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Tax Lapses Derail Daschle and Killefer Nominations

February 3, 2009 at 6:00 PM EST
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Two prominent Obama nominees, Tom Daschle and Nancy Killefer, withdrew their nominations Tuesday over controversies surrounding tax lapses. Political reporters mull the impact.
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JUDY WOODRUFF: President Obama today lost two people he had chosen for top government positions over unpaid taxes and other problems. Tom Daschle withdrew from consideration as secretary of health and human services. Nancy Killefer dropped out as the choice for chief performance officer.

NewsHour correspondent Kwame Holman has our lead story report.

KWAME HOLMAN: It was not the way the Obama White House hoped to spend this day, to say the least. But Daschle, the former Senate majority leader, faced mounting criticism. He’d been forced to pay $140,000 in back taxes and interest for a car service he used from 2005 to 2007.

Shortly after midday, he issued a surprise statement saying, “This work will require a leader who can operate with the full faith of Congress and the American people and without distraction. Right now, I am not that leader, and I will not be a distraction.”

Hours earlier, Nancy Killefer issued her own statement. She ran into trouble in the form of unpaid unemployment taxes. She, too, said she did not want to be a distraction.

At the White House, press secretary Robert Gibbs was peppered with questions over the withdrawals.

ROBERT GIBBS, White House spokesman: The president understands that each of these individuals has served this country with distinction, appreciates that service. Each asked to withdraw their nomination, and the president on each case accepted those withdrawals.

Each also decided they couldn’t distract from the agenda that the president was pursuing, that the agenda that he was pursuing is bigger than them, it’s bigger than me, it’s bigger than any of us that serve at the pleasure of the president of the United States.

KWAME HOLMAN: Gibbs also defended the Obama team’s vetting process for nominees, and he insisted the administration’s ethical standards are the highest ever.

At the Capitol, a senior adviser to the president, David Axelrod, met with Democratic senators today. The Senate already had confirmed Treasury Secretary Timothy Geithner despite his failure to pay taxes, but Axelrod said Daschle knew he would have faced a tougher time and a lengthy confirmation process.

Republican Sen. John Ensign of Nevada said Daschle’s background as a policy adviser to a lobbying firm also posed a problem.

SEN. JOHN ENSIGN, R-Nev.: President Obama has said that he wants to stop the revolving door, that he doesn’t want lobbyists as part of his administration. Well, I don’t know how you get paid $2 million by a lobbying firm and not call yourself a lobbyist. That just seems disingenuous to me and I don’t think passes the smell test.

So I personally think that Senator Daschle, you know, was going to face some tough questions. And to stop an embarrassment from happening for this president, I think he saved the president from being embarrassed next week in a public hearing.

KWAME HOLMAN: But Daschle also had his defenders, among them Majority Leader Harry Reid.

SEN. HARRY REID, D-Nev., Senate majority leader: Senator Daschle served here for many years. He was a Democratic leader for 10 years. He served on the Finance Committee even longer than that. He was the face, in the Senate at least, of the Clinton health care plan. He’s written a book on health care.

He is a person who is really ideally suited to be the secretary of HHS, but there were some things that came up and, as everyone knows, Senator Daschle is like a brother to me, and he made the decision personally to withdraw. I support his decision.

KWAME HOLMAN: In his own statement, President Obama said he accepted Daschle’s decision with sadness and regret. He also named a new nominee for commerce secretary, Republican Sen. Judd Gregg of New Hampshire.

U.S. PRESIDENT BARACK OBAMA: Now, clearly, Judd and I don’t agree on every issue, most notably who should have won the election. But we do agree on the urgent need to get American businesses and families back on their feet.

We see eye to eye on conducting the nation’s business in a responsible, transparent, and accountable manner. And we know the only way to solve the great challenges of our time is to put aside stale ideology and petty partisanship and embrace what works.

JUDD GREGG, Commerce secretary-designate: This is not a time for partisanship. This is not a time when we should stand in our ideological corners and shout at each other. This is a time to govern and govern well.

And, therefore, when the president asked me to join his administration and participate in trying to address the issues at this time, I believed it was my obligation to say yes, and I look forward to it with enthusiasm.

KWAME HOLMAN: The Democratic governor of New Hampshire today named Republican Bonnie Newman to fill out the remainder of Greg’s Senate term. The president’s first choice for Commerce was New Mexico Gov. Bill Richardson. He withdrew a month ago amid a grand jury investigation of state contracts.

JUDY WOODRUFF: Late this afternoon, President Obama made his own public statement in an interview with ABC News.

U.S. PRESIDENT BARACK OBAMA: That’s an issue. And, you know, as I’ve said publicly, you know, ultimately I take responsibility for the situation that we’re in.

But what I also think is important is to stay focused on the overarching theme of this administration, which is making sure that we get this economy back on track, that we provide health care for people who are in desperate need of it.

