Geithner’s $42,702 ‘hiccup’

Senate Majority Leader Harry ReidHarry Mason ReidMcConnell goes hands-off on coronavirus relief bill Kamala Harris to young Black women at conference: 'I want you to be ambitious' Obama calls filibuster 'Jim Crow relic,' backs new Voting Rights Act bill MORE (D-Nev.) thinks Treasury Secretary-designate Timothy Geithner’s tax problem is a “hiccup.”

I don’t know about you, but if I had an issue with my taxes that resulted in my having to pay the IRS $42,702, I would call it more than a “hiccup.”

In any event, Reid is unconcerned that Geithner failed to pay Social Security and Medicare taxes when he worked at the International Monetary Fund (IMF) in 2001, 2002 and 2003.

ADVERTISEMENT

Reid and his colleagues in the Senate majority leadership believe Republicans should be unconcerned, too.

If it were up to the leadership, Geithner’s confirmation hearing would be happening Friday, with members of the Senate Finance Committee having little time to review the details of the matter.

That would have been a serious mistake. Until Tuesday afternoon, the only people on the committee who knew about Geithner’s problem were Chairman Max BaucusMax Sieben BaucusBottom line Bottom line The Hill's Morning Report - Presented by Facebook - George Floyd's death sparks protests, National Guard activation MORE (D-Mont.) and ranking member Chuck GrassleyCharles (Chuck) Ernest GrassleyTrump puts trade back on 2020 agenda McConnell goes hands-off on coronavirus relief bill GOP chairmen hit back at accusation they are spreading disinformation with Biden probe MORE (R-Iowa).

There had been a few rumblings and rumors about Geithner having a problem with his paperwork — wouldn’t the Treasury secretary’s hearing be one of those the Obama transition team would like to get done first? — but few people, other than Baucus and Grassley, knew what was going on.
Then, on Tuesday, Geithner came to Capitol Hill for a closed-door, members-only committee meeting.

He dropped the news on the senators and took a lot of questions.

So now the members know about it. But they haven’t had much chance to study the very revealing memo put out by the committee staff — on a bipartisan basis — that described just what Geithner did.

ADVERTISEMENT

It described how the IMF repeatedly informed its employees, including Geithner, of their obligation to pay the self-employment tax.

It described how the IMF frequently updated employees on the status of their tax situation.

And, perhaps most importantly, it described how the IMF system of “tax allowance” worked.

Employees were expected to pay their taxes out of their own money, but were then reimbursed by the IMF for the amount paid.

On the self-employment tax, Geithner accepted the IMF’s reimbursement, but never paid the taxes. He did that in 2001, and 2002 and 2003 — over and over again.

All that is information that takes a little time for a senator to assess. A little more reporting on it in the nation’s major newspapers would be nice, too.

But at the meeting Tuesday afternoon, Baucus expressed a desire to have a hearing on Friday, just two days hence. That would have required a waiver of the rule that requires a seven-day notice for a committee session.

Some senators objected, and the early-hearing idea was shelved. Geithner will appear before the committee next week.

It’s a good thing the senators put it off. This is serious business, something Grassley pointed out during a conference call with Iowa reporters on Wednesday.

Geithner’s tax omissions, Grassley said, are “a little disconcerting.”

“I’m not saying at this point it’s disqualifying,” Grassley continued. “But it’s a little more important about income tax for somebody that’s overseeing the IRS than there is, maybe, for the secretary of Agriculture, as an example.”

That’s an understatement.

It may turn out, in the end, that Geithner’s tax problems were completely the result of honest mistakes. But previous Cabinet nominations — are you listening, Zoe Baird and Linda Chavez? — have been sunk for less important things.

Before senators confirm Geithner, they need to ask a lot more questions.

York is a White House correspondent for National Review. His column appears in The Hill each week. E-mail: byork@nationalreview.com