Daschle apologizes for tax lapses, gets Baucus’ backing

Former Sen. Tom Daschle, President Barack Obama's choice to head the Department of Health and Human Services, says his tax mistakes were unintentional. (Manuel Balce Ceneta/AP)

WASHINGTON, D.C. —

After heading to Capitol Hill to apologize for his tax lapses, Tom Daschle secured the support of the top Democrat on the Senate Finance Committee for Daschle’s increasingly controversial bid to be confirmed as secretary of health and human services.

"Sen. Daschle made the mistakes on his taxes," Sen. Max Baucus, D-Mont., said after a closed-door meeting with Daschle and other committee Democrats. "They were clearly not purposeful mistakes. His tax mistakes are regrettable, but his tax mistakes do not change his qualifications to oversee health care reform."

Baucus said the committee will hold hearings on Daschle’s nomination next week, when Republicans are expected to take a less forgiving view of the former Senate leader’s tax problems — especially his failure to pay $128,000 in taxes on a car and driver provided by one of his consulting clients.Daschle’s hearing was initially expected to be one of the smoothest confirmations for one of President Obama’s nominees.

Instead, Daschle, who led Senate Democrats just four years ago, huddled for more than an hour with Baucus and other former colleagues on Monday to explain why he did not pay taxes on the use of a car and driver that was provided from 2005 to 2007 by a private equity firm that also paid Daschle consulting fees.

Daschle said in a letter to the committee on Monday that he had recently paid the Internal Revenue Service $146,000 for back taxes and interest, saying "[his] mistakes were unintentional." Obama called Daschle’s mistakes "serious," but has stood behind Daschle and urged Senate confirmation so the South Dakota Democrat can get to work implementing a plan for universal health care.

But some are wondering if senators should not also be examining Daschle’s work as a public policy adviser on health care issues for lobbying firm Alston & Bird. Watchdog groups are asking if that work violates the new ethical standards put in place by the Obama administration that would prohibit anyone from regulating industries for which they lobbied in the past two years.

Daschle is not a registered lobbyist, but some of his activities served a similar purpose. His financial disclosure forms show he earned more than $390,000 for speeches delivered to health care organizations, including American Health Insurance Plans and the National Association of Boards of Pharmacy, since he left office.

Daschle also received $5,000 for providing advice to UnitedHealth Group, an insurer that would be involved in any government health care reform initiatives. Daschle also received $5,000 and expense-paid trips to the Middle East and Bahamas from the student loan company EduCap.

"He is in some sense no different from a registered lobbyist," said Sheila Krumholz, executive director of the watchdog group Center for Responsive Politics. "He has been a strategic adviser serving in that same capacity. While not technically a lobbyist, he can still influence legislation by advising lobbyist on what strategies to pursue."

Finance Committee members are investigating Daschle’s health care ties and his tax problem and will issue a report in the days to come.

Daschle’s troubles come after Obama has already granted a waiver to his revolving-door lobbyist policy with the nomination of William Lynn as deputy secretary of defense. Lynn was a lobbyist for Raytheon, which has received millions of dollars in government contracts.

"The bigger problem is Obama came out with a policy, and his actions seem to be violating that policy," said Melanie Sloan, executive director for Citizens for Responsibility and Ethics in Washington. "They have created an appearance issue."