Editorial: Timothy Geithner

Under normal circumstances, a tax cheat would not be named to head the department that oversees the Internal Revenue Service.

But these are extraordinary times. Even as many celebrated President Obama's inauguration, stocks tumbled as fears mounted that the government would be forced to nationalize leading financial institutions.

Given the economic turmoil, what used to be an insurmountable hurdle is a speed bump. With little time to waste, decisions now get made with proverbial guns to heads. That explains in part why the Senate will likely confirm Timothy Geithner as the next treasury secretary.

Even leading Republicans in Washington appear willing to overlook Geithner's tax dodge. Indeed, many want Obama to have his own team in place and get off to a good start. But standing by Geithner undercuts Obama's message of change and accountability.

Geithner failed to pay $34,000 in taxes over several years. That's no small matter in normal times. But when the issue was first disclosed by the Wall Street Journal, Obama called it an "innocent" mistake.

At his confirmation hearing yesterday, Geithner said he made "careless and avoidable" mistakes in preparing his taxes, but they were "completely unintentional."

However, his contrition doesn't jibe with all the facts on the ground. An IRS audit in 2006 found Geithner failed to pay self-employment taxes in 2003 and 2004. Geithner promptly paid the back taxes, plus interest.

But he failed to mention that he didn't pay the same taxes in 2001 and 2002 - years the IRS audit didn't cover. That error was caught by the Obama vetting team. In addition, it was discovered that Geithner wrongly claimed a tax credit for overnight camps for his kids.

Geithner prepared his own taxes. As such, it's perhaps understandable that even a savvy businessman like Geithner could get tripped up by the Byzantine tax code. But once the IRS found the problem, Geithner was obligated to amend his other returns.

Hard-working taxpayers are rightly outraged that the person who will oversee the IRS tried to beat the government out of tens of thousands of dollars. Geithner's appointment is an even tougher sell given his key role in the series of federal bailouts that have gone to major banks and other institutions, while average taxpayers have watched their retirement savings get sliced in half and home values tumble.

As the head of the New York Federal Reserve Bank, Geithner has been deeply involved in shaping and determining who gets a bailout. Questions have been raised about the handling and oversight of the bailouts.

At his Senate hearing yesterday, Geithner called for reforming the bailout plan, saying it favored big financial institutions over small businesses and struggling families.

By most accounts, Geithner is a smart guy. He may very well make an excellent treasury secretary. Given his early stumbles, there appears to be nowhere to go but up.