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Geithner apologises for tax transgressions

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Latest update : 2009-01-21

The man US President Barack Obama has chosen to be the next US Treasury Secretary, Timothy Geithner, apologised at his confirmation hearing for his failure to pay $34,000 in back taxes while vowing to unfreeze credit and hold Wall Street to account.

AFP - Treasury secretary designate Timothy Geithner apologized Wednesday over past tax transgressions while vowing to act with "strength, speed and care" to get the stricken US economy moving again.
   
At his confirmation hearing, the outgoing head of the New York Federal Reserve underlined President Barack Obama's determination to do what it takes to unfreeze credit, rebuild broken infrastructure and clean up Wall Street.
   
On Obama's first full day in office, Geithner, 47, expressed contrition after revelations that he failed to pay 34,000 dollars in income taxes while working at the International Monetary Fund earlier in the decade.
   
"These were careless mistakes. They were avoidable mistakes. But they were completely unintentional," he said, apologizing to the Senate finance committee for the distraction caused by the affair.
   
"I should have been more careful. I have gone back and corrected these errors and paid what I owed," he said, explaining he had relied on "Turbo Tax" software and accountants but took full responsibility himself.
   
The committee's Democratic chairman Max Baucus said the errors, arising from Geithner's tax status in 2001-2004 as a US national working for the tax-free IMF, were "innocent mistakes."
   
In more ordinary times, the unpaid taxes, and Geithner's admission that his former housekeeper's work visa expired during her employment with his family, would likely have derailed the nomination.
   
But in these extraordinary times, as the United States grapples with what former Fed chairman Paul Volcker said was "the mother of all financial crises," the embarrassment is not expected to prove a crippling impediment to Geithner.
   
"I believe that Mr Geithner has sufficiently corrected the errors. I know a man of Mr Geithner's talent and dedication will be meticulous on these points in the future," Baucus said.
   
The committee's senior Republican, Chuck Grassley, flagged up Geithner's undoubted experience but asked: "How much does this troubled tax history reflect on his judgment?"
   
Grassley noted that as Treasury secretary, Geithner would command the Internal Revenue Service -- and joined other committee members in saying the affair underlined the need for reform of the US tax code.
   
The Senate finance committee had scheduled a hearing for last Friday but Republican objections over the tax controversy pushed it back past Tuesday's inauguration of Obama.
   
The move meant that Obama lacked a Treasury secretary as soon as he took office, with an immediate reminder of the stakes involved as global stocks sank in the face of a deepening banking crisis.
   
In his inaugural speech, Obama said "greed and irresponsibility" were the roots of the crisis but also blamed "our collective failure to make hard choices" and vowed "action, bold and swift" to mend the economy.
   
In his written testimony, Geithner said: "Our test is to act with the strength, speed and care necessary to get our economy back on track, and restore America's faith in our economic future."  
   
He gave few specifics but promised "aggressive" action to unblock frozen credit with the help of a 825-billion-dollar stimulus package that the new administration hopes to hustle through Congress soon.
   
Geithner vowed "serious reform" to improve the transparency of a 700-billion-dollar financial bailout rushed out last year by the departed administration of George W. Bush.
   
And Geithner pledged the Obama administration would work "as quickly as possible" once recovery is underway to fix the nation's trillion-dollar budget deficit.
   
To that end, he said the Obama administration wanted to consult with Congress on long-term reforms to Social Security retirement benefits and Medicare health insurance for seniors -- two of the budget's biggest burdens.
   
The Treasury nominee declined to commit to an idea for the government to establish a banking "clearing house" to clear US lenders of their onerous bad debts.
   
Democratic Senator Charles Schumer of New York said the proposal could cost three to four trillion dollars, as he joined Volcker in delivering messages of support for Geithner despite the tax affair.
 

 

Date created : 2009-01-21

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