Why Geithner Will Skate

On the surface, the parallels are haunting between the mess Tim Geithner has found himself in and the one that sank Zoe Baird’s nomination for attorney general 16 years ago. But his chances of avoiding her fate aren’t that bad.

Baird, a 40-year-old corporate lawyer who was incoming President Bill Clinton’s choice to become the first woman to run the Justice Department, was forced to withdraw her nomination after it was revealed that she’d knowingly hired two illegal Peruvian immigrants as household help and then failed to pay Social Security taxes for them.

Since then, two other Cabinet nominees have been felled by similar scandals: Clinton’s replacement choice for Baird, Kimba Wood; and George W. Bush’s first pick for Secretary of Labor in 2001, Linda Chavez. But Wood quickly stepped aside almost immediately after her “nanny problem” was revealed, while Chavez, since she was nominated for a lower-profile Cabinet role, didn’t cause much of a stir with her troubles.

Baird’s case was different, touching a nerve among the public, which quickly came to view her as a symbol of an aristocratic class that believed itself to be above the law. Waves of popular protest ensued, and her support in the Senate evaporated. Baird’s story stands as a case study in how a seemingly safe and innocuous Cabinet appointment can turn into a disaster almost overnight.

Which brings us to Geithner, Barack Obama’s choice to head the Treasury Department. Until about 24 hours ago, Geithner’s nomination seemed every bit the slam dunk that, in 1993, Baird’s initially seemed. Then came last night’s reports that he, too, employed an illegal immigrant in his house and also that he failed to pay Social Security and Medicare taxes (although not for his household help – Geithner’s tax problem stems from his work with the International Monetary Fund early this decade).

Eerily, the Baird story broke on the same date, January 13, on which the reports about Geithner emerged. Then, as now, the nominee’s supporters stood by her and forecast that the revelation would be but a small bump in an otherwise smooth confirmation process. Clinton put out word that he’d been aware of Baird’s problem before nominating her, while top Senate Democrats mostly shrugged it off.

“Based on the facts as I now know them to be, and after consultation with several of my colleagues on the committee, I do not believe this matter will prevent her confirmation,” said Joe Biden, then the chairman of the committee that would oversee Baird’s confirmation hearings.

Similarly, Obama was quick to rally around Geithner on Tuesday night, with the president-elect’s spokesman, Robert Gibbs, praising Geithner’s previous government service and arguing that it “should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed.”

Geithner, alerted by the IRS that he owed money during an audit, paid about $43,000 in back taxes and penalties in 2006, and then cut another check for about $5,500 last month when the Senate Judiciary Committee turned up several other issues with his tax returns.

Baird’s backers initially pointed to similar acts of contrition: She and her husband had paid $12,000 in back taxes and penalties before her nanny problem was reported, and she also paid a $2,900 fine to the Immigration and Naturalization Service for hiring undocumented workers.

Also just like now, initial news reports characterized the Baird controversy as minor and predicted that it would quickly blow over. Much was made of the fact that Orrin Hatch, the top Republican on the Judiciary Committee, vowed to stand by Baird, hailing her as “as straight a shooter as I’ve seen – very intelligent, an excellent nominee.” That would be the same Orrin Hatch who is now pledging support for Geithner and praising the nominee for addressing the controversy “forthrightly.”

But the public wasn’t about to let Baird off the hook so quickly. Her transgressions lent themselves perfectly to mass outrage: Here was a woman who was seeking to become the nation’s top law enforcement official who had knowingly and willfully broke the law. An army of conservative talk radio listeners mobilized against her, but resentment of Baird quickly bled across party lines. The story became a national sensation.

Within days, moderate Democrats in the Senate, including David Boren, James Exon, John Breaux and J. Bennett Johnston, had turned on her, and Republicans, even though they were badly outnumbered in the Senate, sensed an opportunity to score a major early victory against the new president. On the night Clinton was inaugurated, Biden phoned the president to say that Baird’s Senate prospects were hopeless. She withdrew the next day.

In theory, it should be just as easy to whip the public into a frenzy about Geithner: Here is a man who wants to be in charge of collecting taxes from every American, but who failed to pay his own. (The nanny issue may not be as severe in his case, since his employee was legal at the time of her hiring; her paperwork only expired a few months before she stopped working for the Geithner family.) Some Republicans, most notably Iowa’s Charles Grassley, are now hinting that Geithner’s nomination may be in jeopardy, and the date for his confirmation hearings has now been moved back to next week to give the committee more time to prepare.

But that’s probably as far as the Baird comparison will go. For one thing, Geithner’s tax issue, while embarrassing, can be plausibly explained as a technical and unintentional violation – one that he addressed long before he was nominated, not after (as was the case for Baird). No one wants the treasury secretary to be confused about the intricacies of the tax code, and Geithner will surely face tough questions from the committee about his tax issues; a few senators might even oppose him. But it will also count for something that he doesn’t appear to have knowingly flouted the law. What sunk Baird wasn’t incompetence; it was her image as another Leona Helmsley, sneering at all the “little people.”

Perhaps more importantly, the climate is different now. In 1993, the country was emerging from an economic slump. Now, there is widespread fear that America is speeding toward another Depression. Especially when it comes to the nomination of a treasury secretary, there just isn’t as much appetite – among voters or among Republicans in the Senate – for a confirmation fight.

Why Geithner Will Skate