The story is (a) that the immigration status of Geithner's housekeeper changed during the course of her employment -- she later got her green card -- and (b) Geithner didn't realize that his status as an employee of the International Monetary Fund subjected him to different tax rules than other U.S. citizens. (According to the IMF, employees who are U.S. citizens have to file their taxes as self-employers and use Schedule SE (self-employment) on the 1040. See here.) The IMF withholds income tax payments four times a year; employees are responsible on their own for calculating how much payroll tax they owe. It's kind of complicated, but IMF employees are supposed to be briefed about these rules. (The Journal's Weisman writes that the "IRS has mandated loose rules for U.S.-born IMF employees unaware of their obligations to pay payroll taxes) because this happens a lot. According to transition officials, Geithner told the Senate Finance Committee today that he made a "common mistake" which he corrected as soon as it was discovered. He has since paid the back taxes in the amount of about $26,000. The error was discovered by Obama's meticulous vetting team on November 21, even as it slipped by an accountant that Geithner had employed to figure this out. As for the housekeeper: she had an Employee Authorization Document at the time of her employment. Her authorization expired a few months before she stopped working for the Geithners. She was NOT an illegal immigrant; she was a legal U.S. resident, married to a U.S. citizen, and was later given her green card. The housekeeper nit we can dispense with fairly quickly: even anti-immigration Republicans believe that the rules are complex and the enforcement mechanisms flawed and arbitrary. Politically, maybe it matters that Geithner had a housekeeper; it probably doesn't.Sen. Charles E. Grassley, ranking Republican on the Senate Finance Committee, is raising questions about a housekeeper who worked briefly for Treasury Secretary-nominee Timothy Geithner without proper immigration papers, and multiple years when Mr. Geithner didn't pay Social Security and Medicare taxes for himself.
The IMF issue is less easy to dismiss, although there certainly seems to have been no ill-intent on Geithner's part; he made more than enough money to cover the tax liability that he owed, and, again, the mistake is common and apparently was not subject to any sort of a cover up. The question, then, is whether Geithner's intelligence can be knocked for not knowing all the rules of the tax code; in theory, the Treasury Secretary ought to be held to a slightly higher standard on these things. The Senate Finance Committee's chair and ranking member, Max Baucus (D) and Chuck Grassley, issued a joint statement saying that would "continue to review Mr. Geithner's tax returns and other information in advance of a nomination hearing." So -- the committee will show its oversight chops and publicly send the message that they're an independent body willing to hold Obama's team accountable. Baucus, in a statement, said he was "disappointed" but otherwise not concerned. Obama's press secretary, Robert Gibbs, spent the morning in a tabletop homeland security exercise. He existed to a real (if minor) PR crisis: In a statement, he says that Geithner's "service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."
So far, Democrats are only clucking faintly; the Republican National Committee e-mailed the Journal story to reporters, but so far hasn't figured out what to say.
Would Geithner's nomination will be derailed by this kerfuffle? Based on what we know now, that wouldn't be reasonable.
The disclosure calls into question Geithner's ability to multitask and his prior knowledge of the tax code, but it would be hard to fault his of his judgment or his qualifications, and it really has little bearing on the job he was nominated to do.
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