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Daschle Withdraws Name for HHS Secretary

Former Senate Majority Leader Tom Daschle has withdrawn his nomination for secretary of health and human services amid a tax problem.

Durbin said the withdrawal could be a serious setback for health-care reform, because of Daschle's unusually strong legislative background and long interest in the issue. "It sets us back," Durbin said.

"He didn't really have a choice," said Sen. John Cornyn (R-Tex.), after calling earlier in the day for Daschle to step aside.

Daschle also faced criticism in a New York Times editorial today, which called for him to withdraw his nomination because of his tax problems and his ties to the health-care industry.

In the earlier withdrawal, Killefer indicated that controversy over failure to pay taxes by Daschle and Geithner had persuaded her to decline the new president's request to join his administration. Killefer had a tax lien placed on her house by the D.C. government in 2005 because she had not paid unemployment taxes for her household help. She resolved the problem five months after the lien was filed, but the Associated Press wrote about it shortly after Killefer was nominated in early January.

"I recognize that your agenda and the duties facing your Chief Performance Officer are urgent," Killefer wrote in a letter to Obama, which was released by the White House this morning. "I have also come to realize in the current environment that my personal tax issue of D.C. Unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid. Because of this I must reluctantly ask you to withdraw my name from consideration."

Obama nominated Killefer to be deputy director for management at the Office of Management and Budget and to take on a new White House post, chief performance officer for the entire federal government. Both positions require Senate confirmation. Obama had said Killefer would work on "identifying where there are areas that we can make big change that lasts beyond the economic recovery plan and save taxpayer money over the long term."

It was not immediately clear who would replace her.

Killefer's confirmation would have been handled by the Senate Committee on Homeland Security and Governmental Affairs, which is chaired by Sen. Joseph I. Lieberman (I-Conn.) and has jurisdiction over OMB appointments. The White House never officially referred her nomination to the panel and a committee staff background investigation had only recent started, according to committee spokeswoman Leslie Phillips.

"Sen. Lieberman is disappointed the nomination process for this important position has been delayed," Phillips said in a written statement. "He hopes the Obama Administration quickly appoints a new nominee so the critical business of making government more efficient and responsive to the American people can be carried out with energy and vigor."

Killefer is a senior director at McKinsey & Co., an international management consulting firm with private- and public-sector clients. From 1997 to 2000, she served as assistant secretary for management and chief financial officer and chief operating officer at the Treasury Department.

At McKinsey -- where she worked before joining Treasury, and after her stint there -- she has consulted with the retail, hotel and pharmaceutical industries on management, marketing and efficiency issues. Killefer also chaired the IRS Oversight Board from 2001 to 2005 and has served on the board of the Partnership for Public Service since 2006. She has drawn wide praise from colleagues.

"She's a very talented person, and we have a lot of important issues that she was going to be charged with addressing," Max Stier, president and chief executive of the Partnership for Public Service, said this morning. "My hope is that the Obama administration works with great dispatch and works to find someone with her caliber, who will give as much prioritization to the matter as the president was giving these issues."

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