Obama Takes Blame In Daschle, Killefer Controversy

Barack Obama on Tuesday abruptly abandoned his nomination fight for Tom Daschle and a second major appointee who failed to pay all their taxes, fearing a lingering ethics dispute would undercut his claims to moral high ground and cripple his presidency in just its second week. "I screwed up," Obama declared.

"It's important for this administration to send a message that there aren't two sets of rules — you know, one for prominent people and one for ordinary folks who have to pay their taxes," Obama said near the end of a day of jarring developments, little more than 24 hours after he had said he was "absolutely" committed to Daschle's confirmation.

"I'm frustrated with myself, with our team. ... I'm here on television saying I screwed up," Obama said on NBC's "Nightly News with Brian Williams." He repeated virtually the same words in interviews with other TV anchors.

Hours earlier, the White House had announced that Daschle had asked to be removed from consideration as health and human services secretary and that Nancy Killefer had made the same request concerning what was to be her groundbreaking appointment as a chief performance officer to make the entire government run better.

Daschle said in a brief letter to Obama that he refused to "be a distraction" from the new president's drive for health care reform. Obama said neither he nor Daschle excused the former Senate Democratic leader's tax errors but that he accepted his friend's decision "with sadness and regret."

Unsightly personal tax problems had been piling up for the new administration. Last week, the Senate confirmed Timothy Geithner as treasury secretary, but only after days of controversy over the fact that the man who would oversee the Internal Revenue Service had only belatedly paid $34,000 in income taxes.

Bill Richardson bowed out, too, though his difficulties didn't involve personal taxes. The New Mexico governor, who was Obama's first choice for commerce secretary, withdrew amid a grand jury investigation into a state contract awarded to his political donors.

Questions about Daschle's failure to fully pay his taxes from 2005 through 2007 had been increasing since they came to light last Friday. Daschle overlooked taxes on income for consulting work and personal use of a car and driver, and also deducted more in charitable contributions than he should have. To resolve it, he paid $128,203 in back taxes and $11,964 in interest last month.

Daschle, chosen to lead the administration's push for sweeping health care reform, also was facing questions about potential conflicts of interests related to speaking fees he accepted from health care interests and about the advice he provided to health insurers and hospitals through his work at a law firm.

Killefer, an executive with consulting giant McKinsey & Co., had been chosen by Obama to serve in two roles: as the first chief performance officer in a White House and as a deputy director at the Office of Management and Budget.

When Obama announced Killefer to much fanfare in early January, The Associated Press reported that the District of Columbia government had filed a $946.69 tax lien on her home in 2005 for failure to pay unemployment compensation tax on household help. She resolved the tax error five months after the lien was filed. Since then, administration officials had refused to say whether her tax problems extended beyond that one issue.

By Tuesday, the tax questions had reached critical mass.

"This is a self-induced injury that I'm angry about, and we're going to make sure we get it fixed," Obama said on ABC's "World News."

Earlier, he made sure to get in a brighter few minutes. With little notice, the president and first lady Michelle Obama left to visit some second-graders at a Washington public school, where she told the laughing youngsters, "We got out! They let us out!"

Back at the White House, press secretary Robert Gibbs said the choice to step aside was Daschle's alone and the former senator "did not get a signal" from the White House to do so. Daschle and Obama spoke Tuesday, and the president was surprised at the news, said White House senior adviser David Axelrod.

Democratic lawmakers were surprised, too — and disappointed. Axelrod rushed to Capitol Hill to soothe frayed nerves.

"I was a little stunned. I thought he was going to get confirmed," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, the panel that would have voted on Daschle's nomination. "It's regrettable."

Obama, Vice President Joe Biden and Daschle's former Democratic colleagues had leapt to the former Democratic leader's defense. And it seemed that the clubby way that senators treat one of their own was likely to help Daschle survive the controversy.

But particularly after the divisive Geithner debate and vote, it apparently became too bitter a pill. Tax issues are easy for the public to understand, and also particularly easy to resent in wealthy officials at a time of widespread economic crisis.

They also created an opening for a drumbeat of criticism from Republicans and on newspaper editorial pages that Obama was engaging in a double standard: proclaiming his administration to be more ethical, responsible and special interest-free than his predecessors' and yet carving out exceptions almost daily.

