The (Unintentional?) Use of Humor by Obama's Economic Team

The Secretary of the Treasury is a comedian as well as a tax cheat. At least that's the only rational interpretation of his recent statements in Europe, where he used the do-as-I-say-not-as-I-do routine while pretending to tell the Europeans to be fiscally responsible. The Wall Street Journal, in keeping with the deadpan style of the gig, reported Geithner's comments as if they represented serious advice: "U.S. Treasury Secretary Timothy Geithner landed in Europe and reasserted a traditional American role of dispenser of financial advice to the world, telling European governments to get their fiscal houses in order."

The key to any good monologue, though, is knowing how to follow one joke with another. Geithner did not disappoint. He then did a 180-degree turn, leaving the audience rolling in the aisles by urging spending and bailout policies directly at odds with his previous joke: "Mr. Geithner pushed continental Europe to speed up the rescue of debt-laden economies, and to not stint on fiscal stimulus."

Geithner may have been the headliner, but the Wall Street Journal also reported on some of the warm-up acts, including a so-so performance from Christina Romer, Chairman of the White House Council of Economic Advisors. Romer doesn't have Geithner's advantage of simultaneously being a tax cheat and being in charge of tax enforcement, so she's tried to carve out an interesting niche in the world of humor by pushing for policies that contradict her academic writings. It's unclear whether her reference to "pulling out" was an attempt to be risque (perhaps influenced by the President's naughty use of the "teabagger" phrase), but here's how the the WSJ covered her stand-up routine: "She told reporters that she, too, would warn European and other countries against pulling out of their stimulus plans too quickly. 'There's a certain amount of rush for the exits on fiscal policy,' Ms. Romer said."

Perhaps not surprisingly, some critics failed to undersand the subtle use of humor and irony by Obama officials and actually took the comments seriously. The article reports on a wet-blanket reaction from one think tank representative: "For Geithner critics, the new U.S. assertiveness is misplaced. Desmond Lachman, a former senior IMF European official who is now a researcher at the American Enterprise Institute, said the repeated bailouts engineered by Mr. Geithner have made the overall problem worse, and that the U.S. advice of providing even more financing for heavily indebted countries like Greece is bound to fail."

Need a Last-Minute Christmas Present for a Taxpayer?

for those of you who can’t find zhu zhu pets, here's an option sure to bring a smile - a long-sleeved t-shirt honoring the Secretary of the Treasury. Maybe if you've been very good all year long, Santa also will bring you a special Tim "Turbotax" Geithner free pass, allowing you to cheat on your taxes and get away with no penalties once you're caught.

Geithner, Corruption, and the Fed

Tim "Turbotax" Geithner is getting attacked on the Hill because of the weak economy, but he should be condemned for the corruption and favoritism he displayed while head of the New York Fed during the financial crisis. The New York Times recently reported how much of the money wasted on AIG actually was designed to go in the pockets of Geithner's friends and cronies in the banking sector:

The Federal Reserve Bank of New York gave up much of its power in high-pressure negotiations with the American International Group's trading partners last year, according to a government report made public on Monday. Just two days before the New York Fed paid AIG’s partners 100 cents on the dollar to tear up their contracts with the insurance giant, one bank volunteered to take a modest haircut — but it never got the chance. ...Goldman Sachs and the top French bank regulator. They argued, with others, that it would be improper and perhaps even criminal to force AIG’s trading partners to bear losses outside of bankruptcy court. The banks and the regulator were confident that the New York Fed was not willing to push AIG into bankruptcy, because earlier in the fall the New York Fed had stepped in with $85 billion to prop up the insurer. ...The Fed “refused to use its considerable leverage,” Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, wrote in a report to be officially released on Tuesday, examining the much-criticized decision to make AIG’s trading partners whole when people and businesses were taking painful losses in the financial markets. There have been suggestions that the Fed chose to negotiate weakly, Mr. Barofsky said, to give a “backdoor bailout” to AIG’s banks. He said Mr. Geithner and the Fed’s lawyers had denied this, but added that “irrespective of their stated intent,” there was no doubt about the result: “Tens of billions of dollars of government money was funneled inexorably and directly to AIG's counterparties.”

Obama Administration Defends Tax Competition

Since the Treasury Department is still very much on the wrong side of the OECD anti-tax competition campaign, don't get too excited about the headline. But it is still nice to see that Tim Geithner and the rest of the crowd in the Obama Administration are not so hopelessly statist that they are willing to go along with a global tax on financial transactions. The Wall Street Journal opines:

In the department of bad ideas that won't go away, Exhibit A is a global tax on financial transactions. British Prime Minister Gordon Brown mooted the tax last weekend before the G-20 finance ministers in St. Andrews, Scotland, where he was promptly rebuffed by Treasury Secretary Timothy Geithner. ...it's easy to see why high-tax countries such as France and Germany relish the idea. Tax competition is a bête noire for the Western European countries whose governments eat up close to half of their economies. The U.K. is back in that club after the post-financial-panic recession lopped 6% off its GDP. Scrambling for revenue—and unwilling to hamstring London markets alone—Mr. Brown is suddenly promoting global tax coordination. ...Like all tax-harmonization schemes, the Tobin levy is designed to raise taxes above a level that is hard to sustain in a competitive world. This is why its backers have always insisted on a global imposition of the tax. Kudos to Secretary Geithner for offering Mr. Brown a reality check.

If the Choice is Bernanke or Geithner, Can I Pick "None of the Above"?

In this CNBC debate, I argue that more regulatory power for government is a bad idea. I need to learn to interrupt, though, since Christian is very effective using that tactic to get more air time.

Another Obama Appointee with Tax Problems

Ordinary Americans would get in trouble if they neglected to file tax returns in 2005 and 2006, but it almost seems as if disobeying tax laws is a prerequisite in the Obama Administration for getting nomined by a high-level government position. Unlike the Treasury Secretary, however, this latest nominee actually was owed a refund. It is understandable that this would preclude interest charges on unpaid tax, but it is curious that no penalties were assessed for failure to file. Would a regular taxpayer be treated so kindly? The New York Times has some of the details:

President Obama’s choice as chief of protocol for the State Department, a position that carries the status of an ambassadorship, did not file tax returns for 2005 and 2006, errors she corrected last November. The nominee, Capricia Penavic Marshall, has placed blame for the problem on the Postal Service and on miscommunication between her husband and their accountant. ...Tax issues have bedeviled several high-level Obama appointees and cost the administration at least two of its picks. Ms. Marshall may fare better because, after ultimately filing the 2005 and 2006 federal and local paperwork, she was entitled to $37,259 in refunds, according to data she provided to Mr. Lugar. ...No late fees or penalties were assessed when they later submitted the returns.