TOPICS > Politics

Daschle Cabinet Bid Hits Trouble Over Tax Issue

BY Admin  February 2, 2009 at 5:10 PM EST

President Obama and Tom Daschle; AP file photo

The Democratic former Senate majority leader, issued an apologetic statement shortly before meeting with the Senate Finance Committee, which must approve his nomination as health secretary.

Daschle said Monday he was deeply embarrassed about having to pay some $140,000 in back taxes, a lapse that raised questions about his nomination.

President Obama told White House reporters Monday he was “absolutely” sticking with his nominee for secretary of health and human services. A key senator also added an important endorsement.

No one on Capitol Hill predicted defeat for Daschle’s nomination, but it proved to be an unsavory pill to swallow for senators who only last week confirmed Timothy Geithner as treasury secretary despite his separate tax-payment problems. It’s an issue that strikes a nerve among lawmakers’ constituents who are struggling with their own serious money problems.

New Mexico Gov. Bill Richardson, another high profile Obama pick who had been tapped to head the commerce department, withdrew his name from consideration in January in the face a federal grand jury investigation into how one of his political donors landed a lucrative New Mexico transportation contract.

The White House both underscored the magnitude of Daschle’s problem and tried to downplay Monday, the Associated Press reported. “Nobody’s perfect,” said press secretary Robert Gibbs. “It was a serious mistake. …”

Gibbs reiterated Obama’s support for the former South Dakota senator and said it would be up to the Senate to weigh a “serious, but corrected mistake against that three-decade career in public service.”

“We still think he’s the best person to do health care reform and shepherd a very complicated process through Congress to achieve savings and cut costs for the American people,” Gibbs said. The White House also had suggested Geithner was indispensable for the national economic revival in arguing for his confirmation despite tax problems.

Daschle was an early supporter of Obama’s presidential bid, and several of Daschle’s former Capitol Hill staffers went to work for Obama after Daschle lost his re-election bid in 2004.

Daschle received warm words from the chairman of the Senate Finance Committee, the panel that will have the first say on his fate. Daschle has been “an invaluable and expert partner” in efforts toward health care reform, said Democrat Max Baucus of Montana — an especially important endorsement since the two men have had tussles in the past over Baucus’ handling of GOP tax-cut proposals, Medicare changes and other issues.

“The ability to advance meaningful health reform is 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,” Baucus said, according to the New York Times.

Republicans appeared to be adopting a wait-and-see approach, with Senate GOP leader Mitch McConnell telling CBS News on Sunday it was a “quite a surprise” but he wanted to hear from the Finance Committee about the matter.

Daschle expressed his remorse in a letter to the Finance Committee about what he said was an unintentional failure to pay taxes that he owed. He recently filed amended returns for 2005-07 to report $128,203 in back taxes and $11,964 in interest, the AP reported.

“As you can well imagine, I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns,” Daschle said in a letter to Baucus and Sen. Charles Grassley, the top Republican on the panel.

The letter sought to explain how he overlooked taxes on income for consulting work and the use of a car service. He also deducted more in charitable contributions than he should have.

“I apologize for the errors and profoundly regret that you have had to devote time to them,” he told the senators in a letter dated Sunday and issued on Monday. “I will be happy to answer any committee members’ questions about these issues.”

A financial disclosure form Daschle filed about a week ago showed that he made more than $200,000 in the past two years speaking to members of the health care industry that Mr. Obama wants him to reform.

The speaking fees were just a portion of the more than $5.2 million the former senator earned over the past two years as he advised health insurers and hospitals and worked in other industries such as energy and telecommunications, according to a financial statement filed with the Office of Government Ethics, according to the AP.

Among the health care interest groups paying Daschle for speeches were America’s Health Insurance Plans, $40,000 for two speeches; CSL Behring, $30,000; the National Association of Boards of Pharmacy, $16,000, and the Principal Life Insurance Co., $15,000.