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ABC News has learned that the nomination of former Senator Majority Leader Tom Daschle, D-S.D., to be President Obama’s secretary of health and human services has hit a traffic snarl on its way through the Senate Finance Committee.
The controversy deals with a car and driver lent to Daschle by a wealthy Democratic friend — a chauffeur service the former senator used for years without declaring it on his taxes.
It remains an open question as to whether this is a "speed bump," as a Democratic Senate ally of Daschle put it, or something more damaging.
After being defeated in his 2004 re-election campaign to the Senate, Daschle in 2005 became a consultant and chairman of the executive advisory board at InterMedia Advisors.
Based in New York City, InterMedia Advisors is a private equity firm founded in part by longtime Daschle friend and Democratic fundraiser Leo Hindery, the former president of the YES network (the New York Yankees’ and New Jersey Devils’ cable television channel).
That same year he began his professional relationship with InterMedia, Daschle began using the services of Hindery’s car and driver.
The Cadillac and driver were never part of Daschle’s official compensation package at InterMedia, but Mr. Daschle — who as Senate majority leader enjoyed the use of a car and driver at taxpayer expense — didn’t declare their services on his income taxes, as tax laws require.
During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007.
(Daschle reimbursed the IRS $31,462 in taxes and interest for tax year 2005; $35,546 for 2006; and $34,935 for 2007, a Daschle spokesperson said, adding that Daschle had asked his accountant to look into the tax implications of the car and driver five months before Obama won the presidency.)
The Daschle spokesperson told ABC News that the senator, facing questions from the committee, has said "he deeply regretted his mistake. When he realized it was a mistake he corrected it rapidly."
The chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., has called his colleagues for a private meeting at 5 p.m. ET Monday to discuss these complications surrounding Daschle’s nomination.
In the meantime, the White House and Democratic allies are coming to Daschle’s defense.
"The president has confidence that Sen. Daschle is the right person to lead the fight for health care reform," White House deputy press secretary Bill Burton said. "In preparation for his nomination, Sen. Daschle and his accountant identified some tax issues and fixed them. They filed amended return with the IRS and made payments with interest. Sen. Daschle brought these issues to the Finance Committee’s attention when he submitted his nomination forms and we are confident the committee is going to schedule a hearing for him very soon and he will be confirmed."
Jim Manley, a spokesman for Senate Majority Leader Harry Reid, D-Nev., added: "Sen. Daschle will be confirmed as secretary of health and human services. He has a long and distinguished career and record in public service and is the best person to help reform health care in this country."
But House Republicans attending a retreat in Hot Springs, Va. also were buzzing about the news of Daschle’s tax problems.
In a speech to his fellow Republican House members, Rep. Eric Cantor, R-Va., compared Daschle’s issue with the tax problems that hindered the confirmation of Treasury Secretary Timothy Geithner and those of Rep. Charles Rangel, D-N.Y., who is embroiled in a controversy over payment of taxes on a beachfront villa in the Dominican Republic.
"A pattern is developing," Cantor said. "The pattern is solidified. … It’s easy for the other side to sit here and advocate higher taxes because — you know what? — they don’t pay them."
This is the second Cabinet nominee of President Obama’s to face questions of tax malfeasance.
Geithner paid more than $34,000 in taxes during his vetting process for income earned at the International Monetary Fund. Earlier, Commerce secretary nominee
Bill Richardson withdrew his name from consideration after reports of a federal investigation involving whether his office engaged in "pay to play," a charge Richardson denied.
The spokesperson said, by way of explaining how it was this happened: "In 2005, Sen. Daschle’s close friend Leo Hindery, who lives in New York, offered him the use of a car and driver in Washington when he was not using it. That same year, they began a formal business relationship where he was an independent consultant and chairman of the external advisory board to InterMedia Advisors. The car was not provided as part of his compensation. So it never occurred to him that it should be considered income. The senator simply and probably naively considered its use a generous offer by a longtime friend."
Hindery did not have any comment. Daschle has personally refrained from commenting.
Daschle came before the Senate Health Education Labor and Pensions Committee for a hearing on Jan. 8, 2009, and it was a veritable love-in, with the respected former colleague praised to the high heavens.
But staffers at the Senate Finance Committee are generally a little more exacting — witness the stormy weather faced by Treasury Secretary Tim Geithner for his back-tax snafus — and they have been delving into the issue and exploring all the ramifications before holding a committee vote on his nomination.
