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Ethical, Legal Challenges Loom in Vetting Cabinet Choices

February 2, 2009 at 6:00 PM EDT
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While some of President Obama's Cabinet picks have sailed through confirmation, others have hit snags, such as Tom Daschle's recent admission of past tax mistakes. Analysts mull the pitfalls of cabinet-building.
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JIM LEHRER: One of President Obama’s key cabinet nominees, Tom Daschle, struggled today with a tax problem. Another, Eric Holder, sailed toward confirmation.

Ray Suarez has our lead story report.

JOURNALIST: Mr. President, do you still stand behind Tom Daschle?

U.S. PRESIDENT BARACK OBAMA: Absolutely.

RAY SUAREZ: Absolutely. With that one word, the president indicated today he’s sticking with Tom Daschle as his choice for secretary of health and human services.

The former Senate majority leader’s nomination ran into trouble over the weekend. Reports surfaced that he paid more than $140,000 in back taxes and interest last month.

The tax liability stemmed mainly from the use of a car service from 2005 to 2007, provided by a close friend and business associate. The service was valued at more than $250,000 over three years, but Daschle failed to report it as income.

He was the second Obama nominee, along with Treasury Secretary Geithner, who didn’t pay his taxes on time.

Today, White House press secretary Robert Gibbs said the president is not insensitive to the problem.

ROBERT GIBBS, White House spokesman: It’s a serious mistake, but laying that mistake next to a three-decade career in public service, the president believes that Senator Daschle is still the best suited to shepherd health care reform through Congress and get something to the president’s desk that will save the American people money and make the quality of health care far better.

RAY SUAREZ: Earlier, Daschle sent a letter to the Senate Finance Committee saying the mistakes were unintentional. He wrote, “I’m deeply embarrassed and disappointed by the errors that required me to amend my tax returns. I apologize for the errors and profoundly regret that you have had to devote time to them.”

After remaining silent on the issue for the past two days, the Democratic chair of the Finance Committee, Max Baucus, released a statement in support of Daschle. “The ability to advance meaningful health reform in my top priority in confirming a secretary of health and human services, and I remain convinced that Senator Daschle would be an invaluable and expert partner in this effort. I’m eager to move forward together.”

Republicans in the Senate appeared to take a wait-and-see approach, including Minority Whip Jon Kyl on “FOX News Sunday.”

SEN. JON KYL, R-Ariz.: We’ll have to see. I just got the report. I’m on the Finance Committee, and I just got the report late Friday afternoon. So we’ll have to question former Senator Daschle and understand his explanation and then have a conversation about it and see where it goes.

RAY SUAREZ: Late today, Daschle met with members of the Finance Committee behind closed doors, hoping to put those questions to rest.

The full Senate meanwhile moved to confirm another one of President Obama’s cabinet picks, Attorney General-designate Eric Holder. During the hearing, some Republicans had raised concerns about controversial pardons made during Holder’s service in the Clinton administration. Others complained of Holder’s unequivocal declaration that waterboarding is torture.

But by today, confirmation seemed assured.

SEN. PATRICK LEAHY, D-Vt.: When he designated Mr. Holder, President Obama said, “The attorney general serves the American people.” And I have every expectation Eric will protect our people and uphold the public trust, adhere to our Constitution.

I have no doubt that Mr. Holder understands the serious responsibilities of the attorney general of the United States, and his experience and integrity will serve him and the American people well.

RAY SUAREZ: Still, there were some senators, like Republican John Cornyn of Texas, who could not get behind Holder.

SEN. JOHN CORNYN, R-Texas: Mr. Holder’s experience in many ways uniquely qualifies him for this promotion as attorney general.

But it’s that very same experience when he served as deputy attorney general that calls into question his independence and judgment, particularly when the president of the United States at the time, President Bill Clinton, basically wanted something out of the Department of Justice. And this had to do specifically with two clemency petitions, one for the FLAN terrorists and the other for the notorious Marc Rich.

RAY SUAREZ: There were also widespread reports the president was close to nominating Republican Sen. Judd Gregg of New Hampshire for commerce secretary. His fellow Republicans said they had assurances the state’s Democratic governor would appoint another Republican to fill the open seat.

President Obama’s first choice for commerce, New Mexico Gov. Bill Richardson, stepped aside in the face of a grand jury probe of state contracts.

