Can a known tax avoider be a money-losing nation's top revenue collector?
David Kotok of Vineland-based Cumberland Advisors says his clients and readers don't want New York Federal Reserve chief Timothy Geithner as Obama's Treasury secretary. Kotok told me he's gotten "nearly 50" notes opposing Geithner's confirmation, vs. just 4 who don't excuse Geithner's actions but "want to move on and believe he will be confirmed." The Senate hearing is slated for Wednesday, a day after Obama's swearing in.
What bothers writers isn't Geithner's failure, as the top regulator of the nation's biggest banks, to heed warnings that non-banks were doing dangerous things with subprime home loans on his watch, in the mid-2000s.
Rather, it's the revelation Geithner didn't pay federal taxes he owed for 2001-04; that he paid just the legal minimum when his failure was uncovered in an audit, and didn't pay the rest until Obama was elected; and what the episode shows about Geithner's judgement, Kotok said.
"Had he paid all and declared that made an innocent error, and done this in 2006, none of this would have been an issue," Kotok told me. "The email critical of Geithner and suggesting that his name should be withdrawn is consistent and in high volume. He has no defenders," and few excusers, Kotok wrote here.
ADDED: Wall Street Journal wrote last week, "Mr. Geithner didn't make any Social Security or Medicare tax payments on his income during the years he worked for the IMF, though he did pay income taxes. After the Internal Revenue Service audited him in 2006 and discovered the payroll-tax errors, Mr. Geithner corrected them for 2003 and 2004. Only after Mr. Obama picked him for Treasury secretary last fall did Mr. Geithner pay the Social Security and Medicare tax he owed for 2001 and 2002."
The embarrassed Fed won't be hiring more "tax scofflaws," Kotok predicted. Should Obama? "The Geithner affair is now in the hands of the US Senate... They are aware of the facts. And they know that the world is seeking a new and trustworthy level of integrity and transparency in the post-Lehman, post-Madoff environment... The only open item is whether (your Senator) has heard from you... The US Capitol switchboard number is (202) 224-3121."