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Feature
Secretary Loophole
(Page 3 of 4)
But bailouts aren’t the only area where Geithner has shown his flexibility in recent months.
The Loophole Lobbyist
COMING INTO OFFICE, Obama promised to end lobbyist influence in Washington. As a signal of his seriousness on this score, his first executive order was an ethics order curbing the actions of lobbyists in his administration and slowing the revolving door between government and lobbying.
The order required all appointees to swear: “I will not for a period of two years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.” Additionally, it exacted this oath from incoming lobbyists: “I will not for a period of two years after the date of my appointment: (a) participate in any particular matter on which I lobbied within the two years before the date of my appointment; (b) participate in the specific issue area in which that particular matter falls.”
In short, this means that if you were recently a lobbyist and now you’re in the Obama administration, you must now avoid the issues on which you lobbied and matters directly affecting companies for which you worked.
While many folks described this as a “lobbyist ban,” it is far from a “ban.” For instance, Tom Vilsack, Obama’s agriculture secretary, was a lobbyist right up until his appointment. But he lobbied for the National Education Association and didn’t lobby on food or agriculture issues. He may have to walk out of the cabinet room when the Education or Labor secretaries start speaking, but he can do everything he needs to do at Ag without crossing Obama’s new ethical barriers.
At least 16 former lobbyists are serving in the Obama administration, and most of them are pretty clearly exempted from the rule—for instance, if it’s been more than two years since they last were registered as lobbyists. For three appointees, however, there has been no avoiding a clash with this rule, and so President Obama has utilized the executive order’s waiver clause if it is “in the public interest to grant the waiver” or if “the literal application of the restriction is inconsistent with the purposes of the restriction.”
But one lobbyist-appointee stands in a class of his own, entering the administration not through any of these clear-cut loopholes, but through an almost impossible-to-believe loophole. And as is typical of this man to whom the rules don’t seem to apply, it was Tim Geithner who brought this appointee in.
Timothy Geithner’s chief of staff at Treasury is Mark Patterson. Patterson was in the very inner circle of Senate Democratic leadership under Tom Daschle. After Daschle’s 2004 defeat, Patterson cashed out, as do many top staff, and became a lobbyist at Goldman Sachs. He worked there as a federally registered lobbyist until April 11, 2008.
Federal lobbying forms show Patterson lobbied Congress on banking regulations, insurance policy, monetary policy, executive compensation, commodities trading, foreign investment, real estate, pension issues, renewable energy subsidies, immigration, tax policy, mortgage lending, copyright, derivatives trading, tribal gaming, and regulation of credit rating agencies, among others.
His employer, Goldman Sachs, is tied up with just about every corner of the financial sector—and many other sectors too. After all, they are too big to fail, right? AIG bailouts, as we’ve seen, are largely Goldman bailouts.
Despite all of this, Patterson hasn’t received a waiver from the president. That seems to mean he must recuse himself from “personally and substantially” participating in any matter involving finance, banking, Goldman, AIG, credit rating, taxes, mortgages, or real estate. Maybe he just collects time sheets and changes coffee filters at Treasury, but other wise, it’s just another example of Secretary Geithner finding a way around the rules.
One Man’s loophole…
THESE EXAMPLES ALL POINT TO what makes a loophole different from a violation. Loopholes are actual holes—places where the seemingly relevant law doesn’t apply. Finding loopholes is, by definition, following the rules.
Similarly, bending the rules is explicitly not breaking rules. Geithner, except for his tax “hiccup,” is no scofflaw.
Comments
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Paul Milenkovic| 5.15.09 @ 11:08AM
Threading a needle through a loophole? The payroll tax matter was one of smashing an M1-A1 tank through a building.
Much as there has been populist and right-wing snark against Mr. Daschle getting a limo and not counting that as income, the average person out there, who admittedly doesn't get a free limo, can at least sympathize with getting some non-monetary freebie. Tell me that no one here has not put Frequent Flier miles to personal use (my reading of the tax rules is that there is an exemption for Frequent Flier miles being taxable income, and that is probably the result of airline lobbying).
