I have a new story on what is, for some senators at least, the most frustrating thing about Treasury Secretary-designate Timothy Geithner's tax problem: Geithner can't explain why he did it.
Members of the Senate Finance Committee know Geithner failed to pay self-employment taxes during his time at the International Monetary Fund. They know the IMF had repeatedly informed Geithner, as it had all its employees, of his obligation to pay that tax. They know Geithner signed documents saying he would pay the tax. And they know Geithner accepted IMF reimbursement for Social Security and Medicare taxes that he had not, in fact, paid. Geithner paid part of his obligation after a 2006 Internal Revenue Service audit, and the rest of it after he was nominated to become treasury secretary. In all, he paid $42,702 in back taxes and interest.
But why did Geithner, who had been a high-ranking official at the Treasury Department before joining IMF and would go on to head the New York Fed, make those mistakes? Senators got a chance to ask him in person last Tuesday after committee leadership broke the news to them in a hastily-called meeting.
“His explanation was kind of, ‘I don’t know — it was stupid, obviously it was a mistake, and I don’t know why I did it,’” recalls a senator who was present during Geithner’s surprise appearance before a members-only meeting of the Senate Finance Committee last week. “What do you say to that?”
…Since their meeting with Geithner was the first time that most senators had heard of the problem, their questions were not terribly detailed; several of the queries were along the lines of “What were you thinking?” And Geithner’s answers were not terribly satisfying. “He can’t offer a specific reason,” says another source familiar with what went on at the meeting. “He doesn’t really have an answer. He just didn’t know.”