Former Senate Majority Leader Tom Daschle, A democrat from South Dakota nominated to be President Obama's secretary of health and human services, has hit a huge snag on his way to confirmation through the Senate Finance Committee.
The controversy deals with a car and driver gifted to Daschle by a wealthy Democratic friend. Daschle used the chauffeur service for years without declaring it on his taxes.
After being defeated in his 2004 re-election campaign to the Senate, Daschle became a consultant and chairman of the executive advisory board at InterMedia Advisors in 2005.
Based in New York City, InterMedia Advisors is a private equity firm founded in part by longtime Daschle friend and Democratic fundraiser Leo Hindery, the former president of the YES network (the New York Yankees' and New Jersey Devils' cable television channel). That very same year he began his professional relationship with InterMedia, Daschle began using the services of Hindery's car and driver.
The Cadillac and driver were never part of Daschle's official compensation package at InterMedia, but Daschle -- who as Senate majority leader enjoyed the use of a car and driver at taxpayer expense -- didn't declare their services on his income taxes, as tax laws specifically require.
During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007.
(Daschle reimbursed the IRS $31,462 in taxes and interest for tax year 2005; $35,546 for 2006; and $34,935 for 2007, a Daschle spokesperson said, adding that Daschle had asked his accountant to look into the tax implications of the car and driver five months before Obama won the presidency.)
The Daschle spokesperson told ABC News that the senator, facing questions from the committee, has said "he deeply regretted his mistake. When he realized it was a mistake he corrected it rapidly."
His spokesman also added "In June 2008, Sen. Daschle mentioned the use of the car to his personal accountant and asked him if there were any potential tax consequences," the spokesperson said. "His accountant said that there could be tax consequences and said he was going to fix them as part of Daschle's 2008 filing. So when he got down to vetting, Sen. Daschle decided to amend his returns for 2005, 2006 and 2007, and he paid all the taxes. At the urging of Daschle, the accountant was very conservative in his estimates."
Really Tom Daschle?? You have not been paying your taxes since 2005, and 5 months before it looks likely that you will have a new boss and position where your taxes will be looked into, in 2008, you finally ask someone to look into that matter? Tom Daschle, how stupid do you think the American people are?
In the meantime, the White House and Democratic allies are coming to Daschle's defense.
"The president has confidence that Sen. Daschle is the right person to lead the fight for health care reform," White House deputy press secretary Bill Burton said. "In preparation for his nomination, Sen. Daschle and his accountant identified some tax issues and fixed them. They filed amended return with the IRS and made payments with interest. Sen. Daschle brought these issues to the Finance Committee’s attention when he submitted his nomination forms and we are confident the committee is going to schedule a hearing for him very soon and he will be confirmed."
Jim Manley, a spokesman for Senate Majority Leader Harry Reid, D-Nev., added: "Sen. Daschle will be confirmed as secretary of health and human services. He has a long and distinguished career and record in public service and is the best person to help reform health care in this country."
But Republicans have different feelings about the issues.
In a speech to his fellow Republican House members, Rep. Eric Cantor from Virginia, compared Daschle's issue with the tax problems that hindered the confirmation of Treasury Secretary Timothy Geithner and those of Rep. Charles Rangel, D-N.Y., who is embroiled in a controversy over payment of taxes on a beachfront villa in the Dominican Republic.
"A pattern is developing," Cantor said. "The pattern is solidified. ... It's easy for the other side to sit here and advocate higher taxes because -- you know what? -- they don't pay them."
Should Daschle have difficulty being confirmed he doesn't have to worry about finding another job in the administration, since President Obama has also appointed him to serve as director of the new White House Office on Health Reform.
