When Barack Obama was asked last Monday if he still supported Tom Daschle, his embattled Health and Human Services nominee, the president gave a firm one-word response: "Absolutely."
The preceding Friday night, news had broken that Daschle had failed to pay more than $140,000 in back taxes, primarily owed on a chauffeur-driven Cadillac, which was loaned to Daschle by his mega-millionaire friend and employer Leo Hindery. Daschle neglected to report the personal use of the car and driver, totaling more than $250,000 over three years, as taxable income. As White House press secretary Robert Gibbs said on Monday of Daschle's tax problems, "Nobody's perfect."
Following a closed Senate Finance Committee meeting Monday night, Democratic senators stood in solidarity with Daschle. The former Senate majority leader apologized to "President Obama, to my colleagues, and to the American people" for his "completely inadvertent" tax errors. Daschle's former colleagues defended his integrity and endorsed his nomination "with vigor," in the words of West Virginia's Jay Rockefeller.
Then on Tuesday morning Daschle called up the president and asked that his nomination for HHS secretary be withdrawn. "It sounded as though he were tearful," NBC's Andrea Mitchell reported moments after she spoke with Daschle over the phone about his withdrawal.
President Obama said in a statement that he felt "sadness and regret" over Daschle's withdrawal and told CBS's Katie Couric that Daschle
made a mistake and a pretty big one when it came to these taxes. He didn't offer excuses and I don't think there is an excuse and what became apparent was that not only could this be a distraction, but I don't want my administration to be sending a message that there are two sets of rules: one for prominent people and one for ordinary folks who have to pay their taxes everyday.
"Did I screw up in this situation?" Obama asked during his NBC interview. "Absolutely."
What had changed Obama's mind between Monday, when he had absolute confidence in Daschle, and Tuesday, when he claimed he had screwed up with the nomination, is not entirely clear.
On Monday, we knew that Daschle had accepted a car and driver from Leo Hindery, managing partner of InterMedia Partners, a private equity firm from which Daschle received $1 million annually for consulting services. Daschle said he thought the car and driver was a gift, but in June, around the time Obama sewed up the Democratic nomination, Daschle told his accountant to check and see whether his use of the car ought to be considered taxable income. Daschle did not pay his taxes in full until January 4. (Daschle also had tax errors regarding some charitable gifts, and InterMedia failed to report one month's worth of income.)
It had already come out that the Senate Finance Committee was investigating whether Daschle's trips to the Bahamas and the Middle East on the corporate jet of EduCap, a nonprofit organization that provides loans to students at interest rates as high as 18 percent, ought to be considered taxable income as well. (EduCap's charitable status is itself under investigation by the IRS.)
On Friday Politico also reported on $220,000 in speaking fees Daschle took from health care groups--some of which had lobbied him as recently as the previous week. Then, on Sunday, a damaging quotation from Daschle began making the rounds on the blogs. "Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter," Daschle said on the floor of the Senate in 1998.
By Tuesday the political storm had grown more intense. That morning, Politico reported that Democrats alleged Daschle had tried to get Hindery a job in the Obama administration, and a round of newspaper editorials called on Daschle to step down.
Far more devastating than the 1998 statement about tax cheaters was a 1986 Daschle campaign ad that popped up on YouTube on Tuesday morning, where Daschle drives around Washington in a 1971 Pontiac, unlike elite Washingtonians in their "BMWs and limos." "Sure it's rusted, and it burns a little oil," the narrator says. "But after 15 years and 238,000 miles, Tom Daschle still drives his old car to work every day. Maybe he's sentimental--or just cheap. Whatever the case, isn't it too bad the rest of Washington doesn't understand that a penny saved is a penny earned?"
More and more things were appearing that would have made Daschle's confirmation hearings deeply embarrassing. According to one Senate source, Daschle's accountant made a "conservative estimate" of his use of the limo service, so his total tax liability might have increased after more thorough investigation. The Finance Committee's EduCap investigation report might have provided more damaging information. What's more, Daschle had a history of tax problems. As Meghan Clyne reported in 2004 for National Review, Daschle wrongly claimed residency in Washington, D.C., in order to gain a $300 tax exemption on his home. Had a public hearing occurred, senators would certainly have raised these issues, requested emails between Daschle and his accountant, and possibly unearthed more damaging information.
The crucial event on Tuesday, though, might have been the withdrawal of Obama's nominee for "chief performance officer," Nancy Killefer. The District of Columbia had filed a $946.69 tax lien against her home in 2005 as Killefer had failed to pay $298 in unemployment compensation tax on household help (the amount included interest and penalties). She had paid off the lien within five months of being notified, and its existence had been reported by the Associated Press on January 8, the day after Obama announced her nomination. Why did she step down on February 3, in the midst of the Daschle controversy? Did someone convince Killefer to throw herself under the bus, knowing that Daschle would be dragged along with her? Or did the White House just decide to clear the decks?
Daschle told Andrea Mitchell that a New York Times editorial calling for his withdrawal convinced him that he couldn't "pass health care [reform] if I am too much of a distraction." He also cited criticism from some Republicans as a reason for stepping down.
What Daschle didn't do was answer the lingering questions of why, if he thought the limo service was a gift, he flagged the issue for his accountant in June? In the Monday night closed-door Finance Committee meeting, as in other meetings with committee staff, Daschle could not provide an answer to this question, according to Senate sources. Did Daschle raise the issue with his accountant just in case he was nominated for a cabinet position? Did he intend to pay the tax if he weren't nominated for a cabinet post? These are some of the uncomfortable questions Daschle would have had to answer in public during a confirmation hearing.
Also far from clear is that Daschle knowingly did anything wrong in the way that Treasury secretary Tim Geithner did. Geithner failed to pay the IRS $48,000, mostly on self-employment taxes incurred while working at the International Monetary Fund. During his confirmation hearing, it was revealed that the IMF reimbursed Geithner for his self-employment taxes, that the IMF repeatedly reminded him to pay, and that he had signed documents saying he would do so.
Barack Obama is far closer to Daschle than he is to Geithner. (Daschle helped fill Obama's Senate staff in 2005 and provided a critical early endorsement of his presidential bid.) Obama knew that Daschle had failed to pay taxes on Monday, and he knew that Daschle had failed to pay taxes on Tuesday. If Obama doesn't want to send the message that there are "two sets of rules"--one for members of his administration and one for ordinary citizens--then why did Daschle have to go if Geithner got to stay? When Charles Gibson asked Obama this question on Tuesday, the president dodged, saying, "Well, as I said, I think everybody makes mistakes. Tim owned up to them. And I think I've been very clear of the fact that this was a bad mistake." That's almost exactly as he described Daschle's transgressions on Tuesday. Some mistakes are apparently more inconvenient than others.
John McCormack is a deputy online editor at THE WEEKLY STANDARD .