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The devil is in the details

By
February 4, 2009

President Obama greeted Thomas Daschle’s decision to withdraw as nominee to be secretary of Health and Human Services with "sadness and regret" — and surely with something approaching relief. The tax problems of Obama’s nominees were threatening to become the stuff of late night comedy. And they were doing nothing for the president’s credibility on his high-minded new ethics standards.

Earlier the same day, Nancy Killefer, his nominee to be the White House’s czar of government performance, withdrew because of the perennial nanny problem. The unpaid unemployment compensation taxes, penalties and interest came to only $946.69, peanuts for a high-powered, two-income couple, but it took the D.C. government almost two years and a lien against her house to get it. Too bad, because she seemed to have great qualifications for the job.

Obama’s nominee to be Treasury secretary, Timothy Geithner, was found to have owed $34,023 in employment taxes for two years, 2001-2002, he worked at the International Monetary Fund, an awkward credential for someone running the department that includes the IRS. He paid those taxes last fall, shortly before his nomination. The Senate decided the need for a Treasury secretary in the midst of the financial meltdown outweighed ethical niceties and confirmed him anyhow.

Daschle failed to pay taxes on the value of a car and driver he had for three years while consulting for a private equity firm. Daschle said he considered the perk a gift and not income. An excusable error, perhaps. But he discovered the error last summer and it turned up in the vetting process for the HHS job but he didn’t pay the taxes, $140,167 with interest, until January as his Senate confirmation hearings approached. Nomination to a top government job is turning out to be a marvelous tool of tax collection.

After losing a reelection bid in 2004, Daschle, the former Senate majority leader, moved seamlessly into the world of big bucks consulting, earning over $4 million at it plus $220,000 in speaking fees to the health-care industry.

Daschle is a genuine health-care expert and probably the best choice to get Obama’s health-care reform agenda enacted. Perhaps it is terribly unfair to the man, but the chauffeur-driven Cadillac, the huge fees for cashing in on public service, the casual attitude toward his taxes all convey a dismaying sense of entitlement. He was right to withdraw.