Secretary Sibelius has also been the target of criticism for whatever tax problem she had. But her problem involved deductability of mortgage interest when her house was in some kind of post-sale limbo, and this kind of gray-area tax problem can happen to any of us.
But as to Mr. Geithner, there was not gray-area or "I forgot to enter it" or "TurboTax made me do it" excuse that works here. It has been reported that the HR people where he worked took people aside and told them they had to pay the tax. And we are not talking about the Income Tax here. We are talking the Payroll Tax, you know, that regressive tax on working stiffs who would not otherwise have any withholding from their meagre paychecks, that tax that funds Senior Citizens through the Third Rail of American Politics: Social Security and Medicare.
I mean here is the head of the Treasury which is in charge of the IRS. Maybe this is a "it took Nixon to go to China" matter. Perhaps Geithner is the only person with the moxie for the financial crisis, and it took a left-liberal President to put him in charge as a right-conservative President would never be allowed to to this.
Tim| 5.15.09 @ 2:26PM
Dr Ray Stantz: Personally, I liked the university. They gave us money and facilities, we didn't have to produce anything! You've never been out of college! You don't know what it's like out there! I've *worked* in the private sector. They expect *results*.
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Twitted by Lyn_Sue links to this page. Here’s an excerpt:
D. Smith| 5.15.09 @ 11:36PM
Interesting, insightful dissection of Tiny Tim, omitting one of his more creative interpretations of IRS filing of taxes. Did TurboTax tell him it was OK to call posh summer camp tuition for his kid "child care"?
In my opinion, this kind of penny-ante skirting of paying one's taxes requires a criminal mind with the sensitivity of a safe-cracker. A perfect fit for the Obama Administration.
Every time I hear of Geithner's avoidance of four years of IMF taxes, I think anyone who calls summer camp "child care" and gets away with it can get away with anything with the asleep-at-the-wheel IRS. How about private school tuition, is that child care, too?
Just wait until we get Souter's replacement. We will have plenty to howl about, then. A Supreme Court Justice chosen based on empathy, compassion and having "been there". Describes Oprah, doesn't it? You don't have to be a lawyer to be a Supe.
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Netizen19380| 5.29.09 @ 6:09PM
An Open Letter to American Government and Business:
Okay, that’s it; why does the United States continue to deal with China?
Our nation has been subtly at war with China. Communist China has already breached the borders of Capitalist America, in many ways. And their insidious “attacks” have been deadly. America needn’t even engage in a military war with China, China has already successfully attacked American families in their very homes. China has assaulted us through the avenues of our own consumerism:
- China has killed our pets, with inferior tainted petfood.
- China has killed our elderly and sick, with inferior tainted drugs.
- China has sickened our children, with inferior lead and toxin laden toys.
- China has destroyed our newly-constructed homes values, with inferior tainted drywall.
- China has destroyed our job base, through outsourced manufacturing jobs.
- China mocks fair trade, by perennially running trade imbalances with the U.S.
- China damages our digital data, through state sponsored cyber attacks and censorsoring our companies.
- China has stolen our personal identities, through online identity theft.
- China steals our stories, by wantonly ignoring copyright laws.
- China continues to flagrantly harm the global environment; by poor pollution controls, by on-lining coal-burning power plants one-a-week and by dumping cheap plastic goods the world over.
- China ruins economies the world over, by keeping their own currency’s value artificially low.
- China despises the American Dollar, China wants to no longer base the International Monetary Fund currency on the U.S. Dollar.
- ...and ultimately China could very easily behead our economy, when they call in the U.S. debts which they hold.
Capitalist America has undermined itself in the short-run by “selling out” to Communist China, at the long-term expense of having a robust American economy. China is no friend the the United States. Ultimately, if America wants to reverse it’s decline during this 21st century, American government and business leaders must help our nation by limiting and eliminating many imbalanced policies and dealings with China. No excuses, no gray areas. Period.
- A Concerned American
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