Geithner draws scrutiny

GEITHNER DRAWS SCRUTINY…. This seems to be causing some headaches on the Hill this afternoon.

Sen. Charles E. Grassley, ranking Republican on the Senate Finance Committee, is raising questions about a housekeeper who worked briefly for Treasury Secretary-nominee Timothy Geithner without proper immigration papers, and multiple years when Mr. Geithner didn’t pay Social Security and Medicare taxes for himself. […]

According to people familiar with the matter, Mr. Geithner employed a housekeeper whose immigration papers expired during her tenure with Mr. Geithner, currently president of the Federal Reserve Bank of New York. The woman went on to get a green card to work legally in the country and federal immigration authorities didn’t press charges against her, these people said.

The second issue involved taxes due while Mr. Geithner worked for the International Monetary Fund between 2001 and 2004. As an employee, Mr. Geithner was technically considered self-employed and was required to pay Social Security and Medicare taxes for himself as both an employer and an employee.

He apparently failed to do so, resulting in Internal Revenue Service audits his last two years at the IMF. As soon as the IRS brought the issue to his attention, he paid the taxes with interest, these people said.

The transition office quickly leapt to Geithner’s defense, insisting that his service “should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed.”

As nominating controversies go, this seems pretty thin. With regards to the housekeeper, Geithner employed a woman whose papers were in order when he hired her, and who went on to get a green card. There was a three-month gap, but it’s easy to believe Geithner didn’t know about the discrepancy, and the gap wasn’t even worth prosecuting. He went beyond what was legally necessary in paying back withholdings.

On the self-employment taxes, the Wall Street Journal noted that this is a pretty common error among IMF employees — the institution has deliberately set up a unique payroll system to accommodate foreign employees — and Geithner addressed it by paying what he owed.

This seems, in other words, like small potatoes, especially given the seriousness of Geithner’s responsibilities at the Treasury Department in the middle of an economic crisis.

At this point, Democratic senators have “gathered in an emergency meeting” to discuss the matter, but Senate Finance Committee Chairman Max Baucus (D-Mont.) said the allegations are not enough to “disqualify” Geithner from consideration, and Sen. Debbie Stabenow (D-Mich.), added, “What we talked about had been fully disclosed to transition officials. I am certainly going to support him.”

For what it’s worth, while Grassley has causing a fuss, at least some other Republicans seems largely unfazed by the revelations. Sen. Orrin Hatch (R-Utah) said he “still supports” Geithner.

At this point, I’d be surprised if anything came of this. We’re talking about infractions that a) are minor; b) Geithner addressed and corrected; and c) he made no effort to conceal. It’ll take considerable effort for Republicans and Fox News to gain traction with this.