I have a new article today on the Senate Finance Committee’s confirmation hearing for Treasury Secretary-designate Timothy Geithner. As expected, some Republicans questioned Geithner closely about his failure to pay Social Security and Medicare taxes in 2001, 2002, 2003, and 2004. After a 2006 IRS audit, Geithner paid his back taxes and interest for 2003 and 2004, but was not required to make good for 2001 and 2002 — a bill totaling nearly $26,000 — because the IRS’s statute of limitations had run out. Even though he had unquestionably not paid his full taxes, Geithner did not pay up for ‘01 and ‘02 until he was nominated to be Treasury Secretary.
Geithner came in with a carefully prepared confession of error. “These were careless mistakes,” he told the committee. “They were avoidable mistakes. But they were unintentional.” Geithner explained that when he first went to the IMF in 2001, he somehow believed — he didn’t explain exactly how — that he was not required to file those Social Security and Medicare taxes. As he thinks about it today, he said, he realizes that the IMF informed him repeatedly, and precisely, about his obligation. But back then, he just didn’t get it. “Looking back, it was very clear,” Geithner said. “If I had thought about it more carefully at the time, and I’d asked more questions — I would have gone back and asked a bunch more questions about that, and I would have approached it differently.”
As the hearing went on, Geithner repeated that explanation several times, whether it answered the question he had been asked or not. He relied on it, for example, when Kentucky Republican Sen. Jim Bunning asked Geithner a very simple and direct question. “Would you have paid your 2001 and 2002 tax had you not been nominated to be the treasury secretary?” Bunning asked.
“Senator, as I said initially, I should have asked more questions when I concluded that audit at the time, and I didn’t,” Geithner responded. “When I think back on that, I regret not having done that. But I should have done it at that point.”
Most people who have reviewed the facts of the Geithner case would probably say that no, he would never have paid those 2001 and 2002 taxes had he not been nominated. But only Geithner can say for sure. Bunning’s question was one of those moments when it became clear that there were questions the nominee simply couldn’t answer, at least not if he wanted to avoid damaging himself.