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Bumps in the Road: Obama's HHS Secretary Nominee Faces Tax Questions Over Car and Driver
January 30, 2009 6:29 PM
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
January 30, 2009 | Permalink | Share | User Comments (929)
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Good facts. I'm gonna wait for the next update on this.
Posted by: Archer | Sep 7, 2009 7:17:51 AM
AND NOW IT IS NANCY PELOSI!!!!!!!!!!!!!!!11
WHAT HAPPENED TO THE MORALS/ETHICS IN THIS COUNTRY??????????? WHO DO THOSE DEMOCRATS THINK THEY ARE? - Obama, Rangel, Daschle, Geithner, Dodd, Frank, Holder- Whether they believe in the "Higher Power" or not - they eventually will have to be held accountable for their own actions. If the Democrats won't do, and the Republicans won't do it - then there is only one other person who will do it - that is God - our Eternal Father in Heaven. YEAH!!!
Posted by: c. johnston | May 8, 2009 10:52:30 AM
test
Posted by: Test Name | Feb 9, 2009 9:13:36 PM
o m gee! thats not good
Posted by: sarah | Feb 8, 2009 9:34:17 PM
The Cloward/Piven Strategy is named after Columbia University sociologists Richard Andrew Cloward and Frances Fox Piven. Their goal is to overthrow capitalism by overwhelming the government bureaucracy with entitlement demands. The created crisis provides the impetus to bring about radical political change.
Posted by: tanarg | Feb 8, 2009 1:13:11 PM
Daschle should pay his taxes.
Posted by: Sid | Feb 5, 2009 2:07:32 AM
No one has to pay federal income taxes. There is no clause in the IRS taxcode that mandates this. Also, the Supreme Court already determined that a third tax, a tax on an individual's income, is unconstitutional. Look it up. I challenge anyone to find the actual law that says you must pay a federal income tax on top of the property and state taxes you already pay.
Posted by: Sid | Feb 5, 2009 2:05:20 AM
DemocratAlltheWay said this: "The Deomocrats always take the blunt of mistakes made by the Republican party and have to clean up their messes."
That is one of the dumbest things anyone has ever said and it is precisely and exactly backwards. When George Bush entered office, Mohamed Atta, Marwan al-Shehhi and Hani Hanjour were all here in the United States and had completed their flight training by the end of 2000. Their visas had already expired and no one knew where they were on the day that Bush was inaugurated. The economy was in a recession following the massive corporate fraud that occurred during the stock market bubble. Now, the sub-prime mortgage binge that was at the core of the housing bubble has blown up in our face. Those idiotic policies were the primary (not exclusive) cause of the economic meltdown we are experiencing now. If Barney Frank and the other Democrat idiots in congress hadn't run interference for Fannie and Freddie, maybe this wouldn't have happened. There's a lot more but obviously liberals couldn't care less about the facts.
From the very beginning, Bush was cleaning up the mess that Clinton left for him. Reagan had to clean up the mess that Carter left for him. In contrast, Clinton inherited an economy that had grown by over 4% for the full year before he entered office and he was free of the cold war that Republicans had won for us all. Obama is merely dealing with the results of the idiotic policies that Clinton, Barney Frank, Chris Dodd, Franklin Raines, Jamie Gorelick and the rest of the crooks in the Democrat party started. Now Obama wants to take the crisis that the Democrats caused and use it to expand size and power of the government.
Posted by: jt007 | Feb 3, 2009 11:07:02 PM
Yes! Now this is change you can believe in. You all are a bunch of cheats and phonies. I donot care if you republican, democrate, white, black, yellow,red Christian, Buddist, Muslim, Hara Krishna, Jehovak Witness> If you are a thief you go to jail and you are not fit to serve. If Biden said it is patritic to pay taxes them those tax cheats are all crooks.
Posted by: Vern | Feb 3, 2009 4:24:47 PM
Oh no more bad news for Obama. Key indicators are looking better, especially in the housing market. Even with Obama bad mouthing the economy day in and day out, it is improving. Maybe we don't need to blow trillions on Democrat garbage.
