Nancy Killefer’s withdrawal came after the Obama team spoke with people on the Hill, and came to believe the Senate would rake her over the coals as the third Obama nominee with a tax issue.
(CNN) — A senior administration official says the tax issues surrounding former chief performance officer nominee Nancy Killefer are “a little more complicated” than some reports have suggested.
There are actually a few tax issues — all in equally small amounts, all related to household help. Killefer’s withdrawal came after the Obama team spoke with people on the Hill, and came to believe the Senate would rake her over the coals as the third Obama nominee with a tax issue.
When her selection was announced by Obama on Jan. 7, The Associated Press disclosed that in 2005 the District of Columbia government had filed a $946.69 tax lien on her home for failure to pay unemployment compensation tax on household help.
Since then, administration officials refused to answer questions about the tax error, which she resolved five months after the lien was filed. Obama’s first choice for commerce secretary, New Mexico Gov. Bill Richardson, took his name out of consideration when his confirmation appeared headed toward complications because of a grand jury investigation over how state contracts were issued to political donors.
Obama talks tough with Wall St., but what about his Cabinet?
Last Thursday brought a bracing reminder of what a breath of fresh air Barack Obama can be. After news reports tallied up $18.4 billion in bonuses paid out to American financial executives last year – one in which Wall Street dragged down the rest of the economic world with its shocking failures – the president didn’t mince words.
“That is the height of irresponsibility. It is shameful,” he said. “And part of what we’re going to need is for folks on Wall Street who are asking for help to show some restraint, show some discipline, and show some responsibility.”
But the following day, when news reports came out that Obama’s health and human services secretary-designate, Tom Daschle, had initially failed to pay about $140,000 in taxes, mostly on a car and driver provided by a private equity firm, there was no scolding from the commander in chief.
Daschle, the former Senate majority leader, received more than $2 million in consulting fees from the firm along with some valuable perks. He failed to pay taxes on his car-and-driver perk. Separately, he apparently exaggerated the value of a charitable donation, leading to an inappropriate deduction. Having now repaid what he owes, Daschle hopes to be confirmed for Obama’s Cabinet.
If so, he will join Treasury Secretary Timothy Geithner, who paid $43,000 in back taxes and interest of his own, having failed to cover his share of payroll taxes while working overseas for the International Monetary Fund. With Obama’s backing, Geithner was confirmed by the Democratic-controlled Senate.
Democrats are now trying to rally around Daschle, too, portraying his tax problems as a rare blemish on a fine career. And some are saying that Daschle, like Geithner, is an absolutely crucial player in Obama’s administration. Just as Geithner’s appointment was necessary to reassure Wall Street, where he headed the Federal Reserve Bank of New York, Daschle is uniquely suited to steer the president’s healthcare proposal through Congress, his defenders say.
That may be so, and Obama, who declared yesterday he “absolutely” stands behind Daschle and who came into office with far more political capital than most presidents, may choose to grit his teeth and spend some more of it to get a second reformed tax evader confirmed for his Cabinet.
Still, the cost to Obama could be considerable.
And Obama, whose high-mindedness at times verges on aloofness, will inevitably be attacked for putting his own team’s sense of superiority – the belief that Geithner and Daschle are so talented that they’re irreplaceable – ahead of the normal sense of accountability that would apply to people who fail to pay their taxes on time.
Tolerating such lapses could also diminish Obama’s moral leadership, the strong voice that rang out in condemning last week’s news of the Wall Street bonuses. The president’s ability to call a halt to irresponsible behavior by powerful people is needed to fulfill his pledge to reform the political system.
The idea that Geithner and Daschle could amass underpayments greater than most family incomes isn’t a cause for much sympathy. And Obama, whose righteousness has struck a chord with Middle America, would do well to express his own outrage, rather than try to shield his nominees behind his own considerable presence.
Read article at Boston.com
This official says the vetting team was aware of all Killefer’s tax issues, and that she was immediately forthcoming about them. Going back to the fall, the transition had decided they wanted her for this role when they unveiled the economic team, but held off on announcing her while they determined if they were comfortable with her tax issues. They decided they were, and announced Killefer about two weeks after the rest of the team.
The decision to have her withdraw has built over last two weeks in light of similar controversy swirling around Treasury Secretary Timothy Geithner during his confirmation, and their knowledge of the growing problems surrounding Tom Daschle’s nomination. Killefer, a McKinsey executive, never formally resigned — so she still has a job there to return to.
Read at CNN.com