January 30, 2009

Driving Mr. Daschle: HHS Nominee Has $100,000 ‘Geithner Problem’

Filed under: Economy,MSM Biz/Other Bias,Taxes & Government — Tom @ 11:26 pm

Daschle0109.jpgFormer South Dakota Senator Tom Daschle (picture at right is part of a Getty Images pic at a related New York Times story) has just upped the ante in Washington’s tax-avoiding/evading game of “Can you top this?”

Whereas recently confirmed Treasury Secretary Timothy Geithner “only” $40,000 in back taxes and interest, principally relating to unpaid Social Security and Medicare taxes (with a dash of retirement-plan penalty and illegally deducted overnight summer camp expenses included in the mix), the man who Rush Limbaugh used to call “Puff” Daschle during his Senate days has upped to ante to six figures.

Jake Tapper at ABC’s Political Punch appears to be the one who broke the story (HT NRO’s The Corner):

Bumps in the Road: Obama’s HHS Secretary Nominee Faces Tax Questions Over Car and Driver

….. After being defeated in his 2004 re-election campaign to the Senate, Daschle in 2005 became a consultant and chairman of the executive advisory board at InterMedia Advisors.

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 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 Mr. 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 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.”

The chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., has called his colleagues for a private meeting at 5 p.m. ET Monday to discuss these complications surrounding Daschle’s nomination.

In the meantime, the White House and Democratic allies are coming to Daschle’s defense.

What follows in Tapper’s report are the typical “no big deal” Democratic claims, with White House Deputy Secretary Bill Burton leading the charge, along with Jim Manley, a spokesman for Harry Reid. Republican Congressman Eric Cantor of Virginia counters by saying that “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.”

Ceci Connolly at the Washington Post reports the daft dodge developed by Daschle:

Daschle spokeswoman Jenny Backus said that Daschle “naively” believed the car service was a “generous offer from a friend,” and he discovered only last summer that it is considered reportable income.

Daschle brought the matter to the attention of the Senate Finance Committee “when he submitted his nomination forms,” White House Press Secretary Robert Gibbs said in an e-mailed statement tonight. “We are confident the committee is going to schedule a hearing for him very soon and he will be confirmed.”

So why this became a story during the traditional Friday night news dump, when fewer people are paying attention to what’s going on (and Rush Limbaugh and Sean Hannity have to wait almost 72 hours before they can pounce on their radio shows)? How long have any senators known about this, and if it’s more than about 24 hours, why didn’t this break once it was known?

Best question: Is six figures the limit before a tax problem becomes important enough to stop a nomination? Do I hear seven?

But the real entertainment in this will be seeing how (probably not “if”) the Associated Press and other media outlets minimize the significance of the Daschle Dodge. Will they pull out their Geithner words again (“Goofs.” “Discrepancies”), or get even more “creative”?

Cross-posted at NewsBusters.org.

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3 Comments

  1. Had Geithner’s Social Security taxes remained unpaid, at least he would also have not gotten the related Social Security benefits later in life.

    Daschle’s lapses, however, completely benefited himself. And, that the lapses were for luxury items — a chauffeur, jetting to vacations — is over-the-top unacceptable. Meanwhile, the little people couldn’t even be given charity properly.

    Comment by Cornfed — January 31, 2009 @ 9:31 am

  2. There is a Geithner precedent now. Ethical lapses are not disqualifying anymore.

    Comment by Largebill — January 31, 2009 @ 2:25 pm

  3. #1, and 4 days later they drive a Mack Truck through the new hole.

    Comment by TBlumer — January 31, 2009 @ 3:31 pm

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