What's Up With All the Tax Probkems with Obama's Staff?

No wonder the Democrats love taxes. They don’t pay ‘em. I think we could eliminate the federal budget deficit if the Democrats just paid the taxes they owe.

Nathan Moore: “The problem here, at least in my view, is not so much that Solis’ husband had some rather antique tax liens hanging around, but that the Obama administration’s vetting process has revealed itself to be decidedly incompetent. Or, more accurately, arrogant, which really is just a subform of incompetence. . . . The message is clear, no matter how earnestly the president employs Newspeak rhetoric in a vain attempt to muddle it - there are two sets of rules, one for us, and one for them. If they truly believed there was one set of rules, the administration would have taken it upon itself to weed out the tax-encumbered nominees from the process, but they didn’t - and that speaks volumes.”

I almost forgot to mention the problems of Democratic Congressman Charles Rangel!

Solis Nomination Vote Delayed After Tax Issue Arises

By Holly Rosenkrantz

Feb. 5 (Bloomberg) -- A Senate committee put off its vote on Representative Hilda Solis’s nomination as labor secretary, one day after her husband paid to settle tax liens.

White House Press Secretary Robert Gibbs said Solis’s nomination wasn’t in trouble even though the Senate Committee on Health, Education, Labor and Pensions today delayed the vote. Her husband paid about $6,400 yesterday to settle the liens.

Solis is the fourth of President Barack Obama’s nominees to top posts whose family’s taxes have become an issue in the Senate’s confirmation process. Three have said they had failed to pay all their taxes, and two withdrew from consideration.

Gibbs said Solis wasn’t involved in the liens and shouldn’t be blamed. “We’re not going to penalize her for her husband’s mistakes,” Gibbs told reporters at the White House. “Her tax returns are in order.”

Former Senator Tom Daschle, a South Dakota Democrat, withdrew Feb. 3 as nominee for health secretary after questions arose about errors on his federal taxes. Hours earlier, Nancy Killefer withdrew from consideration as deputy director of the White House Office of Management and Budget. She also cited a personal “tax issue.”

Timothy Geithner was confirmed as Treasury secretary on Jan. 2, overcoming concerns that he underpaid federal taxes in previous years.

Auto Repair Business

Solis’s accountant was unaware of the tax liens until about two days ago, White House spokesman Tommy Vietor said. The liens had been outstanding for as long as 16 years against an auto repair business belonging to Solis’s husband, Sam Sayyad. The liens were first reported today by USA Today.

“He believes he paid the taxes,” Vietor said. “He believes they are only county fees and assessments, and he is planning to appeal.”

The couple filed their taxes jointly. The liens were on a business for which Sayyad was the sole proprietor.

Solis, a California Democrat, has already had her nomination delayed while Republicans examine her support for union legislative goals such as the Employee Free Choice Act, which would make it easier to unionize. Labor leaders today said it was important that the Senate confirm her nomination.

“As the daughter of two immigrant workers and proud union members, Hilda Solis is the embodiment of the American dream,” said Andrew Stern, president of the Service Employees International Union.

Senator Michael Enzi of Wyoming, the top Republican on the committee considering her nomination, will examine the new issue, said Craig Orfield, Enzi’s spokesman. Enzi hasn’t yet decided how he will vote.

“Obviously, there are new tax issues to review now,” Orfield said. “It’s going to take a few days” because “we’re trying to get answers and verify a lot of new information.”

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net
Last Updated: February 5, 2009 18:19 EST

Daschle Withdraws Nomination Following Tax Questions

By Kristin Jensen and Edwin Chen

Feb. 3 (Bloomberg) -- Former Senator Tom Daschle withdrew as nominee for secretary of health and human services after questions arose about errors on his federal taxes.

Hours earlier, another of President Barack Obama’s nominees, Nancy Killefer, withdrew from consideration as deputy director of the White House Office of Management and Budget. She also cited a personal “tax issue.”

The twin withdrawals in rapid succession dealt Obama his worst setback as president, threatening to delay his efforts to enact comprehensive health care overhaul and inject greater accountability into his administration.

Fixing the nation’s health system “will require a leader who can operate with the full faith of Congress and the American people and without distraction,” Daschle, 61, said in a statement today. “Right now, I am not that leader.”

Obama said in a statement that he accepted Daschle’s decision with “sadness and regret.” In a series of previously scheduled interviews with television networks later in the day, Obama took responsibility for the demise of the nomination.

“Did I screw up in this situation? Absolutely,” Obama told NBC. “I’m willing to take my lumps.”

He said the episode, while “an embarrassment,” should not detract from his agenda.

Amended Returns

Daschle’s nomination faced delays after he amended three years of returns on Jan. 2 for unreported income, including personal use of a car and driver provided by Leo Hindery Jr., founder of the private-equity firm InterMedia Advisors. Daschle, who sat on the firm’s board, paid $140,000 in back taxes and interest.

Killefer was to oversee White House efforts to make government more accountable for its spending.

In her letter to Obama, Killefer, 55, said she came “to realize in the current environment that my personal tax issue of D.C. unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid.”

Daschle’s withdrawal stunned his former colleagues in the Senate, many of whom had defended him.

“It’s regrettable,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. “I thought he was going to get confirmed.” Daschle also was to have held a senior post within the White House.

Daschle “did the honorable thing to spare his family, the president and his colleagues in the Senate from a tough political battle,” Illinois Senator Dick Durbin, the Senate’s No. 2 Democrat, said.

Health Care Role

The withdrawal “really sets us back a step” in the drive to overhaul the health-care system because “there are very few people who could have stepped into the role he was going to play,” Durbin said.

Daschle’s tax errors are part of “an unfortunate trend here” that shows “some serious problems with the vetting process” in the Obama administration, Republican Senator John Cornyn of Texas said in an interview yesterday.

