeepers had expired immigration papers.
A frustrated Sen. Jon Kyl (R-AZ) kicked the questioning up a notch when after several attempts Geithner still had not substantively responded to timeline questioning about his failure to pay back income taxes. Kyl asked, “Would you answer my question rather than dancing around it, please?”
“I did not believe when I settled that audit and paid what they owed me [sic] that I was obliged to go back. I did not think about that until I was going through the vetting process,” Geithner responded to Kyl’s questioning.
“That was a relatively clear answer being ‘no’ you didn’t think about it until it became important in connection with your nomination,” Kyl said.
“I take full responsibility for my actions,” became the standard line of the offenders during the multitude of Clinton administration scandals and has quickly become the theme of controversial Obama nominees. What remains to be explained is how, exactly, folks like Geithner have taken “responsibility” for their actions. Unlike what happens daily to the average American, the IRS did not any penalties for this Treasury nominee’s failure to pay his back income taxes.
I caught up with Rep. John Carter (R-TX) yesterday in the hallways of the Rayburn House Office building, outside of an Appropriations Committee markup. An attorney and former judge, Carter has been a vocal critic of the double standard afforded public officials, in particular House Ways and Means Chairman Charlie Rangel (D-NY), by the IRS when it comes to assessment of interest and penalties on back taxes.
“The first one that popped to the surface seemed to be the issue of Mr. Rangel’s 20-years of failure to pay taxes on his rental income,” Carter told me. “So far there have been no penalties or interest assessed. … If that’s the way the IRS is going to treat Mr. Rangel, I think that we should be able to write on our tax returns if we owe any penalties or interest, ‘I exercise the Rangel Rule’ and you would also be exempt from having to pay those monies. … Now it appears Mr. Geithner is getting the same treatment.”
In the real world, taking “responsibility” includes bearing the consequence of your actions. Paying the penalty. The Democrat Congress has placed unprecedented power in the hands of the Treasury secretary, granting sole discretionary power to disburse hundreds of billions of dollars in bailout funds. Being held accountable in actuality means as a consequence of your actions, whether “careless” or intentional, you are not placed in a position of great power in the public trust — a position wielding oversight of the disbursement of trillions of dollars of the public’s money.
“I should have been more careful” and “These were careless mistakes” should not be in the financial world vernacular of the person who will guide this nation through the worst economic times since we endured four years of Jimmy Carter at the helm.
President Obama should — in most cases — not be denied the counsel of those he deems appropriate to advise him on matters. Yet appointing a man to head the Treasury Department — the very agency in charge of the IRS — who lacks the capacity to properly file his own self-employment taxes not once, but four years in a row, borders on the absurd.
The Senate’s responsibility is one of “advise and consent” to this young president serving in his first executive position. The rubber-stamping of these nominees places a large part of the responsibility for their performance in office squarely on the shoulders of a Senate controlled by Democrats determined to shove these nominees through, come what may.