Daschle Apologizes for Tax Problems

The former senator's nomination as Health & Human Services Secretary is expected to go forward

Tom Daschle, President Barack Obama's designated point man on health-care reform, apologized to the Senate Finance Committee on Feb. 2 for "errors" that required him recently to pay about $140,000 in back taxes and interest. The committee, which is considering Daschle's nomination as Health & Human Services Secretary, is to meet behind closed doors later Monday to discuss how to proceed.

The nomination is important to the Obama Administration because the economic stimulus package being considered by Congress includes billions in health spending designed to curb inefficiencies in the U.S. health-care system.

In a letter to the committee, Daschle, formerly a Democratic senator from South Dakota, declared himself "deeply embarrassed and disappointed by the errors that required me to amend my tax returns." He said the oversights, which include charitable deductions "deducted in error" and failure to report "imputed income" related to the use of a car service provided by a consulting client, were identified during the vetting process for the Cabinet post and amended returns were filed promptly.

Committee Chairman Expresses Support

It appeared that Daschle's apology may be enough to keep his nomination on track. Finance Committee Chairman Max Baucus (D-Mont.), who has never been particularly close to Daschle, the former Democratic Majority Leader, said on Monday he was "eager to move forward" with Daschle.

In a statement, Baucus said that his faith in Daschle's "dedication and qualifications has only been bolstered in recent weeks by our numerous conversations about the pressing need for comprehensive health-care reform." He added: "I remain convinced that Senator Daschle would be an invaluable and expert partner in this effort. I am eager to move forward together."

Daschle is the second of Obama's Cabinet nominees to have tax problems disclosed during the confirmation process. Treasury Secretary Timothy Geithner's nomination was slowed after it was revealed that he had originally failed to pay $34,000 in Social Security and Medicare taxes while he worked for the International Monetary Fund. Geithner paid the back taxes, apologized during his confirmation hearing, and was confirmed by the Senate on Jan. 26.

At the White House on Feb. 2, Obama spokesman Robert Gibbs defended the selection of Daschle and said that issues raised by his nomination, as well as that of Geithner, would not stand in their way. "The President is not insensitive to the reports that are out there. But he believes these are the right people for very important jobs. He does not believe this will undercut their ability to do their jobs," Gibbs said.

Daschle "discovered a mistake, and he's paid now what he owes," said Gibbs, adding that he expected the Senate to examine "not just one mistake in a career, but his three decades of service to his country and service to his constituents."

Epstein is a correspondent in BusinessWeek's Washington bureau. BusinessWeek Washington Bureau Chief Jane Sasseen contributed to this story.