Daschle apologizes to Finance for tax error

Former Senate Majority Leader Tom Daschle (D-S.D.) apologized directly Monday for his tax delinquency but asked the Senate and the American people to judge him instead on the totality of his career.

{mosads}“It was completely inadvertent but that’s no excuse and I deeply apologize to President Obama, to my colleagues and to the American people. I would hope that my mistake would be viewed in the context of 30 years of public service,” Daschle said following a closed-door meeting with members of the Senate Finance Committee.

Daschle also apologized to committee members in a letter Sunday.

Daschle failed to pay more than $140,000 in taxes until he discovered his error during the vetting process that culminated in his nomination by President Obama to be secretary of Health and Human Services (HHS).

“My failure to recognize that the use of a car was income and not the gift of a good friend was a mistake. When I realized the mistake, I notified officials and I paid the tax in full,” Daschle said after the meeting.

Democrats rallied to Daschle’s support, but Republicans declined to comment after the meeting, suggesting the nominee’s troubles may not be over.

Daschle told The Hill he had spoken to Obama about the issue several times, and that Obama was “extremely supportive.”

Obama said earlier Monday that he stands behind his Cabinet pick. When asked by a reporter at the White House if he still supports Daschle, the president responded with a single word: “Absolutely.” White House press secretary Robert Gibbs emphasized the president’s support at his daily briefing.

When Daschle’s tax problem became public Friday evening, it threatened to derail a confirmation once thought to be a certainty. Daschle has longstanding and deep personal connections to his former colleagues in a body known for its clubby character.

Daschle was an early supporter of Obama’s candidacy and served as a close adviser during the campaign and the transition that eventually led to his nomination to be HHS secretary and his appointment as director of the newly created White House Office of Health Reform.

The Finance Committee scheduled the meeting to give members a private opportunity to put questions to Daschle about troubling revelations about his finances that came to light during the Obama team’s vetting process.

Finance Committee Chairman Max Baucus (D-Mont.), a sometimes rival of Daschle’s when the two men served together in the Senate, issued a strong statement of support for his confirmation after the meeting.

“Sen. Daschle made mistakes on his taxes. They were disappointing mistakes but it’s clear that they were not purposeful mistakes,” Baucus told reporters. “His tax mistakes are regrettable but his tax mistakes do not change his qualifications to lead on healthcare reform. They do not change my support for this nomination,” Baucus said.

Daschle’s appearance before the Health, Education, Labor and Pensions Committee last month was akin to a homecoming party but he can expect a different reception in the Finance Committee’s hearing room, Baucus said.

“Senators, I suspect, will ask the tough questions, I will ask the tough questions, but I will vote for Sen. Daschle in committee and on the Senate floor. I support Sen. Daschle to be secretary of HHS,” Baucus said. The hearing will take place next Tuesday.

Baucus and Daschle appeared alongside other Finance Committee Democrats before the press, including Sens. John Rockefeller (W. Va.), Kent Conrad (N.D.), John Kerry (Mass.), Ron Wyden (Ore.), Chuck Schumer (N.Y.), Debbie Stabenow (Mich.) and Tom Carper (Del.).
Finance Committee Republicans approached by reporters refused to comment, including ranking member Chuck Grassley (Iowa), Orrin Hatch (Utah), Jon Kyl (Ariz.) and Pat Roberts (Kan.).

When asked if Daschle would be receiving similar treatment if he were not a former colleague, Kerry said Daschle has actually been audited by the IRS.

“I think he’s getting much more in-depth scrutiny,” Kerry said. “The IRS actually audited him, and the IRS did not find any of these discrepancies. The IRS looked at this, as they do normally, and said he went through a normal process.”

Baucus said later he believed Daschle’s IRS audit occurred several years ago, and was unrelated to the recent revelation. “There was an audit — a couple of years ago, I think,” Baucus said.

Kerry suggested that Daschle would have Republican support, based on his impressions of the closed-door meeting. “All the indications are there’s no problem,” Kerry said.

But many GOP senators put Treasury Secretary Timothy Geithner, who also failed to pay some of his taxes, through the ringer during his Finance hearing, and 30 of them voted against his confirmation.

So far, Republican senators have been less openly supportive of Daschle than their Democratic colleagues but none have yet come out against him.

On CBS’s News’s “Face the Nation” Sunday, Minority Leader Mitch McConnell (R-Ky.) said he would withhold judgment until after the Finance meeting. “I think I’m going to just wait until they give me their opinion,” he said.

Some of McConnell’s Republican colleagues in the House are not being so circumspect. Rep. Lynn Westmoreland (R-Ga.) began circulating a letter among GOP lawmakers Monday that asks Obama to withdraw Daschle’s nomination. “Leadership follows from example,”

Westmoreland wrote. “When do one or two ‘innocent’ tax mistakes become an example to the nation that our tax laws are to be willingly discarded?”

While Daschle may find a more forgiving atmosphere in the Senate, his tax errors were on a larger scale than the $34,000 Geithner missed.

Daschle entered the private sector after losing his 2004 reelection bid to Sen. John Thune (R), forging multiple business relationships and streams of income based on his insider knowledge of Washington. The complexity of those relationships appears to have contributed to his current problems.

The foremost problem is that Daschle was forced to amend three years of tax returns by paying more than $140,000 in back taxes including interest, mostly related to the car and driver provided by a wealthy friend and business partner, Leo Hindrey, Jr., a prominent Democratic fundraiser and longtime friend of Daschle.

The firm, InterMedia Advisors, also failed to report $83,000 it paid Daschle. Daschle served on the company’s board and provided consulting services, earning $1 million a year.

Finance Committee investigators also have been trying to determine whether Daschle should have paid taxes on the value of trips taken on an airplane owned by student-loan provider EduCap and affiliated entities.

Daschle and his wife, Linda Daschle, also had to rectify some erroneous tax deductions they took for charitable contributions.

Although Daschle is not a registered lobbyist, his work as a senior adviser at the law and lobbying firm Alston & Bird also has drawn scrutiny, particularly because of its many healthcare clients. Daschle also earned more then $220,00 in speaking fees from healthcare companies and trade groups after leaving the Senate.