Tuesday, February 03, 2009

Obama Oversight Candidate Had A Tax Oversight

Cross-posted from Duh-No!

You just can't keep making this up. It appears that there is something in the Democratic Party gene pool that simply forces this type of behavior. Perhaps there is a flaw in the "ethical gene" that creates a "Robin Hood" attitude: "I'll take from the rich and give to the poor, but don't ask me for any of my money."

From The New York Times:

Published: February 3, 2009

WASHINGTON (AP) -- Nancy Killefer, who failed for a year and a half to pay employment taxes on household help, has withdrawn her candidacy to be the first chief performance officer for the federal government, the White House said Tuesday.

Killefer was the second major Obama administration nominee to withdraw and the third to have tax problems complicate their nomination after President Barack Obama announced their selection.

"Nancy Killefer has decided to withdraw her nomination, and we accepted her withdrawal," Tommy Vietor, a White House spokesman, said Tuesday. The 55-year-old executive with consulting giant McKinsey & Co., was expected to explain her reasons for pulling out later in the day.

When her selection was announced by Obama on Jan. 7, The Associated Press disclosed that in 2005 the District of Columbia government had filed a $946.69 tax lien on her home for failure to pay unemployment compensation tax on household help.

Since then, administration officials refused to answer questions about the tax error, which she resolved five months after the lien was filed. Obama's first choice for commerce secretary, New Mexico Gov. Bill Richardson, took his name out of consideration when his confirmation appeared headed toward complications because of a grand jury investigation over how state contracts were issued to political donors.

More recently, Timothy Geithner was confirmed as Treasury secretary despite belatedly paying $34,000 in income taxes, and Tom Daschle is still waiting to see if his late payment of more than $128,000 in income taxes will harm his nomination to be health and human services secretary.

On paper, Killefer brought impressive credentials to the two jobs Obama selected her for: deputy director for management at the Office of Management and Budget, which requires Senate confirmation, and a new White House post, chief performance officer for the entire federal government, which does not require confirmation.

Killefer oversees McKinsey's management consulting for government clients. During 1997-2000 in the Clinton administration, Killefer was assistant Treasury secretary for management. As such she was the chief financial officer and chief operating officer for the Treasury and its 160,000 employees and led a modernization of its largest component, the Internal Revenue Service.

But for nearly a month, the administration had refused to answer how its choice to make government workers more efficient and more responsive had bungled her household payroll taxes.

The AP reported that on March 7, 2005, the D.C. Department of Employment Services slapped a tax lien on her home in the tony Wesley Heights neighborhood. The local government alleged that just three years after she left the high-powered Treasury post she began to fail to pay unemployment compensation tax for a household employee. And she failed to make the required quarterly payments for a year and half, whereupon a lien for $946.69 was placed on her home.

That sum included $298 in unpaid taxes, $48.69 in interest and $600 in penalties. The lien was filed March 7, 2005, but Killefer didn't get the lien extinguished for almost five months, not until July 29.

During that period, Killefer and her husband, an economics professor, had a teenage son and daughter, but she had two nannies and a personal assistant to run her life when she was on the road, she told Harvard business students back then.

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February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
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December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)