GOP Sen. John Ensign of Nevada said Daschle was going to be faced with tough questions from committee members, among them how the wealth he amassed from a lobbying firm — while not technically registered as a lobbyist — "passes the smell test."

"I think he saved the president from being embarrassed next week in a public hearing," Ensign said.

But even while Obama aimed to stave off potentially crippling problems in one corner with the withdrawals, he created some new ones.

Obama has promised that moving toward universal health care coverage is one of the pillars of first 100 days agenda — a heavy lift that many believed Daschle, with his long experience in Washington, was uniquely qualified for. Daschle was going to wear two hats for Obama, as White House health czar on top of the post leading the Health and Human Services Department.

"We're going to do health care reform," Senate Majority Leader Harry Reid, D-Nev., said flatly after the nomination withdrawal. But others reacted differently.

"It really sets us back a step," said Sen. Dick Durbin, D-Ill. "Because he was such a talent. I mean he understood Congress, serving in the House and Senate he certainly had the confidence of the president."

Among those considered for the post before it went to Daschle was Howard Dean, the physician-turned-politician who ran for president in 2004 and recently left as head of the Democratic National Committee. Other possible replacements include Kansas Gov. Kathleen Sebelius, Pennsylvania Gov. Ed Rendell, and Ohio Gov. Ted Strickland.

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  • by Jewel Location: NC on Feb 5, 2009 at 02:37 PM
    No more IRS tax fines lets be fair. Now that tax season is upon us, I think it would be interesting if people complained to the new IRS head about additional charges they must pay. I am NOT condoning not paying taxes, but am speaking about tax fines and fees. Given the flagrant way that Geithner and Daschles' tax fees were especially WAIVED simply because they are elite Democrats is utterly unfair. Some of the average folks may have been unable to pay taxes due to job losses or real financial hardship. Can't they get a break? What's the democrats' excuse except that they are greedy?
  • by Keith on Feb 5, 2009 at 01:54 PM
    marie, You can't tell people on here anything, they are still drinking BushAid by the gallon and are totally unable to tell right from wrong.
  • by ACE on Feb 5, 2009 at 12:10 PM
    I can believe Obama said he made a mistake, that is one of the things that makes him 100% not disposed to cheat or defraud; not deceptive or fraudulent, like George Bush was foe eight very long years.
  • by marie Location: washington on Feb 5, 2009 at 10:15 AM
    bush got us in this mess. and obama has to get us out
  • by Al Location: NC on Feb 5, 2009 at 10:11 AM
    Is Obama drug tested like other Government employees? A day after banning corporate executives from earning more than $500,000 a year via taxpayer bailouts, Mr. Obama on Thursday will head to a Democratic retreat that has burned through half a million dollars in taxpayer cash for annual retreats at luxury resorts.
  • by Wanda Location: Kenansville on Feb 5, 2009 at 09:43 AM
    To Truth. Everybody make mistakes including President Obama. The truth is that he has learned from those mistakes. GOOOOOO Obamaaaaaaaaaa!
  • by Truth on Feb 5, 2009 at 08:27 AM
    I find it hard to believe the Mr. Perfect Barack Obama made a mistake! This man is the model of perfection and making mistakes is not in him.
  • by WOLFGANG Location: CHOCOWINITY,NC on Feb 5, 2009 at 08:25 AM
    Obama wants to canceal the F22 Raptor?Obama exhibits no grasp of the tenuous nature of our safety and security within our own country. He has not listened to the advice of our military leaders. We, the citizens must, again, make our demands for military sanity heard. Canceling F-22 fighter means losing 95,000 Jobs and our lives to Terror You can not go back. All will be lost and America will have no hope of recapturing a sufficient national defense in the future, even when Obama leaves office. This will ruin us militarily. We will be at the mercy of those whom Obama would befriend.
  • by Michael Location: Merritt on Feb 5, 2009 at 08:01 AM
    let's see.....The President says that he "takes full responsibility". Hell, I would too when there are no consequences.
  • by $$$$ on Feb 5, 2009 at 05:36 AM
    JR, You have got to be joking, it is the fat cat republicans that won't pay their taxes, they never have and they never will" THE FAT PIGS"

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