By Ceci Connolly and Paul Kane
Washington Post Staff Writers
Monday, February 2, 2009
After a quarter-century in Congress, Thomas A. Daschle will return to Capitol Hill today in an unfamiliar role, summoned by former colleagues on the Senate Finance Committee to defend his reputation and his nomination to be secretary of health and human services amid revelations that he did not pay more than $100,000 in back taxes.
Well known and generally well liked in Washington, Daschle was expected to be one of President Obama's first Cabinet secretaries to be confirmed. His preliminary hearing before the Senate Health, Education, Labor and Pensions Committee was so upbeat that Republicans praised his selection.
Instead, a vote on his confirmation has been stalled, and with it one of Obama's signature domestic policy issues -- health-care reform.
Daschle's prospects became complicated during the first week of the year, when he detailed for the White House and the Finance Committee a series of tax filing errors made over the past three years. Most significantly, he did not pay taxes on a luxury car and driver provided by his friend and employer, Democratic businessman Leo J. Hindery Jr.
Daschle, a former Senate majority leader from South Dakota, will head to the Capitol today "ready and willing to answer any questions," said Jenny Backus, his spokeswoman. He will also inform lawmakers that in addition to the $140,000 in back taxes and interest he paid on Jan. 2, he intends to send the U.S. Treasury an additional $6,000 to cover Medicare taxes on the driver.
Questions about the Medicare tax liability arose only Friday, Backus said, and Daschle agreed to pay the money.
Daschle, who has been out of town visiting an ailing brother, has been unavailable for interviews. He has not responded to requests to release his tax returns.
Many Democrats rose to his defense yesterday.
"If all you knew about Tom Daschle was that he used to be a senator and he made a mistake and had to pay over $100,000 in back taxes, you would have a right to be skeptical, even cynical," said Sen. Richard J. Durbin (Ill.) on Fox News Sunday with Chris Wallace. "But if you know Tom Daschle, you know better."
One longtime friend blamed Hindery's company, InterMedia Advisors, for the tax oversight. Daschle did report the $1 million annual consulting fee he received from the private equity firm. He asked his accountant last summer to look into whether the Internal Revenue Service considers the free car and driver to be compensation, Washington lawyer Frederick Graefe said.
"If there was no 1099 [form] from his employer for the car and driver, how was he to know it was taxable?" Graefe said. "His integrity is beyond reproach."
Sen. Jim DeMint (S.C.), one of two Republicans who opposed the confirmation of Secretary of State Hillary Rodham Clinton, was the only lawmaker to suggest publicly yesterday that Daschle's nomination may be in jeopardy.
"It may be. I want to find out more about it," he said on ABC's "This Week." "It's disheartening, obviously."
Several other Republicans held back, saying they are awaiting action by the Finance Committee, which must vote on the nomination before it goes to the full Senate.
"This is a legitimate issue," Sen. Susan Collins (Maine) said on CNN's "State of the Union." "We need more of an explanation than we have now. It's an awful lot of money."
Senate Minority Leader Mitch McConnell (Ky.) said on CBS's "Face the Nation": "I think I'm going to just wait until [committee members] give me their opinion. But it was a surprise. . . . It is quite a surprise."
Daschle is the second Obama Cabinet nominee to undergo a closed-door inquiry by the Senate panel. In mid-January, Timothy F. Geithner was asked to explain why he had not paid $43,000 in taxes relating to work overseas. In the end, the Senate approved his nomination, though 34 lawmakers, including three Democrats, voted no.
Daschle's appearance today is likely to follow the Geithner script, congressional aides said. The 23 committee members will first meet in an anteroom to review a report on Daschle's finances prepared by staff members. Daschle, who participated in similar sessions during his years on the panel, will wait outside, ready to answer questions.
"We'll have to question former senator Daschle and understand his explanation, and then have a conversation about it and see where it goes," Sen. Jon Kyl (R-Ariz.) said on "Fox News Sunday." Kyl, who was Geithner's strongest critic on the committee, said it appears "too early to tell" whether Daschle's difficulties will disqualify him for the post.
As they wait to see whether new information emerges, Republican aides said privately that they will focus attention on the much-vaunted Obama transition process and pledges that the new administration would be free of conflicts of interest.
"It does raise some questions about the vetting process," McConnell said. "This is now the second time that we've had a similar incident -- first with the nominee for secretary of the Treasury and now with Senator Daschle. I think the administration ought to take a look at its vetting process."
Kyl suggested that Obama is benefiting from his popularity and a double standard, and that President George W. Bush's nominees might not have survived similar mistakes.
"President Obama wanted to have a very ethical administration starting out and so on, but I think he's seeing how hard it is to avoid these kind of problems," Kyl said. "And I just wonder if President Bush had nominated these people, what folks would be saying about that."