By David Lawder
WASHINGTON (Reuters) - The Senate Finance Committee on Thursday backed President Barack Obama's nominee to head the U.S. Treasury, Timothy Geithner, overlooking his underpayment of some $34,000 in taxes and clearing the way for a full-Senate confirmation vote.
The 18-5 vote saw half of the panel's 10 Republicans opposing Geithner's nomination. Any Republican senator could object to Democratic plans to push for a swift Senate floor vote later on Thursday, delaying the process.
"If Republicans object, we might not be able to vote to confirm until next week," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid.
Full Senate approval is needed for Obama's key economic cabinet member to start work on tackling a financial crisis that is threatening to worsen a yearlong recession as job losses mount.
Geithner told the committee on Wednesday that the Obama administration in coming weeks will unveil a multipronged approach to stabilize the housing market strengthen banks and support consumer credit to help the economy begin to recover.
The vote came as major stock indexes fell around 3 percent after Microsoft Corp reported grim earnings and large layoffs, and government data showed further deterioration in the economy. The committee's vote did help the dollar regain some ground against the yen.
"Let us come together to support a nominee who has the leadership to transcend the distinct obstacles facing our nation in these troubled times," said committee Chairman Max Baucus, a Montana Democrat who has pushed to put Geithner in place as quickly as possible.
Geithner, who currently heads the New York Federal Reserve Bank, was considered by many to be an ideal candidate for the job because of he has already been deeply involved in government efforts to prop up financial institutions and markets amid the worst financial crisis since the 1930s.
TAX PROBLEMS COST VOTES
His nomination appeared without controversy until revelations last week that he underpaid self-employment tax for several years when he worked for the International Monetary Fund earlier this decade.
Although Geithner corrected what he called "careless" and "unintentional" mistakes, the tax errors cost him some votes on the committee.
"I don't believe that the requisite candor exists for me to indicate my support for him with an affirmative vote," Republican Sen. Jon Kyl of Arizona said.
Democrats and some Republicans on the panel said the U.S. economy's situation was too dire to leave the top Treasury post vacant any longer and Geithner was well-qualified for the job.
After a three-hour grilling by the finance panel on Wednesday, Geithner answered dozens more written questions from senators in a 102-page document, reaffirming the Treasury's long-standing mantra support for dollar strength.
"A strong dollar is in America's national interest," Geithner wrote in the document, released on Thursday.
OBAMA SEES YUAN MANIPULATION
Geithner also issued a stern warning to China, which has a huge trade surplus with the United States, saying that Obama believes Beijing was manipulating its yuan currency.
"President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency," Geithner wrote. "President Obama has pledged as president to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices."
However, Geithner said due to the global economic crisis, the immediate focus of U.S.-China relations "needs to be on the broader issue of stabilizing domestic demand in China and the
U.S."
Geithner also said the Treasury had no current plans to request more bailout money beyond the existing $700 billion already authorized, but said the situation was "dynamic".
"We have to be prepared to act flexibly and with speed if conditions worsen appreciably, to devote more resources if that is necessary to secure our objectives, and we have to make it clear that we will continue to act until we have restored the strength and vitality of the U.S. financial system," he wrote.
(Additional reporting by Tim Ahmann, Mark Felsenthal, Doug Palmer and Emily Kaiser; Editing by Chizu Nomiyama)
