Obama – there aren’t two sets of rules

President Obama deserves credit for taking responsibility for the the last two cabinet nominees who turned out to be tax cheats, Kellefer and Daschle. But what about Geithner, who will now head the agency he cheated?

In his admission the President said,

I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes.

Though Daschle owed a significant amount of money for a car and driver, and Kellefer didn’t pay her D.C. unemployment taxes, Geithner’s offense was worse. National Review online explained it best.

But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

Perhaps President Obama doesn’t realize this part. Perhaps all of the legislators who confirmed him don’t realize this. But just who on Obama’s staff recommended and vetted this guy, and who is he kidding when he told Congress,

At his confirmation hearing, Geithner called the transgressions “careless mistakes” and unavoidable ones.

He told the Senate Finance Committee the failure to pay was “unintentional.” But he also said, “I should have been more careful.”

He blamed his accountant, he blamed Turbo Tax, then finally came up with the above pathetic excuse. More frightening is the fact that he was confirmed because of the skills he has that will get us out of this economic mess.

He was involved in the original TARP distribution, the decision to bail out everyone but Lehman Brothers, and was the head of the N.Y. Federal Reserve while the economy was in a meltdown.

I trust him?

Prior to this job he served as Under Secretary of the Treasury for International Affairs from 1998 to 2001 under Secretaries Robert Rubin and Lawrence Summers, where he was a principal adviser and member of the executive branch’s senior team.

Funny, these are the guys that brought us part of this mess by weakening the Glass-Steagall Act, removing the line between commercial and investment banks which was put in place after the Depression to ensure that it would never happen again!

Guess where many of our former government employees worked before and after their stints in our government?

Goldman Sachs.

The list, for this one financial institution, includes Rubin, Paulson, Steel, Flowers (involved in a bid to take student loan lender Sallie Mae private), Whitehead (deputy secretary of state under Reagan), and Josh Bolten, Bush’s chief of staff, and now Geithner.

How about no one involved in the financial industry ever gets to hold a position such as this. Personally I would nominate the chief auditor for the IRS for the job.

But that’s me. I don’t put much stock in “experts”. Though I predicted this mess a couple of years ago, the “experts”, until last year, were still debating whether we were in a recession.

All I have to do is look at the lack of business in downtown restaurants, the 24-hour diners that are no longer open 24 hours and the Chicago rush hour that is devoid of cars.

Think Geithner should resign to remove the appearance of a double standard?

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One Response

  1. Thank you for this thorough and useful explanation

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