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Geithner tax and housekeeper problems jolt Obama
By TOM RAUM
Associated Press
January 14, 2009

WASHINGTON (AP) -- At the end of a nearly seamless transition, President-elect Barack Obama has been buffeted by a string of embarrassing jolts within the space of two weeks.

The disclosure Tuesday that his choice for treasury secretary, New York Federal Reserve chief Timothy Geithner, failed to pay $34,000 in taxes and employed a housekeeper without proper immigration papers was another jarring distraction just days before Obama's inauguration -- and raises fresh questions about his team's judgment, vetting procedures and political sensitivities.

It follows New Mexico Gov. Bill Richardson's sudden withdrawal on Jan. 4 from consideration as commerce secretary, citing a federal investigation into how his political donors landed a lucrative transportation contract.

Senate Democratic leaders and Obama transition officials immediately voiced confidence in Geithner and called for his quick confirmation once Obama is sworn in and is able to formally nominate him -- citing the important role Geithner will play in dealing with one of the nation's severest recessions in decades.

But the delinquent-tax part of the new disclosure, in particular, is a huge liability for Geithner, given that as treasury secretary he would oversee the Internal Revenue Service.

It's also one of those issues that ordinary Americans can readily understand -- the consequences of not paying taxes properly and on time. You don't mess with the IRS.

At issue is Geithner's failure to pay appropriate Social Security and Medicare taxes when he worked for the International Monetary Fund between 2001 and 2003. He had paid some of the back taxes in 2006 after the IRS sent him a bill. When the Obama transition team discovered he owed even more back taxes, Geithner paid those additional taxes days before Obama announced his choice in November, according to the Senate Finance Committee considering his nomination.

Obama's staff told senators about the tax issues on Dec. 5.

Geithner also didn't realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, according to the materials released by the committee.

It was clearly unwanted news to a team that had prided itself on efficiency and raw talent.

Incoming White House spokesman Robert Gibbs called Geithner's missteps "honest mistakes, which, upon learning of them, he quickly addressed." But serious issues were raised about the performance of Obama's team in vetting Geithner that are not likely to go away soon.

In another jarring episode, Obama and Senate Democrats also were outmaneuvered by disgraced Illinois Gov. Rod Blagojevich and Roland Burris, the man he chose to fill Obama's vacant Senate seat.

Obama at first endorsed the hard line taken by Senate Majority Leader Harry Reid, D-Nev., and other Senate Democrats that they never would accept an appointment from Blagojevich. But Burris, a black politician who had an unblemished reputation, made a goodwill overture to Senate Democrats. Illinois constitutional law seemed to be on his side. Both Reid and Obama reversed course and signaled to Senate leaders that they should seat Burris.

>> Continued -- Page 1 2

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

 

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