- The Washington Times - Thursday, January 15, 2009

Senate Republicans backed off a confirmation fight Wednesday over Treasury Secretary-designate Timothy Geithner’s failure to pay nearly $35,000 in federal taxes, though they bumped a hearing on the appointment until after President-elect Barack Obama’s inauguration next week.

Republicans are holding their fire to gauge whether public scorn builds against Mr. Geithner, who would oversee the Internal Revenue Service. They also fear a negative reaction from financial markets, where the Geithner pick was hugely popular.

Sen. Charles E. Grassley of Iowa, the ranking Republican on the Senate Finance Committee, said Mr. Geithner would not get a free pass but also declined to condemn the nomination over the tax flap.

“I’m not saying at this point it’s disqualifying,” Mr. Grassley said. “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.”

Finance Committee member Sen. John Ensign, Nevada Republican, also said the nominee deserves careful scrutiny but should not yet be counted out. “I’m not convinced that this disqualifies him at this point,” he said.

Another Republican on the committee, Sen. Olympia J. Snowe of Maine, said the tax and housekeeper problems were “troubling and concerning” but “these regrettable issues ultimately should not preclude support for his nomination at this time of monumental challenges for our economy.”

Still, the confirmation hearing, which Democrats hoped to hold Friday but was blocked by Republicans, was rescheduled for Wednesday, the day after the inauguration.

“Once his hearing is over, expect him to be confirmed as quickly as possible,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid, Nevada Democrat.

Mr. Obama pushed hard with a public relations offensive. Barring public backlash, the Obama team expects this latest Cabinet-level mishap will pale in comparison to the withdrawal of Commerce nominee Bill Richardson amid a federal corruption probe and the bumpy confirmation facing Attorney General-designate Eric H. Holder Jr. because of his role in President Clinton’s end-of-term pardons.

The nomination of Mr. Geithner faltered Tuesday when senators revealed Mr. Geithner neglected to pay federal taxes from 2001 to 2004 while working for the International Monetary Fund and has a history of tax mishaps.

All told, he paid $34,023 in back taxes and $8,679 in interest. The IRS waived penalties.

Mr. Geithner also failed to fill out immigration forms for three housekeepers who worked for him since 2004, and he employed one of the housekeepers for more than three months after she was no longer legally allowed to work in the U.S.

Problems with tax returns have sunk nominees before.

In 2004, President Bush withdrew his nomination of Glen Bower to be a judge on the U.S. Tax Court after Sen. Max Baucus, Montana Democrat, raised questions over tax deductions Mr. Bower took, and over what Mr. Baucus said were “woefully short” efforts to clean up his tax returns.

There is also precedent for the housekeeper issue to be just as volatile, as so-called “nanny problems” have derailed nominees.

Mr. Clinton’s first and second picks to be attorney general, Zoe Baird and Kimba Wood, had to withdraw over hiring illegal immigrants as servants. Both Bernard Kerik, whom Mr. Bush tapped in 2004 to be homeland security secretary, and Linda Chavez, whom he nominated in 2001 to be labor secretary, were withdrawn on those grounds.

The Obama transition team reported the tax and housekeeper issues to the Finance Committee.

Democrats said the delinquent taxes, some of which Mr. Geithner paid only after he learned that Mr. Obama was considering him for the post, were an “honest mistake.”

“Is this an embarrassment for him, yes. He said so himself,” Mr. Obama told reporters, adding that the mistake was corrected and Mr. Geithner remains an eminently qualified candidate to lead Treasury during the economic crisis.

He said that if the standard for Cabinet secretaries was never having “a mistake in your life,” no one would be qualified.

Mr. Geithner is currently president of the New York Federal Reserve Bank.

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