Like Daschle and Killefer, Treasury Secretary Timothy Geithner also faced questions about back taxes he had to pay. He was confirmed Jan. 26.

Today’s events are all the more reason for Obama to push his economic stimulus bill through Congress quickly and chalk up a big win as quickly as possible, said analyst Paul Begala, a onetime top adviser to President Bill Clinton.

“It all depends on passing a successful economic plan,” he said. “The country believes in this new president and wants him to succeed.”

Economy Is Key

“This is somewhere between a huge embarrassment and, at least temporarily, debilitating,” said Washington-based political analyst Stuart Rothenberg. “But if a year from now the economy is coming back and the U.S. looks strong, and our international reputation is up, nobody is going to worry about this other stuff.”

Three of Obama’s nominees now have withdrawn before going through the confirmation process. Obama’s first pick to lead the department, New Mexico Governor Bill Richardson, withdrew last month amid a federal investigation into the state’s government.

In seeking replacements for Daschle and Killefer, the Obama White House now must adhere to “zero-tolerance for vetting problems,” and Obama must pick “ivory snow” nominees with spotless records, said Charlie Cook, publisher of the Cook Political Report.

Obama Pledge

That job is no mean feat in part because of Obama’s own campaign pledge to limit the role of lobbyists in his administration, as well as to instill a new era of personal responsibility and government accountability.

“Obama set incredibly high standards” that may continue to “expose him to suggestions of hypocrisy,” Cook said.

Still awaiting confirmation are William Lynn, Obama’s nominee to be deputy defense secretary, and William Corr, the president’s pick as the next deputy secretary of health and human services.

Lynn, 55, is senior vice president in Raytheon’s Washington office and oversees government lobbying for what is the nation’s fourth-largest defense contractor. He was a registered lobbyist until March 2008.

Critics said Corr, executive director of the nonprofit advocacy group Campaign for Tobacco-Free Kids, acted as a lobbyist. A campaign spokesman, Joel Spivak, said Corr “was not ever a fulltime lobbyist.”

“Obama came in with such high expectations and lofty rhetoric,” said Rothenberg. “Now he’s encountering the difficulties of governing.”

Vetting Process

The Daschle and Killefer incidents suggested less-than- rigorous background checks on potential jobholders.

“The question is whether this somehow uncovers some weaknesses in the early days of the administration that will show up later,” Rothenberg said.

At the White House, press secretary Robert Gibbs said Obama retains confidence in the vetting process.

“The president has confidence in the processing,” Gibbs said. “The bar we’ve set is higher” than any past administration, he said, adding that it would take more than two weeks for the president to make good on his pledge to bring change to Washington.

“Thankfully, we’ve got four years to try,” Gibbs said.

The biggest casualty, several analysts said, may be Obama’s aspirations to overhaul the U.S. health care system.

“Having such a high powered, well-wired guy as Daschle as the quarterback on health care was going to be huge,” Cook said.

“I’m sure they’ll get somebody that’s quite competent. But they’re not going to be able to step in the same way that Tom Daschle did,” he said. “So of course it’s a setback.”

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Edwin Chen in Washington at Echen32@bloomberg.net

Tax issues prompt Obama nominee to withdraw

Another one bites the dust.

February 3, 2009

WASHINGTON (CNN) -- Nancy Killefer withdrew her nomination Tuesday to become the Obama administration's chief performance officer, citing unspecified problems with District of Columbia unemployment tax.

The post is a new one, set up to help the incoming administration "scrub" waste from the federal budget. But in a letter to President Barack Obama, Killefer said her tax issue "could be used to create exactly the kind of distraction and delay those duties must avoid."

"Because of this I must reluctantly ask you to withdraw my name from consideration," she wrote.

Killefer was nominated to be deputy director of management at the Office of Management and Budget, and her duties as chief performance officer were added on. The OMB portion required her to be confirmed by the Senate.

Killefer is the third Obama nominee to face tax troubles, after questions about Treasury Secretary Timothy Geithner and former Senate Majority Leader Tom Daschle, Obama's pick for health and human services secretary, who also withdrew Tuesday.

A senior administration official told CNN that Killefer's tax issues dealt with household help, and that Obama aides had expected her to be raked over the coals after the Geithner and Daschle nominations. The official said that Killefer had been upfront about the matter and that Obama's staff had reviewed the questions raised and decided they were comfortable with her before the announcement of her nomination.

Geithner, whose office oversees the Internal Revenue Service, was confirmed after admitting that he had failed to pay in timely fashion more than $34,000 in self-employment taxes while he worked at the International Monetary Fund from 2001 to 2004. The issue was caught during a 2006 audit, and Geithner told the Senate that the debt was incurred unintentionally.

Daschle, who had been awaiting confirmation, previously had acknowledged that he failed to pay taxes on a car and driver provided by a friend and on $80,000 in consulting fees after he left the Senate. He called the matter a mistake and said he paid his taxes in full, but he announced Tuesday that he "will not be a distraction" to the administration. Obama said he accepted Daschle's withdrawal "with sadness and regret."

Killefer, a senior director at the management consulting firm McKinsey & Company, was nominated last month as Obama pledged to cut unnecessary spending and bring "a new sense of responsibility to Washington." Officials said her position would restore fiscal order and reform government.

"We can no longer afford to sustain the old ways when we know there are new and more efficient ways of getting the job done," Obama said in announcing her nomination.

The Congressional Budget Office announced last month that the deficit for the current budget year will be $1.2 trillion. Obama said at the time the government would have to "make tough choices" in the budget "to address both the deficit of dollars and the deficit of trust."

Killefer served as assistant secretary for management and chief financial officer of the Treasury Department during the Clinton administration.

CNN's Ed Henry contributed to this report.