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Obama defends a 'deeply embarrassed' Tom Daschle over tax lapses

February 2, 2009 |  8:31 am

President Barack Obama and former Senate Majority Leader Tom Daschle of South Dakota

He was one of Barack Obama's earliest and most loyal supporters during the presidential campaign -- a former Senate majority leader, a major power in Washington, throwing his support behind a little-known, unlikely candidate for president all the way back in February of 2008.

But South Dakota's Tom Daschle did his candidate no favor when he neglected to tell President Obama's staff during their vetting process to nominate him as secretary of Health and Human Services that, oh, by the way, I neglected to pay, like, $146,000 in taxes. The back taxes included those on a luxury car and driver provided by Democratic businessman and Silicon Valley favorite Leo Hindery Jr.

Later today, Daschle faces what could be a grilling from his former colleagues on the Senate Finance Committee. In a letter to the committee he released this morning, Daschle said:

I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns.... I apologize for the errors and profoundly regret that you have had to devote time to them.

The administration too is embarrassed that two of its top-level nominees -- Daschle and Treasury Secretary Timothy Geithner -- have confessed to failing to pay taxes. Especially in Daschle's case, when the taxes that were omitted turn out to be for use of a limousine and driver, leading critics on Fox News Sunday to suggest that Daschle is a limousine liberal who failed to pay his limousine taxes.

But Obama, asked today if he still backed the embattled Daschle, told reporters, "Absolutely."

Insiders doubt that any of this will derail the nomination. Daschle has stored up a lot of goodwill during his years on Capitol Hill. And Obama is riding the crest of a honeymoon of public support. Still, as Arizona Republican Jon Kyl said the other day, "I just wonder if President Bush had nominated these people, what folks would be saying about that."

You can read the full text of Daschle's letter below.

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Photo: Charles Dharapak/Associated Press

Here is the text of the Tom Daschle apology letter:

THOMAS A. DASCHLE

February 1, 2009

The Honorable Max Baucus - Chairman
The Honorable Charles Grassley - Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Chairman Baucus and Senator Grassley:

Thank you for the work you and the Committee are doing to move forward on my nomination by President Obama to be Secretary of Health and Human Services. I know that despite the heavy workload from both the Economic Recovery Act and SCHIP, as well as all the nominees the Committee is handling, your staff has worked diligently on my nomination. I also appreciate the strong commitment to fairness you both have expressed.

As you can well imagine, I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns. I apologize for the errors and profoundly regret that you have had to devote time to them. I will be happy to answer any Committee members’ questions about these issues. In the meantime, as a follow-up to our conversations, I would like to briefly review three issues discussed at my meeting with your staff and mentioned in our meeting on Thursday.

Last fall, when I was being considered for this position, the Presidential Transition Team’s vetters reviewed my records. During the course of those reviews, the vetting team flagged charitable contributions they felt were deducted in error. When my accountant realized I would need to file amended returns, he suggested addressing another matter I had raised with him earlier in the year: whether the use of a car service offered to me by a close friend might be a tax issue. In December, my accountant advised me that it should be reported as imputed income in the amended returns.

At about the same time, the friend’s company, a consulting client, informed my accountant of a clerical error it had made on the Form 1099 it provided to me and reported to the IRS for 2007. In an effort to ensure full compliance and the most complete disclosure possible of my personal finances, we remedied these issues by filing amended tax returns with full payments, including interest. We provided all this information to the Committee in addition to the completed Committee questionnaire and my responses to your staff’s questions. I disclosed this information to the Committee voluntarily, and paid the taxes and any interest owed promptly. My mistakes were unintentional.

I am available to answer any further questions you might have and look forward to coming before the Committee in the very near future to discuss the critical health and human services issues facing our country. Should I be approved by your Committee and confirmed by the Senate, I look forward to working in partnership with you both to pass meaningful legislation that will help Americans get the health reform they need and deserve and to ensure that all HHS programs and activities reflect a commitment to responding to the needs of our citizens in a manner that is compassionate, cost-effective, and transparent.

Thank you for your consideration.



Sincerely,
Tom Daschle

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