Obama scrambles after Daschle's fall in tax controversy

McClatchy NewspapersFebruary 3, 2009 

WASHINGTON — President Barack Obama scrambled to regain control of his political message Tuesday after a series of tax and vetting scandals forced one of his most important nominees to withdraw and raised questions about the new president's central campaign pledge to change politics as usual.

Obama sat Tuesday afternoon for interviews with the major television networks, saying that he accepts responsibility for the controversies, is committed to high ethical standards and won't accept a double standard for those in power versus average Americans. Obama also sought to steer attention back to the debate in Congress over an economic stimulus package that's approaching $900 billion.

"I campaigned on changing Washington and bottom-up politics. And I don't want to send a message to the American people that there are two sets of standards," Obama said on CNN, one of five networks that conducted previously scheduled interviews with the president Tuesday.

"This was a mistake. I screwed up."

Obama told ABC that it had been an embarrassing day.

"We can't afford glitches, because right now what I should be spending time talking to you about is how we're going to put 3 to 4 million people back to work. And so this is a self-induced injury that I'm angry about, and we're going to make sure we get it fixed."

Earlier Tuesday, former Sen. Tom Daschle withdrew his nomination to become secretary of health and human services, saying that his failure to pay what eventually became $146,000 in back taxes would prevent him from operating "with the full faith of Congress and the American people."

Daschle told Obama of his decision in a telephone call. White House spokesman Robert Gibbs said the decision was Daschle's alone.

The White House announced the news hours after Nancy Killefer, Obama's nominee for deputy director of the Office of Management and Budget and the new post of federal chief performance officer, also dropped out because of unpaid taxes.

Those departures followed the confirmation of Treasury Secretary Timothy Geithner despite his own controversy over unpaid taxes, and New Mexico Gov. Bill Richardson's earlier dropping of his bid to become commerce secretary because of a federal probe into a pay-to-play scandal that's reached into his office.

Obama on Tuesday nominated Sen. Judd Gregg of New Hampshire, a Republican, to the commerce post.

The loss of Daschle could imperil Obama's ability to achieve comprehensive health-care restructuring, one of his paramount policy goals. Daschle is a former Senate majority leader with wide connections throughout the nation's capital and expertise in health policy. He was to have led Obama's efforts to make affordable health-care coverage available to all Americans.

"I will not be the architect of America's health system reform, but I remain one of its most fervent supporters," Daschle said in a statement.

Obama had said Monday that he "absolutely" stood by Daschle. On Tuesday, however, he issued a statement saying that he accepted Daschle's decision with "sadness and regret.

"Tom made a mistake, which he has openly acknowledged. He has not excused it, nor do I. But that mistake, and this decision, cannot diminish the many contributions Tom has made to this country. . . . Now we must move forward."

Sen. Orrin Hatch, R-Utah, who's long worked with Democrats on health legislation, said the loss of Daschle, combined with health-policy veteran Sen. Edward Kennedy's diminished energies from his fight against a brain tumor, would make health-care revisions harder to achieve.

White House spokesman Gibbs declined to discuss apparent shortcomings in Obama's vetting process for nominees. He said that Obama had confidence in the process.

"I'm not going to spend a lot of time up here today looking through the rearview mirror," but "we all take responsibility. The president takes responsibility."

Gibbs said that Obama still intended to change Washington.

"Is changing the way Washington works going to be more than a two-week job? Yes it is," Gibbs said.

Obama campaigned on a promise to reduce the influence of lobbyists, special interests and revolving-door politics in Washington, and to impose the strictest ethical standards ever. Having three of his prominent nominees admitting failure to pay taxes struck many as undermining his credibility on that core commitment.

Daschle's withdrawal came after escalating criticism from watchdog groups and some Senate colleagues. Daschle reportedly told NBC's Andrea Mitchell that he knew what he had to do after reading a New York Times editorial Tuesday calling for him to step aside.

Daschle had failed to pay what became $146,000 in back taxes, largely for accepting the use of a car and driver donated to him by a private-equity firm that he served as a consultant. That service was valued at $255,000 over three years.

Daschle leveraged his former role as Senate majority leader into $5 million in income in just two years — including providing policy advice to corporate clients, including one health-insurance giant — though he never registered officially as a lobbyist.

Killefer faced a $946 lien in 2005 for failure to pay unemployment compensation tax on household help.

Treasury Secretary Geithner failed to pay $34,000 in self-employment taxes, and repaid the amount with $8,000 interest. Partly because his troubles surfaced before the others, and because the economic crisis is so urgent, he was confirmed nonetheless.

Senate Democrats remained supportive of Daschle to the end. Even on Tuesday, Senate Budget Committee Chairman Kent Conrad, D-N.D., called Daschle "one of the most honorable, decent people I've ever known" and his decision to quit "a tragedy."

Senate Republican Policy Committee Chairman John Ensign of Nevada said that calls and e-mails to his office expressing outrage about Daschle "just erupted" in recent days.

Senate Republican leader Mitch McConnell, R-Ky., urged colleagues to turn their attention back to passing an economic stimulus package.

"The story has largely ended," McConnell said of Daschle. "We think the biggest issue of the week is not who's going to staff the president's administration, but how we're going to fix the economy."

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