JIM LEHRER: Judy Woodruff has more on cabinet-making in Washington.

The 'revolving door' to Washington

Melanie Sloan
Citizens for Responsibility and Ethics
It is the way Washington works. And in many ways, Tom Daschle is the quintessential Washington story.

JUDY WOODRUFF: The revelations about Tom Daschle's tax returns raise a larger question about putting together an administration. Do the appointments of Washington insiders to high-level government jobs create ethical and legal challenges?

For some answers, we turn to Kenneth Gross, a former official at the Federal Election Commission. He's now a lawyer in private practice in Washington, where he focuses on lobbying and ethics rules. And Melanie Sloan, she's executive director of the government watchdog group Citizens for Responsibility and Ethics in Washington.

Thanks to you both.

And, Melanie Sloan, to you first. Before we talk about Tom Daschle's tax problems, let's address the pattern that he demonstrates. He's a United States senator. He leaves office. He, in four years, earns $5 million advising a business venture and doing work for a law firm that is advising everything from health care, which he's going to be overseeing, to Indian gambling. Is this the way Washington works?

MELANIE SLOANE, Citizens for Responsibility and Ethics: It is the way Washington works. And in many ways, Tom Daschle is the quintessential Washington story.

You have a very high-powered Washington insider, the former majority leader of the Senate, and then he goes and leverages that position to make a fortune. And the only reason we actually know about how much money he's made is because now he's had to file financial disclosure forms to become the secretary of health and human services. Generally we don't find out exactly how much these folks make once they leave office.

JUDY WOODRUFF: And, Ken Gross, he's not technically a lobbyist. And we should mention he was also doing work serving on the board of a student loan company called EduCap that paid for trips that he made to the Bahamas and the Middle East.

But put it all together. How typical of this is this of people who serve in high places?

KENNETH GROSS, Federal Elections Commission: Well, it's certainly true. People leave government. They're a valuable asset to many corporations. They get jobs. They make money. And that shouldn't disqualify them for re-entering government.

These are some of the most valuable people we have in Washington, with a depth of experience not only in many years in government, but also having the private-sector experience.

JUDY WOODRUFF: Melanie Sloan, then, what's the problem with someone who's in a position, you know, going into government and then out, and then back in to government again?

MELANIE SLOANE: Well, the questions are always raised about, are they then when they go back into government doing more for the folks they were working for in the private sector?

But in this case, I think part of the problem is that the Obama administration has talked about how they were going to change the way Washington worked and they weren't going to have the same kind of Washington insiders back in the Obama administration, and yet Mr. Daschle is exactly that kind of person.

Obama sets new ethics guidelines

Kenneth Gross
Former Official, FEC
People serve in a private capacity. They have issues when they come into government. And these are some of the most valuable people. Is he the only person on Earth who could be the next HHS secretary? No.

JUDY WOODRUFF: Well, the administration has instituted some new rules on what people can do once they leave a position. Is that making any difference here?

MELANIE SLOANE: I think that does make a big difference, and those are some pretty terrific rules. He's said that, for the course of his entire administration, no one who works in the administration can then lobby it. And that is an important change.

JUDY WOODRUFF: But coming back to Tom Daschle, Ken Gross, how big a problem is all this, when you couple what we've been talking about with the fact that he did not report as income a car and a driver and then pay taxes on that?

KENNETH GROSS: Look, it's certainly unfortunate that this tax issue has come up. The question is, is this a deal-killer? And in my view, these situations have to be looked at on a case-by-case basis.

People serve in a private capacity. They have issues when they come into government. And these are some of the most valuable people. Is he the only person on Earth who could be the next HHS secretary? No.

But he has inspired tremendous confidence in people in the administration. He has a tremendous skill set. And it seems to me that, if he's cleared up these problems, that it should not be an impediment to serving in the government.

JUDY WOODRUFF: And, in fact, as I think we reported, the president says he's absolutely still behind Tom Daschle. Robert Gibbs, the White House spokesman, said, yes, it's a serious mistake, but he's still the best person to run the Department of Health and Human Services.

But to get to Melanie's point, how does this square with what Mr. Obama said during the campaign?

KENNETH GROSS: Well, each situation is going to present issues. And you have to look at the various people who are coming forward.

The executive order that President Obama signed last week or so on this very issue, I think, really focuses not only on what people did before they came in the government, but what they do after they leave the government, assuming they don't spend the entire administration in the government.

