Bloomberg exposes Geithner (and hence Obama)

Bloomberg has been doing a great job of exposing many things and showed an impressive independence that every libertarian must applaud. Last week, they exposed the corrupt bureaucracy in the US, and today, their columnist exposes Geithner and hence make a hit against Obama (change you dreamt about will remain a dream). Obama already picked two tax-cheaters in his team (only 2? only tax-cheaters?).

If you still believe in any change coming from Obama's presidency, please have another read at my post Voice of Wisdom: Jeremy Grantham - pt2

And Yahoo: Obama Warns of 'Catastrophe:' What Happened to 'Hope' and 'Change'?: A failure to act, and act now [on the bill], will turn crisis into a catastrophe," Obama said, sounding a lot more like his predecessor than the candidate of hope and change.

Here's the Bloomberg opinion column [emphasis mine]

Feb. 5 (Bloomberg) -- Presidential admissions of fallibility are about as common as humility on Wall Street -- until now.

“I screwed up,” Barack Obama said in TV interviews Tuesday, following Tom Daschle’s withdrawal of his nomination for Secretary of Health and Human Services. “It’s important for this administration to send a message that there aren’t two sets of rules, you know, one for prominent people and one for ordinary folks who have to pay their taxes.”
If Obama screwed up in nominating and backing Daschle, the former Senate majority leader who ponied up $140,000 in back taxes and interest, what does that say about his support for Geithner?

Geithner was in arrears to the Internal Revenue Service, an agency he now heads, for $50,000. Somehow he “missed” the part in the annual hand-outs from the International Monetary Fund, his former employer, where he was told about his obligation to pay Social Security and Medicare taxes -- a document he signed annually in order to get reimbursed.

After a 2006 audit by the IRS, Geithner paid back taxes for 2003 and 2004, waiting until he learned of his nomination for the Treasury to settle his 2001 and 2002 liability. (Nothing concentrates the mind like the prospect of a public hearing.)

Geithner also took a dependent-care deduction for the cost of his kid’s sleep-away camp, a creative interpretation of the tax code, to say the least. You’d think that in all those years of public service, including seven years at the Treasury, he would have run across a smart Internal Revenue Service agent who could answer his tax questions.

Like Daschle, Geithner was teed up as the only person who could possibly do the job. His major selling point was his familiarity with the Treasury’s Troubled Asset Relief Program.

TARP flunked its first and second oversight exam.

“The panel still does not know what the banks are doing with taxpayer money,” the oversight panel said in its Jan. 9 report.

As president of the Federal Reserve Bank of New York from 2003 through 2008, Geithner was at the scene of the crime when the financial system cratered. The fact that the Fed is a bank regulator and supervisor with direct responsibility for the safeness and soundness of the financial system, and that most of the big banks are in the New York Fed’s district, never posed a remote challenge to his competence or his confirmation.
At first it looked as if Daschle would skate through his Senate confirmation as well, his tax problems dismissed as an “innocent mistake” by his former Senate colleagues. Daschle was an early Obama supporter; the president tapped him for a dual role as secretary of HHS and health-care czar, entrusted with revamping one-seventh of the U.S. economy.

When the issue threatened to spiral out of control and distract Obama from the important business at hand, Daschle bowed out.

And it was a good thing, too. Obama came to Washington pledging to drain the swamp of influence-peddling and the system of pay-to-play: You put me on the payroll, and I’ll get you a job as Commerce secretary. In addition to his tax problems, Daschle was an unregistered lobbyist who parlayed his Rolodex into a $5 million paycheck in the last four years. It sure sounds like business as usual.

Tactically it was a smart move for Obama to take responsibility for nominating and supporting a tax cheat for high office. As a practical matter, his stance creates a credibility problem for Geithner.

The economy is Obama’s No. 1 issue: getting it going, not restructuring one-seventh of it. His relationship with his Treasury secretary is almost as important as the public’s confidence in his choice.

The Treasury faces a Herculean task of fixing the banking system to stabilize the economy. It will consume trillions of dollars in new borrowing. It will require the trust and confidence of foreigners, who are bristling at the “Made in America” provision included in the $819 billion economic stimulus bill passed by the House of Representatives last week.

Geithner said as much when he appeared with Obama at a press conference yesterday.
“Financial systems are built on trust and confidence,” he said.
That’s true. Daschle started with the same premise and came to a different conclusion.

“This work will require a leader who can operate with the full faith of Congress and the American people and without distraction,” Daschle said in a statement announcing he was bowing out. “Right now, I am not that leader.”

Geithner has to be wondering if he is -- along with the rest of us.

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