I’m surprised that Barack Obama has made such a strong defense for the “innocence” of his Secretary of Treasury appointee, Timothy Geithner. “It was an innocent mistake,” Obama said, “It has been corrected. He paid the penalties.”
It pains me to hear Barack Obama saying that Timothy Geithner made an “innocent mistake,” because such a declaration seems impossible to defend and therefore brings into question Obama’s slogan, “Change you can believe in.” Obama’s defense of Geithner undermines the believability of Obama own integrity, his commitment to speak forthrightly.
Here is what Roger Simon of the Chicago Sun Times writes: “Would it be OK if I stopped paying my taxes until Barack Obama names me to be his secretary of the Treasury? …The Geithner foul-up is different from the Bill Richardson foul-up. The Obama vetters were unable to get Richardson to give them all of the background information they needed, but Obama went ahead and appointed Richardson to the Cabinet anyway. Then that blew up, and Richardson withdrew his name. With Geithner, the vetters found the bad stuff — yay! — but everybody thought they could sweep it under the rug. Boo.”
This article gives a good summary of what happened: “As is now being widely reported, with new details emerging daily, from 2001 through 2004 Mr. Geithner was employed by the International Monetary Fund (IMF). The IMF does not withhold taxes from paychecks, but they are expected to be paid nonetheless, as if the employees are self-employed. Further, the IMF goes to some lengths to make sure employees understand their tax obligation and, in fact, sign forms that acknowledge their tax obligation. In addition, the IMF provides employees with an allowance above salary to cover tax payments, a fairly standard practice for international organizations and corporations with employees subject to the differing tax regimes of their home countries.
“Mr. Geithner took the money and signed the forms, but did not pay the required taxes for the years that he was employed by IMF.
“In 2006, Mr. Geithner was audited by the IRS for tax years 2003 and 2004. The audit discovered the tax delinquency for those two years, and Geithner paid $16,732 in back taxes and interest. But what of 2001 and 2002, when Geithner was employed by IMF under the same circumstances? Did he immediately pay what he then had to have known he owed, even though the IRS didn’t audit those two years?
“He did not. In fact, Mr. Geithner did not pay an additional $25, 970 in delinquent taxes and interest until after Obama had selected him as Treasury Secretary.”
To me, Geithner’s actions do not seem innocent. Geithner did not pay the $25,970 in taxes he owed for 2001 and 2002 because by the time the IRS audited him in 2006, these tax years were outside of the three year stature of limitation. Certainly in 2006, Geithner knew he owed these taxes, but, because of the three year limitation technicality, he knew he could avoid paying his 2001 and 2002 taxes.
What is telling is that Obama’s vetters, two years later, insisted that Geithner pay this $25,970 — implicitly acknowledging that Geithner’s non payment, for 2001 and 2002, amounted to an unacceptable, though technically legal, evasion.
And, the three year limitation does not apply to instances of deliberate fraud and, it seems to me, Geithner, the finance and tax whiz that he is, can hardly claim any of this amounts to honest “mistakes.” A more aggressive IRS audit would have insisted he not only pay the $16,732 in back taxes and interest payments for 2003 and 2004, but that the $25,970, for 2001 and 2002 be paid as well — or would have threatened to take Geithner to court and make him defend the charge of fraud.
Obama is making a big mistake by not withdrawing Geithner’s name. I hope he will withdraw it, yet. Certainly there should be a lower level position that Geithner could fill, where his valuable skills could be put to use. But, it seems to me, Geithner has ruined his chance to be given the honor of being in Obama’s cabinet. And, Obama should not do anything that undermines his biggest asset: his own integrity.