And there are some very stiff rules people are leaving a lot of -- a lot on the table to come in and serve the government, which is fine. It's a great honor to serve the government. But they're also leaving a lot after they leave the government.

Other controversial appointments

Melanie Sloan
Citizens for Responsibility and Ethics
But what I do think is that the Obama administration shouldn't announce a policy one day and then, within days, be offering waivers day after day against that policy.

JUDY WOODRUFF: Melanie Sloan, there are several other appointments out there that are raising eyebrows. One in particular is a man named William Lynn to be second-in-command at the Pentagon. He has been a lobbyist for Raytheon, which is a huge Defense Department contractor. Is this consistent with what President Obama has been talking about?

MELANIE SLOANE: No, I don't think William Lynn's appointment is at all consistent. Mr. Lynn, as you said, a lobbyist for Raytheon, and he was announced just days after the executive order was announced saying that we wouldn't have lobbyists.

It's impossible to believe that the only person qualified to be the deputy secretary of the Department of Defense is a defense contractor's lobbyist. And I really think they ought to have cast a wider net for that position.

JUDY WOODRUFF: Is there something quantitative or qualitatively different about the Lynn appointment, Ken Gross?

KENNETH GROSS: Well, he was a registered lobbyist, as opposed to, say, the Daschle situation, where he was not a registered lobbyist. And under the Obama executive order, that requires an actual waiver, which was granted in the Lynn case.

And, you know, part of the problem is, is that we shouldn't be demonizing lobbyists as if there's something fundamentally wrong with the fact that you lobbied government.

This town really would not function very well without lobbyists. People don't really understand the role that lobbyists play in many instances in a very positive way. So you have to look at each candidate as they come along.

If there were wholesale waivers being granted all over the place, I can understand it, but there are going to be exceptions in isolated cases. And these individuals have explained it to the Senate in the confirmation process.

And the positives of this person's -- Mr. Lynn's background outweigh this fact that he happened to have registered as a lobbyist for a particular issue in the last couple of years.

JUDY WOODRUFF: Melanie Sloan, do you agree that one needs to look at this instance of who lobbied and what they lobbied for on a case-by-case basis?

MELANIE SLOANE: Well, I agree that lobbyists shouldn't be all tarred as bad as a class. And I certainly agree with Mr. Gross on that.

But what I do think is that the Obama administration shouldn't announce a policy one day and then, within days, be offering waivers day after day against that policy.

It seems to me that if they can't live with the policy then they should just change it. It's this kind of thing that makes Americans so skeptical of their government, when politicians say one thing and then do another. So this waiver is not the answer; they should really change the policy.

Changing the ways of Washington

Kenneth Gross
Former Official, FEC
Business has changed in many ways. I think we have a regulatory environment now with the people who have been appointed to positions in government. Is it completely going to -- a sea change overnight? No.

JUDY WOODRUFF: How realistic is it, Melanie Sloan, for President Obama or anybody else to change the way things are done, to change the way business is done in this city?

MELANIE SLOANE: Well, I think it's not realistic to expect that you're not going to have any Washington insiders become major cabinet officials and have top jobs in an administration. Not everybody is willing to make those kind of sacrifices, to take the long pay -- I'm sorry, the long hours and the short pay, the small pay.

It's a tough job. And Mr. Daschle is very well qualified for the position. But that said, you have to have a consistent position across the board, and the Obama folks are not consistent. They're telling the American public, "We're not going to have lobbyists. We're not going to have these Washington insiders," and then they're doing it.

KENNETH GROSS: I disagree with that. First of all, the policy itself contemplated waivers in individual situations, and that's exactly what's going on. There aren't wholesale waivers being given out day after day after day.

It's been in isolated cases where the value of a particular individual is looked at and what he did in his position when he was lobbying the government. So, you know, I can't -- this administration has signed an order, and it is going with the order, and it is a tough order. And it contemplated these situations where waivers would be granted.

JUDY WOODRUFF: Quickly, do you think it's realistic for this president to change the way business is done in Washington?

KENNETH GROSS: Yes. Business has changed in many ways. I think we have a regulatory environment now with the people who have been appointed to positions in government. Is it completely going to -- a sea change overnight? No, because people are coming in with prior government experience.

JUDY WOODRUFF: All right. We're going to leave it there. Ken Gross, Melanie Sloan, thank you both.