Treasury Secretary Timothy Geithner is in trouble. He’s faced multiple controversies since his nomination, beginning with his own failure to pay all his taxes to his recent admission that Treasury was responsible for the A.I.G. bonus payouts.
At least two congressmen and two senators have already called for Geithner’s resignation or firing – something NBC’s Chuck Todd described on March 18 as Republicans trying to make Geithner “the fall guy.” Others, like Sen. Lindsay Graham, R-S.C., said Geithner would be the first to go if the Obama administration has to “pay a price” and is forced to change directions.
Sen. Johnny Isakson, R-Ga., told Politico that Geithner’s “credibility has been hurt to the point where he’s not going to be effective, and if I were him I would” resign.
Despite all the controversy surrounding Geithner, the news media have glossed over his failures and repeated the White House line that it’s a huge undertaking and Geithner is crucial to the process. That’s exactly what NBC’s David Gregory did on “Today” March 22.
Co-host Jenna Wolfe asked Gregory, “If confidence in Geithner doesn’t improve outside the White House, are they better off just parting ways at that point?”
According to Gregory, “There’s a feeling that losing Geithner at this point would be disastrous” and that he’s still “a critical player.”
Geithner earned commendations from guests of the Sunday political talk shows on March 22 including Robert Reich’s declaration that “my hat is off to Tim Geithner.”
They’ve Got His Back
Journalists rejoiced for Geithner when the market rallied the same day Geithner presented a detailed toxic asset buyout plan. Some claimed the market was showing “confidence” in Geithner. A March 23
“The transformation of Treasury Secretary Timothy Geithner will be remembered for its speed and unexpectedness,” McIntyre wrote. He downplayed calls for Geithner’s resignation saying, “There were calls for him to step down until the President voiced support for his Treasury Secretary on a television talk show.”
Despite the media fanfare, several economists from the left and the right have criticized the plan. Nobel Prize-winning economist Joseph Stiglitz told Reuters, “The Geithner plan is very badly flawed” and “amounts to robbery of the American people.”
“I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer,” Stiglitz said.
James L. Gattuso and David C. John of the Heritage Foundation criticized Geithner’s “Public-Private Investment Program,” (PPIP) and said that “while the plan does have positive elements, it is significantly flawed.” Like Stiglitz, their analysis found taxpayers would assume most of the risk of losses.
The media’s treatment of Geithner was very different from the way the mainstream media acted when Bush cabinet members came under fire. In fact, in the case of Attorney General Alberto Gonzales and Secretary of Defense Donald Rumsfeld it was the news media lighting the torches and grabbing the pitchforks.
Double Standard for Controversy
Geithner’s problems and the networks’ defense again revealed the double standard between the way the media cover this administration and the previous Bush administration.
Despite Todd’s assertion that Republicans are trying to make Geithner the “fall guy,” the Treasury Secretary has faced real problems of his own making.
Geithner was confirmed as Treasury Secretary despite his failure to pay all his taxes for three years of work abroad for the International Monetary Fund. He had also failed to pay self-employment taxes for a housekeeper. Geithner resolved those issues before being confirmed as Treasury Secretary. The stock market also tumbled in February after Geithner vaguely announced a plan to deal with “toxic” assets.
The Associated Press reported that major indexes fell more than 4 percent and “Traders and investors complained about what they saw as a lack of specifics from Treasury Secretary Timothy Geithner.”
But the latest controversy to put Geithner in the hot seat was the public outcry over A.I.G executives earning millions in “bonuses.” Ultimately, Geithner admitted to CNN’s senior business correspondent Ali Velshi that he approached Sen. Chris Dodd, D-Conn., about a provision in the stimulus bill that would have retroactively prohibited those compensation packages.
“We expressed concern about this specific provision because we wanted to make sure it was strong enough to survive legal challenge. But we also worked with him to strengthen the overall framework and his [Dodd’s] bill has this very important provision we’re relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block,” Geithner explained to Velshi.
The news media’s treatment of Geithner has been mild in comparison to the media campaign to get Attorney General Alberto Gonzales fired or to resign during Bush’s administration.
ABC’s George Stephanopoulos grilled Gonzales about the dismissals of eight
“And if it turns out that evidence of political interference does comes up in these e-mails and other communications, will you resign?” Stephanopoulos asked. Just two days later, CBS’s Katie Couric said Gonzales was “on his way out” and “it’s just a matter of time now before the Attorney General gets fired.”
The week of March 31, 2007, ABC was on a crusade to get rid of Gonzales and went looking for a “smoking gun,” to prove that the attorney firings were politically motivated. “Good Morning
Media Love Geithner’s “Dangerous” New Plan
Geithner’s new plan to get toxic assets off the books was announced on March 23 was embraced by the networks and other media.
As noted above, the New York Times said the plan “Dazzles Wall Street.” CBS’s “Early Show” called the plan “the best of both worlds to deal with toxic assets” and cited an unnamed expert who called the plan “the missing link.”
CBS also gave Geithner credit for the nearly 500-point stock market rally of March 23. By March 24 journalists were asking if this was the beginning of a “turnaround.” CNN guest Tara Wall said the markets were “showing confidence” in Geithner. And “Good Morning America,” slipped in a basketball metaphor calling the market’s rally “March Madness.”
But a number of economists in addition to Stiglitz – for different reasons – condemned Geithner’s PPIP plan. Left-wing economist James Galbraith, told The Business Insider that the plan was “extremely dangerous.”
Liberal economists and columnist Paul Krugman said, “It’s exactly the plan that was widely analyzed and found wanting a couple of weeks ago.” He also told Bloomberg News that the populist anger could actually cause the Treasury to fail.
Libertarian and conservative think tanks have also attacked the PPIP. Jagadeesh Gokhale of the Cato Institute said the “interventions in market processes and institutions could become permanent, to the probably detriment of the nation’s long-term economic prospects.”