Thumbs Up for Geithner in Finance Committee

Jan. 22, 2009— -- Timothy Geithner, President Obama's Turbo Tax-using choice to head the Treasury Department (including the Internal Revenue Service), overcame questions both about his personal tax issues and his economic world view to get a sound thumbs up from the Senate Finance Committee this morning. The 18-5 vote all but ensures the New York Federal Reserve Bank president's confirmation as Treasury secretary.

Geithner, whose nomination goes before the full Senate at a later date, received the nod despite questions about more than $40,000 in Social Security and Medicare taxes he failed to pay between 2001 and 2004. Geithner paid the taxes and apologized, but several Republicans questioned his honesty.

"When a new manager is in town, they do deserve their management team," said Sen. John Ensign, R-Nev., who has fundamental disagreements with Geithner on economic policy.

That was not the opinion of all Republicans, including the ranking Republican on the committee, Sen. Charles Grassley Iowa, and Minority Whip John Kyl of Arizona.

"Candor is critical," said Kyl, who tangled with Geithner for his evasiveness on the tax issue at his confirmation hearing Wednesday.

"I'm sad to say, because I very much wanted to support this nomination, that I don't think the requisite candor exists for me to support his nomination with a vote," said Kyl, who nonetheless praised Geithner's "good instincts."

"I'm disappointed that we're even voting on this," said Sen. Mike Enzi, R-Wyo." In previous years, nominees who had made less serious mistakes were forced to withdraw. ... This is the man who is going to be in charge of collecting taxes," said Enzi, who also opposed the nomination.

The tax issues were only one reason for Enzi to oppose Geithner. He offered a written statement on Geithner's role in helping shape the unpopular $700 billion Wall Street bailout that Congress passed last October but which was been maligned by the public and lawmakers for poor management by the Bush administration.

Senate Message to Geithner

Democrats sent a message to Geithner and the Obama administration as well.

Sen. Maria Cantwell, D-Wash., wondered if the new administration will be up to the task of imposing regulation on Wall Street.

"I look at this nomination and I wonder if the smartest guys in the White House are going to find out what the 'smartest guys in the room' are doing," she said, invoking the title of a book on Enron, the company blamed with using complicated accounting schemes to create an energy bubble in the early 2000s.

"It's not just the Enron of the day or the credit default swaps of the moment, it's what new devices they will cook up," she said.

Sen. Ben Nelson, D-Fla., said he wanted more specifics from Geithner on how exactly he would address the financial crisis.

"That's what I thought should have been put forward yesterday, and I'll have to take him at his word that he will 'come forward with a comprehensive plan relatively soon,'" Nelson said.

Sen. John Cornyn, R-Texas, however, said he's not sure anyone -- Geithner, academics or Wall Street whizzes -- have the right answers to address the economy.

"They really don't know what to do," he said, derisively referring to the "masters of the universe" who run Wall Street, "which ought to give us some humility and some note of caution on what we should do," Cornyn said.

Geithner Told Panel Error 'Careless Mistake'

"These were careless mistakes. These were avoidable mistakes. But they were unintentional," Geithner said.

According to documents compiled during the nominee's vetting process and released by the committee Jan. 13, Geithner had failed to pay $34,000 in self-employment taxes for money he earned from 2001 to 2004 while working for the International Monetary Fund.

Geithner pointed out that he has corrected the mistakes and paid the back taxes, totaling $48,268 including interest, and he apologized that the committee has had to spend so much time on this issue when there are more pressing concerns.

He expressed regret that he did not "ask more questions" and said he "thought about it more carefully" when he was audited by the IRS in 2006.

Geithner's Regrets Mistakes

Geithner said he used Turbo Tax to prepare his faulty returns but told the committee "these mistakes were my responsibilities, not the software I used."

Some senators expressed concern over someone who did not pay his taxes being in charge of the IRS.

"It's hard to explain to my constituents, who pay these taxes on a regular basis," Sen. Jim Bunning, R-Ky., told Geithner.

Sen. Pat Roberts, R-Kan., said that his phones were "ringing off the hook" from people in Kansas upset about Geithner's personal tax missteps and his possible confirmation.

In his opening statement, committee Chairman Max Baucus, D-Mont., said he supported Geithner's nomination and believed that his tax gaffes were "disappointing mistakes.

"But after discussing them with Mr. Geithner, I believe them to be innocent mistakes," Baucus said. "I believe that Mr. Geithner has sufficiently corrected the errors. And I know a man of Mr. Geithner's talent and dedication will be meticulous on these points in the future."

Geithner also faced several questions from senators about how the $700 billion financial bailout funds have been spent.

"This is an important program, and we need to make it work," he said. "We're going to keep at it until we fix it."

"Our test is to act with the strength, speed and care necessary to get our economy back on track and to restore America's faith in our economic future," Geithner said.

ABC News' Emily Friedman and Jonathan Karl contributed to this report.