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Taxes trip Obama Treasury nominee

 Treasury Secretary-designate Timothy Geithner, left, and National Economic Council Director-designate Lawrence Summers, leave the auditorium after Pr...
 President-elect Barack Obama, accompanied by National Economic Council Director-designate Lawrence Summers, second from right,  and others, leaves a ...

Obama Economy

Treasury Secretary-designate Timothy Geithner, left, and National Economic Council Director-designate Lawrence Summers, leave the auditorium after Pr...


President-elect Barack Obama, accompanied by National Economic Council Director-designate Lawrence Summers, second from right, and others, leaves a ...

Tax and immigration blunders tripped up President-elect Barack Obama's highly regarded nominee for treasury secretary, arguably the most important position in the next Cabinet that assumes power in the midst of a spectacular U.S. economic downturn.
Timothy Geithner disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.
The Geithner miscue proved an unwanted distraction for Obama, who was on Capitol Hill wrestling to build congressional consensus for his economic rescue efforts.
It was Obama's second trip to Congress since he returned from a Christmas holiday. His first mission pushed his $800 billion plan that melds federal spending and tax cuts. He was back on Tuesday arguing for the release of the second half of a $700 billion bailout package passed in September as several financial organizations failed or were on the verge of collapse.
Obama told senators on Tuesday he would veto legislation to block release of those funds while pledging that billions would go toward helping homeowners facing foreclosure. Several Democrats said his commitments, to be made in writing, would be sufficient to prevent an embarrassing pre-inauguration battle for the president-elect when the Senate votes this week. Obama is sworn in next Tuesday.
"This will be the first vote that President-elect Obama is asking us for. I'll be shocked, and I'll be really disappointed if he doesn't get it," said Sen. Joseph Lieberman, a Connecticut independent who historically votes with Democrats. "This is a new beginning."
Obama was trying to overcome congressional ire over Bush administration use of the first half of the massive bailout measure. Critics claim the rescue money went disproportionately to big financial institutions, was not carefully accounted for and ignored the needs of homeowners facing home mortgage foreclosure.
As Obama tussled on Capitol Hill, an official in his transition office said Geithner had paid most of the past-due taxes days before Obama announced his nomination in November. The unpaid assessments were discovered by Obama's transition team while investigating Geithner's background, said the official, who was not authorized to discuss the situation and requested anonymity.
Obama stood by Geithner, as senators vetting his nomination questioned him behind closed doors.
"He's dedicated his career to our country and served with honor, intelligence and distinction," incoming White House spokesman Robert Gibbs said. "That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."
"He made a common mistake on his taxes," Gibbs said in a statement.
Geithner failed to pay self-employment taxes for money he earned while working for the International Monetary Fund from 2001 to 2003, the transition official said. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in penalties from 2003 and 2004.
Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.
Geithner also didn't realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, the transition official said.
Gibbs said Geithner "was unaware that his part-time housekeeper's work authorization expired for the last three months of her employment."
Geithner is the second Obama nominee to face controversy. New Mexico Gov. Bill Richardson withdrew his name on Jan. 4 as Obama's Commerce secretary after questions surfaced about an ongoing federal investigation.
Immigration issues have derailed presidential nominations in the past.
George W. Bush's choice for labor secretary in 2001, Linda Chavez, withdrew her nomination when word surfaced she had housed an illegal immigrant.
In 1993, Bill Clinton's first choice for attorney general, Zoe Baird, fell through when word leaked that she had hired illegal aliens as household workers and failed to pay their Social Security taxes. Clinton's next choice, federal judge Kimba Wood, didn't go forward after the disclosure that she had hired an illegal immigrant as a baby sitter.
Senior Democrats quickly signaled Tuesday that they would not let the revelations derail Geithner's nomination. Senate Majority Leader Harry Reid dismissed them as "a few little hiccups," and said "I'm not concerned at all" about its impact. He said Geithner is "extremely well qualified" to become treasury secretary.
Senate Finance Committee Chairman Max Baucus said he would move forward quickly with a confirmation hearing. While "disappointed" with Geithner's errors, Baucus said he was "satisfied" that they'd been addressed.
"We have to roll up our sleeves and get this economy moving again for the American people, and Tim Geithner has the right combination of experience and skill for these difficult economic times," Baucus said in a statement.
Sen. Charles E. Schumer, a New York Democrat and also a Finance panel member, said he still strongly supported Geithner.
"Tim came to the committee, admitted he had made some mistakes, and was very contrite. In my opinion, these mistakes were not at all disqualifying," Schumer said in a statement.
Hillary Rodham Clinton, Obama's choice as secretary of state, was sailing through her confirmation process with collegial questioning by the Senate Foreign Relations Committee.
She had faced an array of non-contentious questions until two Republican committee members pressed her to take additional steps to ensure that former President Bill Clinton's global fundraising work did not pose even an appearance of conflict with her role as the chief U.S. diplomat. She balked, saying disclosure rules already in place were carefully crafted and adequate to avoid any conflict.
She encountered no challenges to her basic vision for foreign policy.

Updated : 2021-06-21 22:32 GMT+08:00