You know, I think Tom Daschle would have been the best person to help shepherd through a health care bill through a very difficult process in Congress. And so, you know, I regret the fact that he’s not going to be serving, but we’re going to move forward.

Many factors affected decision

Michael Fletcher
The Washington Post
I think he decided that, you know, why try to push this? This is tarnishing me. And rather than, you know, making change in the White House, I'm beginning to look like, you know, like someone who's not changing the way Washington works.

JUDY WOODRUFF: For more on today's developments and what they say about President Obama's nominating process, we turn to three reporters who've been covering this story: Peter Baker of the New York Times; Jeanne Cummings of Politico; and Michael Fletcher of the Washington Post.

And, Michael, I'm going to turn to you first. You know, we heard President Obama yesterday say he absolutely was sticking with Tom Daschle. What happened?

MICHAEL FLETCHER, Washington Post: Well, I think he realized that his rhetoric wasn't matching his actions. And it became clear that there was kind of a double standard developing.

You know, on one hand, President Obama had talked about having kind of the highest ethical bar ever for a president, but yet he already had the treasury secretary who had tax problems. He has an HHS secretary with tax problems. And I think he decided that, you know, why try to push this? This is tarnishing me. And rather than, you know, making change in the White House, I'm beginning to look like, you know, like someone who's not changing the way Washington works.

JUDY WOODRUFF: Peter Baker, we also know that Tom Daschle said in an interview today with Andrea Mitchell at MSNBC that, after he read an editorial in your newspaper this morning calling for him to step aside, that influenced his decision. What else do we know about his decision?

PETER BAKER, The New York Times: Well, you know, Tom Daschle is having a difficult time in his personal life, as well as family life. His brother is very ill.

I think that the ordeal of that, along with having to answer tough questions to his colleagues, his former colleagues in the Senate, obviously weighed on him. And what he said is that he didn't want to be a distraction for a president that he admires.

What's really interesting about this is that there's probably no single person, or very few anyway, more responsible for Barack Obama's rise in Washington to the presidency than Tom Daschle. Daschle was one of the people who really took him under his wing when then-Senator Obama arrived in Washington. And a lot of the people around the President Obama today are Daschle aides and Daschle advisers. So this is a really big thing that's happened today, I'm afraid.

Problems with the vetting process

Peter Baker
The New York Times
It is a club up there. And former members tend to get a certain degree of deference. So they had every reason to think that they might be able to pull it through.

JUDY WOODRUFF: So given that, Jeanne Cummings, how did it happen? How did it happen that this went as long as it did? I mean, we -- at one point, it was reported that Tom Daschle thought as long ago as last summer that he might have tax problems. What do we know about that process?

JEANNE CUMMINGS, Politico.com: Well, from what we understand, in June it did occur to him for some reason to look into whether he did owe taxes for the car service. And he asked his accountant to look into it. From what we've been told, it took many months for it to be resolved. And as it was, it was resolved against him. And the decision was he did, indeed, owe those taxes.

And so it's been lingering out there in the ether. And that raises a big question about the vetting process. I understand that the White House has defended it and said their process was terrific, but when you have three tax issues appear, that says that something wasn't working right when they were doing the vetting on these nominees.

JUDY WOODRUFF: And I'm gathering that President Obama in a series of interviews he did this afternoon is taking responsibility for that. Do we know, Michael Fletcher, whether anybody at the White House -- the president on down -- tried to talk Tom Daschle out of stepping aside?

MICHAEL FLETCHER: No, we haven't heard that today. I don't know for sure, but I certainly haven't heard that.

I think the thing was that the vetters actually turned up a lot of these problems but there were political decisions made along the way. And I think this is where President Obama found himself kind of compromising himself, where he felt, in the case of Daschle, for instance -- I mean, this is a guy who's been almost a political godfather and someone who's also seen as being pivotal to health care reform.

So he thought that his qualifications and his connections would kind of override these problems which were made apparent in vetting. And I think, as they stood back in the light of day as these other problems came up, they decided, well, you know, how do we sound trying to defend this and parse that?

I think it becomes -- and even the thing about the lobbyists. You know, obviously, Senator Daschle wasn't a lobbyist per se, but he worked essentially as one. So I think they decided that they needed to get out of this game of double-speak and try to get back to principle.

JUDY WOODRUFF: Mike -- I mean, I'm sorry, Peter Baker, do you think that they let this go on longer than they might have because of this longstanding relationship the president had with Tom Daschle?

PETER BAKER: Well, he did have that longstanding relationship. He was obviously reluctant to simply abandon somebody who had been so important to him.

And let's remember, too, they thought very strongly that they were going to be able to get him through the Senate. The Senate today has 58, possibly soon 59 Democratic senators, most of whom or a lot of whom had signaled they were going to stand by their former leader. It is a club up there. And former members tend to get a certain degree of deference. So they had every reason to think that they might be able to pull it through.

