Geithner's tax 'mistake' delays his vote

WASHINGTON — President-elect Barack Obama labeled the tax problems of his choice for Treasury chief an embarrassment Wednesday, but said Timothy Geithner's "innocent mistake" shouldn't bar him from the post leading urgent efforts to revive the economy. Despite the controversy, Geithner's confirmation seemed all but sure — though not by Inauguration Day.

Revelations that Geithner had failed to pay $34,000 in taxes several years ago derailed Senate Democrats' plans to speed him to approval as treasury secretary by the time Obama is sworn in. Bipartisan backing was still strong, but the delay in his confirmation hearing opened the possibility that opposition could build.

Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence, has agreed to stay on until the Senate confirms a permanent successor, according to a government official with knowledge of the situation but not authorized to speak publicly.

Senate Republicans, who have been mostly deferential to Obama's nominees, were blocking efforts to fast-track Geithner's nomination, with at least one Finance Committee member saying the tax questions deserved greater scrutiny.

Obama had hoped for approval by Tuesday, but given the GOP objections, senators scheduled Geithner's confirmation hearing for Wednesday, with Senate debate and a vote sometime after that.

Two Republicans formally objected to scheduling the hearing this Friday after the panel disclosed that Geithner had failed to pay some taxes he owed between 2001 and 2004.

"Look, is this an embarrassment for him? Yes. He said so himself. But it was an innocent mistake," Obama said. "My expectation is that Tim Geithner will be confirmed."

Obama spoke at his transition office after a meeting with Vice President-elect Joe Biden and Sen. Lindsey Graham, R-S.C., about a recent trip to Afghanistan, Pakistan, Iraq and Kuwait.

A number of Democrats and Republicans on the Finance Committee voiced strong support for Geithner, who was phoning senators individually in an effort to persuade them his tax problems were the result of innocent errors, not deliberate attempts to avoid paying the Internal Revenue Service.