The Daschle spokesperson insisted that the former senator is the one who should get credit for discovering, fixing and disclosing the tax issue.
"In June 2008, Sen. Daschle mentioned the use of the car to his personal accountant and asked him if there were any potential tax consequences," the spokesperson said. "His accountant said that there could be tax consequences and said he was going to fix them as part of Daschle’s 2008 filing. So when he got down to vetting, Sen. Daschle decided to amend his returns for 2005, 2006 and 2007, and he paid all the taxes. At the urging of Daschle, the accountant was very conservative in his estimates."
Regardless of how the information came to light, a spokeswoman for Sen. Chuck Grassley, R-Iowa, the ranking Republican on the Senate Finance Committee, said the public should be aware.
"Sen. Grassley’s position for this nomination is the same as it has been for every other nomination processed by the Finance Committee since 2001, that all relevant information about a nominee must be made public in order for the confirmation process to go forward in the committee," the spokeswoman said. "The public’s business ought to be public, and committee members must weigh all the facts of a nominee’s record."
Daschle has long been one of President Obama’s closest advisers, so it was no surprise when the mild-mannered pol was named Obama’s nominee to be HHS secretary shortly after Obama won election; his official nomination came Dec. 11, 2008.
Should Daschle have difficulty being confirmed — a prospect that seems unlikely given the benefit of the doubt senators frequently extend to one another, not to mention the Senate’s Democratic majority — he doesn’t have to worry about finding another job in the administration, since President Obama has also appointed him to serve as director of the new White House Office on Health Reform.
– Jake Tapper, with reporting by ABC News’ Jonathan Karl
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USER COMMENTS
If a democrat or a republican bend the rules, let them pay the pric. We have had far too much of this in our history. If there is no criminal intent, then stop the things that are questionable, and fly right. It is as simple as that. Play it straight and all will bnefit, themselves, the nation, and the puppets(meaning taxpayers)
POSTED BY: 73TOMS | JANUARY 30, 2009, 6:39 PM 6:39 PM
The corruption just will not stop. Obama administration already the most corrupt in history
POSTED BY: GREG | JANUARY 30, 2009, 6:39 PM 6:39 PM
And the hits just keep on coming!
POSTED BY: LONGT | JANUARY 30, 2009, 6:39 PM 6:39 PM
Those darn taxes. Now I know why Dems don’t want tax cuts for anyone else…they don’t want to have to pay additional penalties on the taxes they don’t pay!!!!
Everyone in Congress Reps/Dems needs to be investigated for Tax Evasion. All of them, no excuses!!!
POSTED BY: DAVE MATHEWS | JANUARY 30, 2009, 6:40 PM 6:40 PM
More “change” and “hope” I presume. How many tax cheats is President Obama going to nominate. Next he’s going to put his illegal immigrant aunt as head of INS. Until the America people start voting for third party candidate we are forever going to be given the choice between liars and cheats.
POSTED BY: WARRIORJASON | JANUARY 30, 2009, 6:40 PM 6:40 PM
Why is it that when a democrat gets caught he pays up and apologizes for a lapse in memory, while a republican is investigated and prosecuted? This double standard always amazes me!!
POSTED BY: STAN | JANUARY 30, 2009, 6:42 PM 6:42 PM
Daschle a Democrat… no problem. No tax problem is to big not to overlook. Just ask Treasury/IRS head “Tax Cheat Tim Geithner”.
POSTED BY: MNDASHER | JANUARY 30, 2009, 6:42 PM 6:42 PM
Leave it to Obama to pick these Losers!
Just a Hint on how he’s going to operate!
Does he know anyone that is “Honest” ?
POSTED BY: DOUG ROSE | JANUARY 30, 2009, 6:43 PM 6:43 PM
In less than a week and a half Obama has shown more corruption than GWB in 8 full years.
Not only will my grandchildren (which I don’t have yet) be paying for this disaster, it is looking more and more like my great-grandchildren too.
POSTED BY: SWIFT BOATER | JANUARY 30, 2009, 6:43 PM 6:43 PM
Obama likes to change history. He started changing it from his first speech as president.
POSTED BY: JAMES | JANUARY 30, 2009, 6:44 PM 6:44 PM
CHANGE………IS………MORE AND MORE LOBBYISTS AND TAX CHEATS IN MY CABINET.
POSTED BY: ED357 | JANUARY 30, 2009, 6:44 PM 6:44 PM
I’d love to see journalists start investigating each other’s tax issues also. I’d bet you’d find loads of problems. But, of course, journalists are accountable to no one.