You know, but, in the end, by having this drip out over a number of days and take the amount of time that it did, it increased the damage. When Bill Richardson was let go as the nominee for secretary of commerce, it was done very quickly and sort of minimized the damage. This one has played out over a number of days in a way that's distracted from the Obama White House's strategic planning.

Public perceived a double standard

Jeanne Cummings
Politico.com
It raised a gender issue. Was the Obama White House going to muscle through Tim Geithner and Tom Daschle and then Nancy Killefer has to walk?

JUDY WOODRUFF: And, Jean Cummings, what about the other individual who withdrew herself from consideration today, Nancy Killefer? She was formerly at McKinsey & Company. She was going to be the administration's top performance officer, focused on efficiency in government. What happened there? We were reading this is the less than a $1,000 tax issue?

JEANNE CUMMINGS: Yes, and it had to do with paying taxes on people that she had working for her at home. And, actually, when she withdrew this morning, that really compounded the problems for Daschle on a couple of fronts.

First of all, the amount of money that she had not paid was miniscule compared to his. And it raised a gender issue. Was the Obama White House going to muscle through Tim Geithner and Tom Daschle and then Nancy Killefer has to walk? There were women this morning, influential women in Washington, who were very upset at the notion that the woman was going to take the fall and the two men were going to make it through the process.

But, Judy, getting back to one of the points you were making earlier, I think they didn't have a problem on Capitol Hill. Sure, there would have been tough questions for Daschle, but they would have confirmed him. Obama would have gotten him into the HHS secretary spot.

Their problem was with the public. They got Geithner through because of his -- the economic problems. But the public didn't like it. If you look at public opinion polls, they saw a double standard.

And then you have potentially a cabinet with three members who have not paid their taxes. And meanwhile you have Vice President Joe Biden out there scolding wealthy people for saying that it's patriotic to pay your taxes. Well, how do you in any way meld all of these messages and show a consistent image and a compelling and forceful new image to the public? Very difficult.

Is Obama politically weakened?

Michael Fletcher
The Washington Post
The public, you know, hates these, you know, things that look like hypocrisy and things like that, and I think they wanted to get away from that as quickly as possible. And I think they certainly hope it doesn't follow them from here.

JUDY WOODRUFF: Michael Fletcher, is there worry now at the White House that they have been politically weakened by this episode? Or do they think they just barrel through having let these two individuals go today?

MICHAEL FLETCHER: I think they're very worried. And I think that's why you saw kind of the quick action you saw today. After Ms. Killefer stepped down, as Jeanne points out, I think the problem was just compounded for Daschle.

And there was no way in a sense that he could survive then, because I think just 24 hours ago you heard President Obama, you know, sort of voicing, you know, a strong support for him.

So, you know, the world had changed completely in 24 hours. And I think they saw that the damage was being done. I mean, the public, you know, hates these, you know, things that look like hypocrisy and things like that, and I think they wanted to get away from that as quickly as possible. And I think they certainly hope it doesn't follow them from here.

JUDY WOODRUFF: And, Peter Baker, what are you picking up in that regard about how much concern there is at the White House after this has happened?

PETER BAKER: Well, of course there's concern. And one of the things that they're concerned about is sort of the luster of this president coming in. You know, he had quite a sheen on him as a new president. Many presidents do come in with a honeymoon.

He was perceived in particular to be somebody who was going to come into Washington and change the way business is done. That's what he promised. This doesn't look like change to a lot of people; it looks like business as usual.

The other thing they're worried about, obviously, is health care reform. What comes next in that regard? Senator Daschle seemed to be a particularly unusually well-positioned leader in that effort, a former Senate majority leader, somebody who had written a book about health care himself.

Now they're going to have to go to the Plan B list of other options, none of whom were obviously this president's first choice.

JUDY WOODRUFF: And, Jeanne Cummings, are you hearing anything yet at this point about a second choice for Health and Human Services? And is the administration getting any sort of a lift off its choice of Republican Sen. Judd Gregg for Commerce?

JEANNE CUMMINGS: Well, I certainly think that the Judd Gregg announcement was completely overshadowed by all of the talk about Daschle today. As for any second choices, you know, you hear some of the old names. There are governors out there that at one point were considered likely to join the cabinet.

There are some who've talked about Howard Dean. That's highly unlikely. I think, you know, this process starts all over again.

But in addition to worrying about health care reform, the White House has to worry about that stimulus bill, because every bit of political capital Obama just had to spend he doesn't have now to work on the stimulus.

And you can see the way they've moved abruptly now to try to seize back that agenda and talk about it on their terms, and getting Daschle off of the national conversation, out of the national conversation was an important part of getting the stimulus back into it.

JUDY WOODRUFF: All right, well, we're going to leave it there. And, indeed, the stimulus is something everyone is focused on. We're going to be talking about it later in the program tonight.

Peter Baker at the New York Times, Michael Fletcher at the Washington Post, Jean Cummings of Politico, we thank you, all three.