Geithner failed to pay $34,000 in self-employment taxes from 2001 to 2004 for money he earned while he worked at the International Monetary Fund. He paid some of the taxes in 2006 after an Internal Revenue Service audit discovered the discrepancy for the years 2003 and 2004. But it wasn't until two years later, days before President Obama tapped him to head Treasury last November, that Geithner paid back taxes he owed for the years 2001 and 2002.http://news.yahoo.com/s/ap/20090121/ap_on_go_ca_st_pe/treasury_geithnerWASHINGTON – Timothy Geithner apologized to Congress Wednesday for what he called "careless mistakes" in failing to pay $34,000 in taxes and moved closer to confirmation as treasury secretary and the Obama administration's point man in reviving the economy.
While some Republican lawmakers questioned whether Geithner was being forthright in the explanation of his tax errors, he appeared to have sufficient support to win approval from the Senate Finance Committee.
Several senators told Geithner during the panel's lengthy confirmation hearing that they planned to vote for his nomination. And Sen. Pat Roberts, R-Kan., told him, "You will be confirmed" although Roberts said his phones were "ringing off the hook" from constituents upset about the prospect of having a treasury secretary who was so careless in tending to his own taxes.
Committee Chairman Max Baucus, D-Mont., scheduled a committee vote for Thursday with new Obama administration hoping the nomination can quickly be approved by the full Senate so that Geithner can assume his role in dealing with the worst financial crisis since the Great Depression.
Baucus called Geithner's tax transgressions "disappointing mistakes," but said he believes they were innocent ones — and should not bar Geithner, who is currently the head of the Federal Reserve's New York regional bank, from serving in the administration's top economic position.
Geithner told the panel he was sorry that his past tax mistakes were now an issue in his confirmation at a time of deepening economic distress.
"These were careless mistakes. They were avoidable mistakes, but they were unintentional," Geithner told the committee. "I should have been more careful."
Geithner failed to pay $34,000 in self-employment taxes from 2001 to 2004 for money he earned while he worked at the International Monetary Fund. He paid some of the taxes in 2006 after an Internal Revenue Service audit discovered the discrepancy for the years 2003 and 2004. But it wasn't until two years later, days before President Obama tapped him to head Treasury last November, that Geithner paid back taxes he owed for the years 2001 and 2002.
He did so after Obama's transition team found that Geithner had made the same tax mistake his first two years at the IMF as the one the IRS found he made during his last two years at the international lending agency.
On the economy, Geithner pledged to work closely with Congress to overhaul the controversial $700 billion financial rescue program and to win approval for a new economic stimulus program of around $825 billion. He promised to listen to suggestions made by Congress on how to shape both programs.
Geithner, who has worked in the Treasury Department under three presidents, addressed criticism over how the bailout money has been spent so far by the outgoing Bush administration. Many lawmakers have complained that most of the $350 billion-plus committed so far has gone to the banking industry and has done little to help individual homeowners facing foreclosure.
Geithner told the senators that he and Obama "share your belief that this program needs serious reform."
He said the still-evolving Obama economic plan would include a comprehensive housing package.
"In this crisis, our financial system failed to meet its most basic obligations," Geithner said. "The system was too fragile and unstable, and because of this, the system was unfair and unjust. Individuals, families and businesses that were careful and responsible were damaged by the actions of those who were not."
While many members of the panel said they accepted Geithner's explanation of the tax errors, several Republicans pressed Geithner more closely.
Jim Bunning, a Kentucky Republican, said he found Geithner's failure to pay taxes troubling because it "reflects a degree of negligence toward the law that he will be charged with enforcing." The treasury secretary oversees the IRS.
Geithner told the panel that for the 2001 and 2002 tax years, he had done his tax returns himself with a tax-preparation computer program. He said he hired an accountant to do his 2003 and 2004 taxes who "did not catch my error."
He acknowledged signing an IMF statement saying he was aware that it was his responsibility to fully pay Social Security and Medicare taxes. "I absolutely should have read it more carefully," he said. "I signed it in the mistaken belief I was complying with my obligations."
Sen. Charles Grassley of Iowa, the senior Republican on the panel, said there was a danger in giving the appearance of sweeping Geithner's tax problems under the rug since he will be in charge of the IRS. But Grassley said he recognized that many in Congress viewed Geithner as "possibly the only man for the job of healing the recession before us and a very fractured economy."
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