Wednesday, January 21, 2009

The Geithner Dilemma

Timothy Geithner appears headed for confirmation as Treasury Secretary, despite his past underpayment of federal taxes to the tune of $34,000. Politicians in both parties and big business interests want Geithner in that position. Many consider him to be the single most qualified individual in the nation for the job.

(Is that a good thing, or should it sound a warning alarm when all of the various powers line up on an issue? Some of the rhetoric being used in support of Geithner as reported by the AP is downright scary. It is reminiscent of Palpatine’s rise to power portrayed in Star Wars. Geithner is being portrayed as the one guy that can save our economy. This sets him up as a messiah that will wield incredible powers with which no political appointee — no matter how wonderful — should ever be trusted; thanks in no small part to the Bush precedent.)

One of the reasons Republicans favor Geithner is that he is a political independent. He would presumably be more focused on doing the fiscally correct thing rather than the politically correct thing. Republicans worry that they might end up with someone worse if Geithner were dumped for his tax indiscretions.

Most reports make it sound as if Geithner’s tax underpayments were unintentional. As more information has become available, a reasonable suspicion has been raised that such assumptions might be faulty. At any rate, anyone with such a record of underpayment — innocent or otherwise — would be disqualified from IRS employment. Should this be any less true of the person that will head the Treasury Department, of which IRS is a part?

One argument that has been bandied about by some conservatives is that Geithner’s appointment would help point out the insidiously complex nature of our tax code. Shouldn’t a person’s federal taxes be simple enough for a Treasury Secretary to figure? This is a good point, but it is doubtful that Geithner’s tax problems would result in any kind of tax simplification whatsoever.

Besides, even if Geithner were not confirmed, his example effectively makes the point already. And this line of thinking raises the spectre that Geithner might not be qualified to be Treasury Secretary if he can’t even compute his own taxes.

I do not believe that a president’s appointees should be lightly voted down. With the exception of ethical issues or woefully inadequate qualifications, a president’s appointees should generally be confirmed, ideology notwithstanding. No politician or political appointee should be held to a standard of perfection. But there are clearly matters that should disqualify a candidate from service, even if she/he is otherwise qualified.

If the American experience has taught us anything, it should be that no individual is indispensible. Regardless of how qualified a person might be to fill a position, there are other Americans available that could do a great job in the position as well. Republicans can perhaps be excused for fearing that such a person might be less in line with their ideological views, but this hardly constitutes grounds for alleging an appointee’s indispensability.

Beyond this, I believe that Geithner’s confirmation creates a moral hazard. Americans are already jaded about special privileges enjoyed by the elite political and business classes. This will only add fuel to the fire. It is a recipe for reducing tax compliance among citizens.

On the one hand, Geithner’s confirmation will demonstrate that you have to settle up your known tax problems before being allowed to head up the department that oversees taxes. On the other hand, it will demonstrate that people with the right connections can be excused for actions for which regular Americans routinely receive much harsher punishment.

I do not believe that Mr. Geithner is indispensible. The moral hazard of generating cynicism among Americans will exact a higher cost on our system than would finding a different candidate for Treasury Secretary. Mr. Geithner might actually be a fine and highly qualified individual for this job. But his confirmation will ultimately create more problems than it will ever solve.


Jason The said...

Only among the stupid and the impressionable, who were probably going to mess up their taxes anyway. So much worry about such petty things after 8 years of silence over Constitutional abuses. It's amazing, really.

Scott Hinrichs said...

If you have followed my blog at all, you will note that I have been an outspoken critic of the Bush Constitution-busting bonanza. But arguing that it's OK for the new administration to do something because the old one got away with it is hardly a worthy stance.