Daschle and Geithner: Too Important Not To Be Confirmed?

The old-fashioned Westerns I watched as a kid were simple: good guys vs. bad guys. And if you ever wondered which were which, you just had to look at their hats.

George W. Bush, never managed to grow up past that kind of thinking. There were white hat countries and black hat countries -- with us or against us. A professor of ethics wrote a book about him called "The President of Good and Evil."

Real life, of course, is rarely that simple. Bush is out and Obama is in, but some of the good guys we desperately hope will make everything better are starting, inevitably, to disappoint us. Take Tom Daschle and Tim Geithner.

Daschle is the model of a model politician: clean-cut, well-spoken and smart. And so popular that he was voted Democratic leader in 1994 - eight years after he was first elected to the Senate. Only LBJ had served less time before being chosen party leader. Since losing in 2004, Daschle has made more than $5 million as a lawyer, lobbyist and advisor to a private equity firm.

Suddenly, we learn, Daschle has a problem. It's caused him to pay $140,000 in back taxes and interest since Barack Obama said he wanted Daschle to be Secretary of Health, Education and Welfare. The back payments cover 2005 through 2007, partly for Daschle's free use of a car and driver provided by the equity firm. It's a perk Daschle didn't bother to tell the IRS before, but now estimates as worth $182,250.

The same company paid Daschle an even million dollars in 2007, $83,333 a month. But, although he got paid for 12 months, his payment for May was left out of the annual income statement the firm sent him. So Daschle never reported it to the IRS.

Daschle's spokeswoman blames the company for "a clerical error." But how likely is it that the former Senator didn't notice that instead of an even $1 million from the firm, he was reporting $917,667? In addition, the Daschles corrected an overstatement of almost $15,000 in their charitable contributions over three years.

An administration official says it was all "a stupid mistake" that Daschle discovered, paid for, and told the Senate Finance Committee about. But a Republican committee staffer says it will have to be thoroughly examined. The White House and Senate Majority Leader Harry Reid predict it won't stop Daschle's confirmation.

Tim Geithner has already been confirmed as Treasury Secretary. This, despite a different tax problem. One that cost him a total of $42,700 in back taxes and interest, including almost $26,000 he'd never have paid if Obama hadn't nominated him.

A little background: before being named to head Treasury, Geithner was president of the Federal Reserve Bank of New York, and before that spent more than two years as an executive of the International Monetary Fund.

That's where his tax problems arose. As an international organization, the IMF does not withhold federal and state taxes from its American employees' paychecks. Nor does it deduct their Social Security taxes (including Medicare).

Instead, the Monetary Fund pays the Americans extra money, roughly enough to cover the federal and state taxes, and the employer's half of the Social Security tax. With no withholding, IMF employees are responsible for paying their federal and state taxes quarterly. They are also responsible for quarterly Social Security payments, half the money provided by the IMF, the other half chipped in by the employee, the same way it's divided between American firms and their workers.

Geithner worked for the IMF from 2001 thru 2003, and also got some payments from them in 2004. Two years later, he was audited by the Internal Revenue Service, which found that he had failed to pay any of his Social Security taxes in 2003 and again in 2004 - either the half the IMF had paid him in advance, or the half he was supposed to put up himself. The IRS socked him for almost $15,000 in back taxes plus $1,885 in interest.

Geithner also hadn't paid $19,176 Social Security taxes on his IMF earnings for 2001 and 2002. But the IRS did not audit him for those years because the statute of limitations had run out. Surely, his audit reminded him that he also owed taxes for the other two years -- but he wasn't required to pay them and didn't -- until after Obama picked him for Treasury. Only then did he come up with the additional $19,176 - plus $6,794 interest.

Geithner apologized to Congress for what he called "unintentional...careless mistakes," that neither he, nor his software program nor his accountant managed to catch. But he acknowledged signing an IMF statement saying he was responsible for paying those taxes. And the Senate Finance Committee produced IMF documents U.S. employees got with detailed explanations of their tax obligations.

One blogger posed the best question for Daschle or Geithner: "If you weren't nominated, would you ever have paid this tax'?"

To me the answer is clearly NO. That's too bad. People in high places ought to pay their taxes, to set an example for the rest of us. Especially the Treasury Secretary, who oversees the IRS. Moreover, both men's problems are far more serious than those that torpedoed some past nominees.

Bill Clinton's first two choices for Attorney General--Zoe Baird and Kimba Wood-- were dumped after disclosures they'd hired illegal immigrants. And George W. Bush's first choice as Labor Secretary, Linda Chavez, withdrew after revelations she gave money and a home to an illegal immigrant.

Even so, maybe Daschle should be approved. And perhaps Geithner's confirmation was appropriate. After all, Senator Reid's spokesman described Daschle as "the best person to help reform health care in this country." And Republican Senator Charles Grassley, who voted against Geithner, said many others in Congress think he's "possibly the only man for the job of healing the recession" and "a very fractured economy."

It reminds me of the argument that some financial institutions are too big to fail in spite of their blunders and/or wrongdoings. Maybe some people, like Daschle and Geithner, are too important NOT to be confirmed, at least given the extent of their particular mistakes or sins, relative to the needs of the country. Or maybe not.

