ROBERT SIEGEL, Host:
From NPR News, this is All Things Considered, I'm Robert Siegel. Timothy Geithner began his confirmation hearing this morning with an apology. President Obama's nominee for Treasury Secretary said this to the Senate Finance Committee about the tax issues that have delayed his confirmation.
(SOUNDBITE OF SENATE HEARING)
M: These were careless mistakes but they were unintentional. I want to apologize to the committee for putting you in the position of having to spend so much time on these issues when there is so much pressing business before the country.
SIEGEL: Well, if an apology right off the bat was intended to defuse the situation, as NPR's John Ydstie reports, it did not.
JOHN YDSTIE: Geithner's tax issue involved failing to pay $34,000 in taxes during the years 2001 through 2004. Until the Senate Finance Committee revealed the problem last week and his hearing was delayed, it was assumed the highly respected Geithner would be quickly confirmed. After all, the former Treasury official, who was president of the New York Federal Reserve Bank during this financial crisis, seemed uniquely qualified. But Republicans remain troubled by the tax issue today, including ranking Republican, Charles Grassley of Iowa.
(SOUNDBITE OF SENATE HEARING)
M: Not discussing your tax returns, Mr. Geithner, would be like sweeping them under the rug.
YDSTIE: Grassley went on to ask a series of questions about Geithner's failure to pay the full amount of Social Security tax required while he worked at the International Monetary Fund. The IMF does not withhold and pay taxes for employees, as most US companies do. It does regularly inform workers that they are responsible for paying both their portion and the employer's portion of Social Security. From the years 2001 through 2004, Geithner paid the worker's portion but not the employer's. Geithner was audited by the IRS and required to pay the shortfall for 2003 and 2004, but ultimately he told lawmakers he didn't have to pay a penalty.
(SOUNDBITE OF SENATE HEARING)
M: And that just goes to the point, I think, that they felt this was a common enough problem that it wasn't unusual in my circumstance. Now, having said that, this was completely my responsibility.
YDSTIE: But, here's what's troubling Republicans. The IRS statute of limitations had run out for 2001 and 2002. So the IRS could not require Geithner to pay taxes for those years. And Geithner did not pay those taxes until the Obama transition team discovered the situation as Mr. Obama prepared to nominate him. Only then did Geithner pay it in full. Today, Arizona Republican Jon Kyl tried to get the Treasury nominee to explain why he waited.
(SOUNDBITE OF SENATE HEARING)
SIEGEL: It's legal to rely on the statute of limitations. There's nothing wrong with relying on the statute of limitations. I think what some people find implausible is that that isn't what you're saying you did. What you're saying is that you didn't think about it until it was brought to your attention in connection with your nomination. Is that correct?
M: I said, Senator, that I did not - looking back on it, did not think about it carefully enough, did not ask enough questions, and I regret not having done that.
YDSTIE: But Kyl continued to press Geithner, asking whether he'd thought about paying the taxes prior to being nominated. Geithner did not give him a direct yes or no answer.
(SOUNDBITE OF SENATE HEARING)
M: I did what I thought was the right thing to do at that time, which is, the IRS told me what I owed...
SIEGEL: Yeah, I'm sorry to take extra time here. But, would you answer my question rather than dancing around it, please?
YDSTIE: Aside from his taxes, Geithner defended his role in the government's response to the financial crisis, saying the actions were necessary to avoid financial collapse. He also said within weeks, President Obama will present a detailed plan on dealing with the financial crisis to the Congress and the nation. John Ydstie, NPR News, Washington.