Posted by: Dan L | Feb 3, 2009 3:29:35 PM
Seriously, Does Obama know any Democrats that don't cheat on their taxes? Now the performance appointee has been found not to have paid taxes. At least she had the brains or lack of chuzpah to back down right away. Obama is going to be a diaster. Jimmy Carter was the big winner on election day, because Obama will make Carter look good.
Posted by: Dan L | Feb 3, 2009 3:26:35 PM
Yes, it's against the law to cheat on taxes, but regardless of which candidates cheated on their taxes, they didn't misguide us into a war that cost our country a trillion dollars.
Why does that excuse Rove, Libby, Cheney and Bush? Seems like this is slightly more serious than not paying taxes? Our country would be thriving if the Republicans had done their jobs for the last 8 years. The Deomocrats always take the blunt of mistakes made by the Republican party and have to clean up their messes. President Obama will lead us out of the deep recession that we are in, and once again, the Democrats will help the middle-class and lower-class families.
Posted by: Democrat all the Way | Feb 3, 2009 1:33:41 PM
Skunks of the left, skunks of the right, a skunk is still a skunk. How about mandatory local, state, fed, gov service by lottery ? Just like Jury Duty....
Posted by: Fred Schmidt | Feb 2, 2009 10:43:11 PM
"This is just one example of how ignorant people and media run over things, I don't think having a driver is such a big deal, but the whole relation with fundraiser who help funding politicians then hire them when retired, and offered a free car!
That is the real issue in this story."
And thats the real storrrree!
Posted by: Sam | Feb 2, 2009 10:38:24 PM
Is it true Blago will be the new Senator from New Hampshire?
They say he will be confirmed but it will be close!
Posted by: Sam | Feb 2, 2009 10:34:57 PM
Only the Dems could get away with running on integrity and change and cleaning up the culture of corruption and pull this off!
But than again they only have Republicans as opposition.
Not a fair fight!
Posted by: Sam | Feb 2, 2009 10:32:02 PM
Too bad for Tony Rezko that he got busted he could have been Sec of the interior or somtin.
Maybe he still can!
Posted by: Sally | Feb 2, 2009 10:28:56 PM
Does this qualify Dashle as a Limosine Liberal?
Has people he granted favors for as a Senator pay him back with a cushy lobbiest job and a limo that he fails to claim as compensation or income and fails to pay taxes on.
Yet the "distiguished" Senate see's him as a man of integrity and honesty.
PUUUKE!
Posted by: Tim | Feb 2, 2009 10:25:40 PM
Joe Biden says paying taxes is "patriotic".
So therefore Dashle is an unpatriotic tax cheat!
Now of course if Dashle were a Republican and Cheney had sadi paying taxes was patriotic, Harry Reid would be on the Senate floor say the same thing!
And the MSM would be repeating him saying that every 5 minutes.
That is what the climate is for a Republican but not for a Dem they get kid glove tretment not only from the MSM but even the Republicans!
Republicans are wimps!
Posted by: Fred | Feb 2, 2009 10:21:35 PM
This is simple. You cheated on your taxes? You are done in the cabinet position lottery....except when you are part of the Obama Administration where the complete lack of ethics seems to be a prerequisite for inclusion. Let's look at the candidates and advisors for the most inexperienced President in the history of this country.....
Let's see, Franklin Raines, Robert Rubin, Jamie Gorelick, Eric Holder, Tim Geithner, and Tom Daschle. So, we have a lying financial swindler, a CEO who presided over the complete destruction of CitiBank, an incompetent who wrecked our intelligence community and took unwarranted bonuses from the lying financial swindler, an Assistant AG who pardoned an international criminal and a group of Puerto Rican terrorists, a tax cheat, and another even bigger tax cheat who unbelievably is supposed to be in charge of the treasury. Saturday Night Live couldn't come up with this rogue's gallery in the worst of their parodies. The Obama administration is two weeks old and well on their way to become the most corrupt and incompetent group of losers ever to serve.
Posted by: Edge | Feb 2, 2009 9:37:25 PM
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