Comments

[BCubedReg]

NO! Dashcle is not too important to not be confirmed. There are alot of well qualified connected people that could fill the role. Pick another person and move on.

[funkalicious]

On the one hand a tax cheats on the other hand a president who ran a campaign against tax cheats.

Who does he hire tax cheats. does that make our President a liar and tax cheat by proxy?

In a country of 300 million there are only two qualified men for these positions? and they are both blatant tax cheats?

What kind of nightmare has this country become?

[partyofone]

Daschle has said he will recuse himself from matters involving the clients he has served as a lobbyist. But one of the those clients UnitedHealthCare boasts that it provides serves to 1 in 5 Medicaire recipienets, and, thus, has a HUGE stake in any actions or policy changes invovling Medicare.

Is it really feasible for a Secretary of HHS to recuse himself from any dealings on Medicare?

Daschle is too deeply conflicted to serve in this important position, and an "exception" to allowit would make a mockery of President Obama's commitment to high ethics in his administration and to closing the revolving door for lobbyists.

[Gretchen Adamek]

I absolutely agree. And I wrote a letter to the NYT on the very subject. This is considerably more important than the tax issue. For one thing, if he was supposed to pay taxes (which he was) on the car services, the company providing them should have provided him with tax documents at the end of the year.

But UnitedHealth is a very powerful company, that heavily lobbies. Putting Daschle in charge sends the signal that it is business as usual vis a vis the helathcare­/insurance industries.

[BarackstarObama]

The answer to the question is Yes.

[bigfan1]

Good blog, Mr. Goodman. Both Geithner and Daschle are smart, talented men with outstanding records. But given the way both played fast and loose with the tax laws, neither should serve in the Obama Administration. Obama can't claim the high moral ground and then wave away such blatant transgressions. As for Geithner and Daschle being "indispensable" give me a break. That's hogwash and everyone knows it.

[joebiz]

Good post.

[Yermammy]

You're right, in that these two should are wrong and not fit for the job. Barack should be the man he is and just admit they don't meet the qualifications. That's it! Just appoint people that do. Simple. No biggey :)

[AnnfromCA]

These "exceptions" are exactly why the stock market has tanked.

No, it's really NOT OK.

These aren't "exceptions." These are abuses of positions of power.

And Obama's administration isn't impressing me with integrity.

but then, I always thought the big "kennedy" endorsement meant.....insider guy.

Shrug off integrity.

[basementfrog]

Stealing from the American people is the right of every elected official. The country is no longer subject to the burden of morality and honesty. Openly crooks take what they want and all these elected demigods know how to steal, canive and cover. Who are you to suggest they have to follow the same rules as other citizens. They are above morality, superior and enlighted beings as compared to the dumb mass of ignorance that elects them. Proof of their superiority is that fact that we elect them to do just what they are doing over and over again.

It's like Wall St. executives and their multi-million dollar salaries and bonuses regardless of company performance: a matter of royal entitlement. Who are you to question their value... they are priceless.

We are luck to have such magnificence among us. Who cares if they rob us blind, destroy our economy and rob us of our homes, income, savings and investments?

It's the new morality. It's the new justice of taking what you want. It's the new sense of self-worth you create without consideration to anyone but your own understanding of your value.

Anyone who believes this is democrat versus republican is additional proof of the massive stupidity of our voters: they are all in it together. None of these people believe in "Government for the people." It's government for the rich and it's always been so.

My, My what a world!

[Luvial]

Paying your taxes or not, just another area where the law looks the other way if you are rich or powerful. Why isn't the IRS being investiagetd for all the favors they hand out to the influencial? Oh, I forgot, their boss is rich and powerful.

[usedtowander]

Geithner and Daschle are two different situations.

Geithner is now the head of the IRS. It is morally repugnant to have a man who refused to properly pay his taxes until he was caught be the head of the IRS. Plus, his part in creating this mess as part of the NY Fed is still suspect.

Daschle, on the other hand, was simply taking things from others in what he may have thought was a kind gesture as part of what all senior political officials quickly come to believe is part of their entitlement.

Compared to the $Billions our "representatives" in government see fit to give to AIG, Bank of America, Citigroup and others so that they can live incredibly lavish lifestyles - a mere chauffeured car is nothing.

I mean, really, doesn't every American politican really deserve a chauffeured car? Heck, they (mostly) fly commercial (first class, but commercial) .
That's way less costly than Ken Lewis of Bank of America's $100,000,000 compensation package Or, the $1.4 million office furnishings of Bank of America's Thain. Or AIG's parties. All paid for off the back of the labor of the now-unemployed American Taxpayer and given by our generous Senate and Congressional "representatives.

Change you can believe in? Not hardly.

[kcdrew]

Out standards shouldn't be this low. Didn't pay taxes? No, can't be in the government.

Geithner? Out.

Daschle? Out.

We need responsibility, accountability and competence in government. Not paying taxes is none of those things.

It wouldn't be okay for those of us out here, on the street. It shouldn't be okay for them.