This kind of clarity on an Obama nominee from the New York Times editorial page can't be a great sign for Geithner. Even without the allegation that Geithner took reimbursement for the taxes he did not pay, the NYT raps the economic whiz-kid squarely on the knuckles:
As much as Mr. Obama and his team may wish it, however, the disclosures cannot be dismissed so easily, or papered over. The just-the-facts report of Mr. Geithner's tax transgressions, compiled and released by the Senate Finance Committee, paints a picture of noncompliance that is considerably more disturbing than his supporters are acknowledging...
Even in the best of economic times, it would be hard to accept a Treasury secretary - who, after all, is in charge of the Internal Revenue Service - with a cavalier attitude toward paying his taxes. Today, in a time of economic peril, the nation cannot afford a Treasury secretary with a tainted ability to command respect and instill confidence...
On the Obama argument that Geithner's was a common mistake among IMF employees:
Obama officials say Mr. Geithner, who worked for the International Monetary Fund, had made a common error among international employees in Washington. But as The Journal reported on Wednesday, failing to pay the self-employment tax is not necessarily common among sophisticated I.M.F employees. Rather, one of the reasons such noncompliance is widespread is that it includes household embassy workers and other lower- level contractors. And regardless, the Finance Committee found that Mr. Geithner had signed paperwork at the I.M.F. that acknowledged his self-employment tax obligation.
They even address the irony of claiming the 47-year-old financial wunderkind couldn't manage his own taxes:
Many people find taxes baffling, but before his job at the I.M.F, Mr. Geithner was a senior official in the Treasury Department under President Clinton, and for the past five years he has been the president of the Federal Reserve Bank of New York. With that professional profile, tax transgressions are tough to excuse.
On the news side, however, the Times is predicting that Geithner himself may be "too big to fail." Republicans and Democrats alike are skittish about the possibility of roiling markets by rejecting Geithner, and several Republicans are out praising the pick for his independence and skill, despite his tax delinquency:
"These are not the times to think in small political terms," said Senator Lindsey Graham, Republican of South Carolina, who just returned from Afghanistan and Pakistan with Vice President-elect Joseph R. Biden Jr., and briefly met with reporters on Wednesday alongside Mr. Obama. "I think he is the right guy."
Just taking notes for the next time I'm involved in a tax scandal, so I can inform the IRS that they shouldn't be thinking in "small political terms." Meanwhile, the Wall Street Journal notes that Geithner's track record (outside of tax evasion) could become a political liability. He was an architect of the unpopular original $700 billion bailout, but has been tapped by Obama to change the scope of the bailout in both "substance and style," signifying a break with the Bush administration's approach. Given his association with the original bailout plan and his current tax scandal, one wonders if he can pull off being the fresh, new face of the bailout.
At the hearing, lawmakers are expected to press Mr. Geithner on what he would do differently to combat the crisis and whether he would impose tougher conditions on banks receiving federal money, according to congressional aides.Congress isn't eager to fund more bailouts. Mr. Obama is expected to request and receive the second half of the $700 billion financial-rescue fund approved in October. Obama officials want to combine an expected $800 billion economic-stimulus package with a substantial effort in the financial sector, envisioning both elements working in tandem to stem the crisis, transition aides say.
Complicating matters is the timing of Obama's request for the next $350 billion of the bailout, which he's hinted he may request before he takes office, but he wants broad Congressional support for that move.