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Analysis: Obama manages bump over Treasury choice

Personnel embarrassments are inevitable for U.S. presidents. With skill and luck, disasters are not.
That is the lesson so far of Timothy Geithner. He appears to be on his way to confirmation as treasury secretary despite the startling disclosure that he failed to pay $34,000 in payroll taxes earlier in the decade.
Far from blindsided by the fact, two influential senators who will vote on his confirmation, one in each political party, had known about it for weeks. President-elect Barack Obama's transition team saw to that, according to a bipartisan report by the Senate Finance Committee, averting an unpleasant surprise for politicians who loathe the unexpected.
It also helps that Geithner enjoys an excellent reputation among Republicans and Democrats alike at a time of national economic emergency. And that some GOP senators concluded they were unlikely to do better if Obama had to name a replacement.
Considerable work by Obama's transition team preceded first public word of Geithner's tax problems.
On Dec. 5, the transition team met with Finance Committee staff members and disclosed that Geithner had paid the back taxes and $8,679 in interest, according to a summary of the events signed off on by Democrats and Republicans alike.
At the direction of Sen. Max Baucus, the committee chairman, and Charles Grassley, the senior Republican, committee aides then obtained Geithner's tax returns and interviewed his accountants and a representative of the International Monetary Fund, his employer.
On Dec. 19, Geithner met with committee aides "to answer questions about the employment tax issue and other issues identified during the course of the document review," the summary added.
Presumably, if the committee's investigation had turned up any new problems, Geithner's nomination would have been derailed over the year-end holidays. The fact that his nomination remained on track vindicated the work done by Obama's transition team, as well as the decision to notify the Senate in advance.
Following up, Geithner waited in a Senate anteroom on Tuesday, ready to answer questions from rank-and-file committee members who were hearing the details for the first time from their aides. He followed up Wednesday with a call to Sen. John Ensign, who had been unable to attend the session.
"I don't think I see enough in there to cause a problem," the senator said. "I think they were honest mistakes."
Political reality played a role, as well, as did the grim state of the economy. Geithner's political pedigree is remarkable for a partisan era _ tapped by the Bush administration to help rescue the battered economy, then picked to head the Treasury Department by Obama.
Sen. Orrin Hatch said Republicans interested in derailing Geithner should think again. "They're not going to get anybody better than him from this administration for treasury secretary," he said.
That is not to say there are not lingering questions.
By the committee's account, Geithner paid back taxes for the years 2003 and 2004 after a 2006 IRS audit determined they were owed.
It is not known when he realized he also owed money for 2001 and 2002. Based on regulations, the IRS auditors were barred from looking that far into the past. By the Finance Committee's description, it wasn't until Obama's vetting team informed Geithner that he had made a similar error for 2001 and 2002 that he sent the IRS a check for those years.
The report cites other errors on Geithner's tax returns, including the use of payments for overnight camps his children attended in computing the dependent care credit for the years 2001, 2004 and 2005.
"The accountant who prepared his 2006 tax return apprised him that payments to overnight camps were not allowable expenses for purposes of the credit but he did not file amended returns at the time to correct the prior years," it notes.
Whatever their concerns, Democrats quickly closed ranks. Nearly 48 hours after news about the tax issue surfaced, not a single Senate Republican had stepped forward to oppose the nomination.
Obama reaffirmed his support, and Senate Majority Leader Harry Reid, D-Nev., likened the entire matter to a hiccup.
Baucus called it an honest mistake. Grassley wasn't as forgiving. "I'm not saying at this point it's disqualifying. But it's a little more important about income tax for somebody that's overseeing the IRS than there is, maybe, for the secretary of agriculture, as an example," he told reporters.
Two Republicans forced a postponement in Geithner's planned confirmation hearing, and late-night comedians quickly turned him into a target.
But barring another disclosure, it seems like a crisis averted for team Obama, which so far has proven astute about sorting through personnel problems.
Take New Mexico Gov. Bill Richardson, for example, Obama's choice to become commerce secretary.
With most of the country still celebrating the New Year's holiday, Richardson abruptly announced he was withdrawing, calling a grand jury investigation in his home state a political distraction.
If Obama sought to dissuade him from withdrawing, there is no record of it.

Updated : 2021-07-29 04:55 GMT+08:00