Obama and head of Senate panel still back Daschle
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By David Stout and David A. Kirkpatrick
The International Herald Tribune
Monday, February 2, 2009
WASHINGTON: President Barack Obama and a key Democratic senator voiced unqualified support Monday for Tom Daschle to become head of the Health and Human Services Department, giving a big boost toward confirmation of a nominee who has run into trouble because of $128,000 tax bill.
The president, when asked in a brief session with reporters at the White House whether he stood by Daschle even after reports of the nominee's tax-related problems, replied, "Absolutely."
And Senator Max Baucus of Montana, chairman of the Senate Finance Committee, issued a statement backing Daschle's confirmation without reservation. Daschle, a former Senate majority leader, was also a member of that committee, which will vote on his confirmation.
"The ability to advance meaningful health reform is my top priority in confirming a secretary of health and human services, and I remain convinced that Senator Daschle would be an invaluable and expert partner in this effort," Baucus said. "I am eager to move forward together."
Other Democratic members of the panel have reportedly signaled that they are prepared to stand by Daschle, who was an early supporter of Obama for president.
Baucus's panel was to meet later to hear from Daschle in a private session. Daschle wrote a letter to committee leaders in which he said he was "deeply embarrassed and disappointed" in himself over his failure to pay about $140,000 in back taxes and interest. He said his recently disclosed tax problems, related to income for consulting work and the use of a car made available to him by a close friend who is also a generous donor to Democratic causes, were unintentional.
"I apologize for the errors and profoundly regret that you have had to devote time to them," Daschle wrote.
Baucus's statement in support of the nominee was significant, in that he and Daschle have had a sometimes rocky relationship.
Though respected in Washington, Daschle may have paid too little attention to politics in his home state, South Dakota. He was unseated in 2004 by John Thune, who had been a popular Republican congressman.
When Daschle was voted out of office, he found that his close friend Leo Hindery, a Democratic donor and media mogul, was also out of a job, having just sold his latest company, Yes Networks. In early 2005 the two men teamed up. Daschle became the founding chairman of a new investment firm run by Hindery.
Daschle traveled to help raise money from investors for Hindery's venture, said Jenny Backus, a spokeswoman for Daschle. And in exchange, over the next four years the firm compensated Daschle with more than $2 million, and Hindery lent Daschle the use of a chauffeured limousine in Washington.
Backus said that when Hindery was not in Washington he lent his car to Daschle as a favor to a friend.
The partnership has now come back to haunt Daschle, with the disclosure that he had failed to pay $128,000 in taxes on the car and driver Hindery's firm provided him.
In just four years, the influential former senator was able to make $5 million and live a lavish lifestyle by dint of his name, connections and knowledge of the town's inner workings.
There is no evidence that Daschle pulled strings for Hindery. Indeed, Hindery's firm appears to have had few interests before the government. But interviews and a review of public documents show that in his work for a Washington law firm, Daschle did take on an array of clients seeking influence with the government, including concerns involved in Indian gambling, ethanol, health care, telecommunications and federal contracting.
At least one, the nonprofit student loan company EduCap, may pose new problems for Daschle. The Senate Finance Committee said it was trying to determine whether trips to the Bahamas and the Middle East provided to Daschle by the company should also have been reported as income.
Backus said that the trips predated his work for EduCap, that he traveled at the request of a different charity, and that his accountants say he handled the trips appropriately.
The Finance Committee expects to disclose this week the results of a two-year investigation into the possibility that EduCap abused its tax-exempt status by providing lavish entertainment and travel to its officers and their guests, including Daschle. Daschle is an old friend of Catherine Reynolds, EduCap's chief executive.
Affiliated with the firm Alston & Bird, Daschle has operated in the gap between the popular understanding and legal definition of a lobbyist. There is no evidence that he directly sought to influence his former colleagues or other government officials in ways that would have required him to register as a lobbyist or could have run afoul of the restrictions on former lobbyists entering the Obama administration. But the rules still left plenty of room for him to advise businesses seeking to influence the government or to profit otherwise from the fame and insights he acquired in public life.
"Did he attempt to influence? Maybe," said Thomas Susman, an official at the American Bar Association and author of its lobbying manual. "Did he advise others in the business of influencing? Probably. But he wasn't a lobbyist."
Backus said Daschle provided clients with advice based on years of public service. But she said he also gave the same insights free to the One campaign and the liberal Center for American Progress, as well as to his students at Georgetown University.
Aides to Obama said they still expected Daschle to win confirmation.
What expertise Daschle contributed to Hindery's firm is hard to determine. The firm, Intermedia, has hired no federal lobbyists and it mainly invests in media businesses - the television program "Soul Train," for example; cable networks devoted to gospel music or hunting and fishing; and the Christian publisher Thomas Nelson - with few interests before the government.
-Robert Pear, Sheryl Gay Stolberg and Carl Hulse contributed reporting.
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