Timothy F. Geithner

Geithner confirmed — but with bipartisan “nays”

by John Berlau on January 26, 2009

in Bailout Watch, Politics as Usual, Stimulus to Nowhere

The U.S. Senate voted to confirm Timothy F. Geithner tonight, but the vote was closer than expected with more “nays” than any previous nominee of President Barack Obama. The 60-34 confirmation was also the first nomination vote of the Obama administration with any Democrat voting no.

Because of the nagging questions remaining about Geithner’s failure to pay four years worth of self-employment taxes and his role in designing the Troubled Asset Relief Program, four members of the Democratic caucus joined with 30 Republicans in opposing Geithner’s nomination. (10 Republicans unfortunately voted for him). Those four are Tom Harkin of Iowa, Russ Feingold of Wisconsin, Robert Byrd of West Virginia and Bernie Sanders of Vermont, the independent self-proclaimed socialist who usually caucuses with Democrats.

“Had he not been nominated for treasury secretary, it’s doubtful that he would have ever paid these taxes,” Byrd said, according to the Associated Press report. Harkin asked during the Senate floor debate how someone of Geithner’s supposed “financial sophistication” could have made such careless mistakes, and not corrected them for all the years he made the errors until Obama nominated him. “How can Mr. Geithner speak with any credibility or authority?” Harkin said.

A Rasmussen poll late last week found that 41 percent of Americans oppose Geitner’s nomination and two-thirds think that his confirmation would show that different standards and rules apply to powerful people. This impression was confirmed by statements such as that of Sen. Kent Conrad, D-N.D., that “in normal times, that would be enough to cause me to oppose his nomination, but these are not normal times.” The perception that both corporations and individuals can be “too big to fail” because of their supposed importance undermines the very credibility needed to restore confidence in our financial system.

While his serious tax infractions should have still disqualified him from heading a department that enforces the nation’s tax laws, there are steps Geithner can take to assuage these concerns. He can call for an end to government policies that prop up failing institutions with taxpayer dollars. The failures could be orderly and arranged to minimize damage to the financial systems, but big corporations must be allowed to fail, just as small businesses do every day. That would send a message that no business or individual plays by a different set of rules.

And given his own serious breach of the tax laws, which he only corrected completely after being chosen as Treasury Secretary nominee, Geithner should show sympathy with the difficulties of individuals and small businesses in dealing with the complexities of taxes and regulations. New financial regulations from the Treasury Department should be carefully thought out so that they don’t hinder small investors and entrepreneurs. If Geithner reflects on and learns from his personal and policy errors, he can be a more effective Treasury Secretary.

Geithner should withdraw nomination for failure to pay self-employment taxes

by John Berlau on January 14, 2009 · 10 comments

in Bailout Watch, Politics as Usual

Treasury Secretary Nominee Timothy Geithner’s failure to pay four years’ worth of self-employment taxes for Social Security and Medicare is absolutely astonishing. And as more details are released, Geithner’s actions seem even more disturbing.

According to the New York Times, Geithner still didn’t correct the same type of error for some years, even after the Internal Reveue Services flagged him for the failure to pay the taxes in other years. To have him leading the department that manages the IRS would be a slap in the face to the millions of self-employed Americans who fulfill their responsiblities to correctly asses their tax burdens.

These disturbing details paint a picture of a nominee who hasn’t been fully vetted. As I have written in the Washington Examiner and the American Spectator, unlike previous Treasury Secretary nominees, Geithner had not distinguished himself as a corporate leader or as an academic economist. His only significant policy accomplishment has been his role in the Bush-Paulson bailouts.

And disturbing details are emerging about his misjudgments in this policy area as well. According to the Bloomberg wire service, Geithner pushed for Citigroup to take over the operations of Wachovia Corp. at taxpayer expense, even after Wells Fargo’s offer to purchase the firm without taxpayer backing. Had Geithner prevailed, who knows how much more trouble the financial system would be in given Citigroup’s current financial troubles.

President-Elect Barack Obama has nominated many well-qualified candidates to serve in his administration, and, despite some policy disagreements, CEI scholars have praised his choices for posts in the Securities and Exchange Commission, the Federal Communications Commission, the Department of Housing and Urban Development, and the Department of Agriculture. But in this choice for the Treasury Department, the Obama transition team members clearly dropped the ball. In an effort to please some on Wall Street and keep the bailouts going, they glossed over their nominee’s credentials and judgment.

Geithner’s errors and/or misjudgments make him unfit to serve as Secretary of the Treasury. His nomination should be withdrawn, and, if this does not happen, should be voted down by the Senate.

Geithner choice is ‘more of the same’ — was Paulson’s bailout cohort

by John Berlau on November 21, 2008 · 2 comments

in Bailout Watch, Politics as Usual

If news accounts are true, and Presidet-Elect Barack Obama has indeed decided on Timothy F. Geithner to be his Treasury Secretary nominee, it represents a giant step away from Obama’s promise of “change you can believe in.”

The Geithner nomination would be “more of the same” in almost every respect — more bailouts, more lack of transparency in the bailouts, and more corporate welfare. Geithner was the architect of the Bear Stearns bailout and cohort of Treasury Secretary Paulson in American International Group and the TARP bailouts. In choosing Geithner, Obama might as well have nominated Hank Paulson to another term!

Geithner’s financial qualifications are in many respects quite thin. He has never been a banker nor an academic economist. As liberal columnist Robert Kuttner noted recently in the American Prospect, Geither “has neither a doctorate in economics nor an M.B.A.”

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