POSTED BY: LISA | JANUARY 30, 2009, 6:44 PM 6:44 PM
Tax Cheat, hey that’s not a problem in the Obama administration. That’s change you can believe in.
POSTED BY: BUCKAROOBONSAI | JANUARY 30, 2009, 6:46 PM 6:46 PM
Hope and Change!
POSTED BY: MASSTEXODUS | JANUARY 30, 2009, 6:47 PM 6:47 PM
This is bad for Daschle, but I don’t believe President Obama needs him anymore. Daschle has tried desparately to sell the corporate health plan that doesn’t work. The President Obama health plan of guilt on your way of life didn’t work. The truth of corrupt and greedy insurance companies will be revealed. It is the insurance companies that are the problem of the poor health care in America, and Daschle couldn’t force feed the propaganda of guilt ridden it’s your fault and your responsibility to good health that is the problem. Daschle is expendable. President Obama will get someone that the sheeple will believe, or he will have to face the reality and restructure insurance companies to insure and not exist for obscene profits. I provided transition.gov with my community meeting. 73% of participants said it was the insurance companies who destroyed healthcare by providing a quote,”discount coupon healthcare. I spend $1,000 and you pay $.10.” Daschle and his group completely ignored my meeting and results, but he was sure to put up his video where he controlled the meeting.
POSTED BY: CLANCY49 | JANUARY 30, 2009, 6:47 PM 6:47 PM
If it were possible to elect someone who wasn’t in the CFR, we could get honest politicians. Unfortuantely, the evil (literally) CFR and Tri-Lateral Commission run the world
POSTED BY: JOHN | JANUARY 30, 2009, 6:47 PM 6:47 PM
Evidently, after Rangel and Geithner, paying taxes is purely voluntary. For Democrats, that is.
POSTED BY: MESQUITO | JANUARY 30, 2009, 6:48 PM 6:48 PM
So I guess it really does make a difference who your friends are. Just look at Illinois…
POSTED BY: ESTER | JANUARY 30, 2009, 6:48 PM 6:48 PM
Get rid of Daschle!!!
POSTED BY: TOMTOTH | JANUARY 30, 2009, 6:50 PM 6:50 PM
Not a big enough thing to worry about. Making a mountain out of a molehill.
Slap his wrist and let it go.
POSTED BY: BETO | JANUARY 30, 2009, 6:50 PM 6:50 PM
Today, a relative of mine who is 83 years old and a life long democrat, changed their party affiliation to Republican. That sums up Obama’s first 10 days in office.
POSTED BY: DEBBIE | JANUARY 30, 2009, 6:50 PM 6:50 PM
So what? – - being upright & honest doesn’t count with this administration – - witness Geithner, etc.
All rules flew out the window when theser folks came into being with Obama & the election.
POSTED BY: KAY | JANUARY 30, 2009, 6:51 PM 6:51 PM
I love when a scandal is revealed on a Friday afternoon at 6PM. Couldn’t have another blemish on BO hit during a busy news week now could we?
This should certainly keep coverage and discussion to a minimum of yet another tax problem with admin choices. This will be forgotten about as Monday will be all about Superbowl Ads.
Yes, all the pols use this trick but alas it is annoying and thinly veiled.
POSTED BY: CHRISINATL | JANUARY 30, 2009, 6:52 PM 6:52 PM
I didn’t see anything related to fines or penalties related to the refilings and the statement: “During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007.” means what? Was there an option not to pay?..
POSTED BY: DRROB | JANUARY 30, 2009, 6:52 PM 6:52 PM
So those rich Wall Street guys is actually Daschle? Obama hangs around some really corrupt people, it boggles the mind he remains so innocent.
POSTED BY: KAREN | JANUARY 30, 2009, 6:53 PM 6:53 PM
He had the use of a car and driver AT OUR EXPENSE! Show this tax-cheater the door! We’re NOT paying him for anything more!!!!!!
POSTED BY: JIM | JANUARY 30, 2009, 6:53 PM 6:53 PM
Timothy Geithner, Charles Rangel, and now Tom Daschle…why don’t Democrat officials want to pay their taxes? And when they finally do, why don’t they have to pay a penalty?
POSTED BY: AMANDA | JANUARY 30, 2009, 6:54 PM 6:54 PM
Another Dem that is a tax cheat. So where s the news?