Senate Approves Geithner Despite Tax Issues

Jan. 26, 2009 -- Despite accusations by Republicans that he was not entirely forthcoming about back taxes, and opposition even from some Democrats, Timothy Geithner was confirmed today as treasury secretary by a 60 to 34 vote in the U.S. Senate, and immediately began overseeing the second half of the $700 billion Wall Street bailout.

The confirmation comes none too soon. The second tranche of TARP money at Geithner's disposal becomes available Tuesday. Of the $700 billion, $288 billion has been spent and $380 has been promised.

Thirty Republicans and three Democrats (Tom Harkin of Iowa, Russ Feingold of Wisconsin and Robert Byrd of West Virginia) joined Independent Bernie Sanders of Vermont to oppose Geithner's nomination.

Geithner, who failed to pay more than $40,000 in Social Security and Medicare taxes from 2001-2004, survived a haranguing on the tax issue by Republicans on the Senate Finance Committee last week and will take over at Treasury as President Barack Obama initiates a multipronged strategy to pep up the U.S. economy.

Obama has called his economic response a multilegged stool and the leg Geithner will be tasked with overseeing is the disbursal of the remaining $350 billion from the Troubled Assets Relief Program.

That program -- which, as chairman of the New York Federal Reserve Bank, Geithner had a hand in creating -- was overseen by his predecessor Henry Paulson, President Bush's final treasury secretary.

Paulson persuaded Congress to provide the money in a rush last Fall, but was criticized from both sides of the aisle for not doing enough to track the money after it went to troubled banks, and for not forcing the banks to use the money to spur lending.

Just 52 senators voted earlier this month in favor of giving Obama access to the second $350 billion tranche of the TARP funding, compared with 74 who voted to authorize the program last year.

Recasting TARP as a program that has helped the economy as a whole and wasn't just a bailout for Wall Street will be a top priority for Geithner and Obama, who wants Congress to sign another, even larger check, to spur economic growth.

Obama is scheduled to meet with House and Senate Republicans Tuesday to woo their support for his $825 billion stimulus plan.

Geithner has been credited with foreseeing some of the complicated problems arising from the opaque and unregulated credit default swap market, a web of private insurance bets that could be worth $30 trillion. In addition to doling out the TARP funds, making sense of the credit default market will be high among Geithner's tasks.

His confirmation drew votes from both sides of the aisle, often because, despite the tax issue, many senators believe Geithner to be uniquely qualified for the job.

"To suggest that Tim Geithner is unqualified because of this tax issue is to fail to understand his contribution to this country," said Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee.