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article imageObama Appointees Hit by Tax Problems

By Sadiq Green     Feb 4, 2009 in Politics
Tom Daschle, the former Senate majority leader whom President Barack Obama had nominated for secretary of Health and Human Services, withdrew his nomination Tuesday amid growing criticism over his late payment of more than $120,000 in back taxes.
The Democrat from South Dakota is the second nominee for a Cabinet post in the Obama administration to withdraw amid controversy. New Mexico Gov. Bill Richardson withdrew his name from consideration as Commerce secretary in the midst of state contracting investigation. Tax errors could also spell more trouble for another Obama appointee who has admitted to tax missteps.
It was bad enough when Timothy Geithner, now the Treasury Secretary, faced questions over his failure to pay taxes as he was being considered for the post. Like many people, we thought, if nothing else, this just looks bad when the guy who is suppose to be the steward of the nation’s finances comes up short with the I.R.S. After he made the appropriate mea culpa and took his lumps in the media we figured it would be the last we would hear of this type of issue with an Obama appointee. After all, this is an administration that did not seem to miss a beat when they were in campaign mode for two years so we figured the Geithner tax issue was just a bump in the road.
Well, what looked like a bump is turning into quite a mountain of tax issues for the new administration. No sooner than Geithner had been sworn-in did word surface that another high-profile nominee, former Senator Tom Daschle, in line to lead the Department of Health and Human Services, had his own tax issues and that they were significantly more problematic than the Treasury Secretary’s problems. Daschle was seen as a critical component in the Obama administration’s plan to tackle universal health care. Now, those plans are on hold as the former senator has bowed out under mounting criticism over his personal finances and the Obama administration is forced to accept his withdrawal from consideration for the Health and Human Services post.
It was the third instance of an Obama appointee coming up short with Uncle Sam. The other person was Nancy Killefer, chosen by President Obama to be the chief White House performance officer. Killefer also stepped aside Tuesday after acknowledging that she had a tax related issue related to Washington, D.C. unemployment. Given that her role was to scrutinize government spending as a deputy at the Office of Management and Budget (OMB), her tax troubles were, like those plaguing Daschle, an embarrassment for the administration. Once it was clear that both appointees were the lead story in the press and on television news, there was little that the administration could do than accept their withdrawing their names.
It seems as though there was a hole in the vetting process as three individuals made it through and were announced by President Obama only to later admit to having issues with the Internal Revenue Service. If the nation were not in the throes of the “Great Recession,” the tax troubles these individuals face might have been overlooked by the public and dismissed by the media. After all, the I.R.S. has very few fans out there and even Republicans have been vocal critics of the agency. But we are in hard, and for some, desperate times and many people have little patience for high ranking officials who appear to be avoiding paying their fair share. Daschle’s case was particularly problematic since it involved private car service at a time when even the mode of transportation business executives use is coming under scrutiny.
While the loss of Daschle is not fatal to the new administration, it does represent a setback. The President was anticipating that the former senator, respected on the Hill by his former colleagues, would have the gravitas to commandeer health care reform through Congress. Now, Mr. Obama will have to recalibrate his thinking and identify a replacement that bears the same stature and influence as Daschle but, of course, without the baggage of a tax liability.
What this episode really reveals is that despite the euphoria over President Obama, the realities of Washington politics is beginning to set in. The new administration is learning each day that being in the majority is no picnic despite the fact that you can pack the basket of goodies.
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